Andrew Dessler
There’s an important battle brewing over university overhead rates. Sounds boring, right? But hang with me and you’ll see why this is so crucially important to America. It will determine whether breakthrough technologies emerge in American labs or Chinese ones.
Last week, the Department of Energy slashed university overhead rates to 15 percent. They claim this saves taxpayers $405 million annually while ensuring funds support “support scientific research—not foot the bill for administrative costs and facility upgrades.” This is dangerously misleading.
To understand why, let me start by explaining what “overhead” means. When you picture a university research lab, you probably imagine scientists in lab coats, surrounded by high-tech equipment, performing groundbreaking experiments. What you see in this mental image are what we would call “direct costs”—things that are directly involved in a research project.
What you don’t see are the countless support systems making that research possible. Air conditioning, electricity for lighting, wifi, janitorial services, administrative support for payroll and purchasing, and a million other things that cannot be neatly assigned to a particular research project but without which research cannot be done.
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