Hey university bureaucrats, the NIH wants more for its money

US universities spend nearly $80 billon per year on research, more than half of which comes from US taxpayers. It’s hardly surprising, then, that a Trumpian rule change by the National Institutes of Health has some university administrators panicking. Henceforth, the percentage of NIH research grants that can be used to fund university overheads will be capped at 15 percent; 85 percent of funds must be used to cover direct research costs.

Currently, a quarter of NIH grant money is used to pay indirect expenses, but at some universities, the administrative tax is substantially higher. Johns Hopkins University, the largest recipient of federal funds, levies a 63.7 percent overhead charge, while Harvard takes 69 percent and Yale 67.5 percent.

To understand the implications of the rule change, consider that in 2023, Johns Hopkins received $843 million from the NIH. Under the new edict, the university’s overhead charge would have been $126 million rather than $537 million—hence the protests. Jeffrey Flier, a former Dean Harvard Medical School griped that “no sane government would do this.” Matt Owners, president of the Council on Government Relations, a grouping of academic medical centers and research institutes, warned the shift would “cripple life-saving research and innovation.”

One can debate whether a 15 percent overhead allowance is too miserly (researchers, after all, need facilities in which to do their work); but what can’t be argued is that in recent decades universities have been piling on bureaucratic belly fat like grizzlies bulking up for winter.

Johns Hopkins professor Benjamin Ginsberg, author of The Fall of the Faculty,  describes the phenomenon well:

“Every year, hosts of administrators and staffers are added to college and university payrolls, even as schools claim to be battling budget crises that are forcing them to reduce the size of their full-time faculties. As a result, universities are filled with armies of functionaries—vice presidents, associate vice presidents, assistant vice presidents, provosts, associate provosts, assistant provosts, dean, deanlets, deanlings, each commanding staffers and assistants—who, more and more, direct operations of every school.”

Between 1976 and 2018, the number of full-time administrators employed by US colleges and universities increased by 164 percent. During that time, the number of full-time faculty increased by 92 percent while total student enrollments grew by 78 percent. In consequence, many universities now have more managers and administrators than faculty members. Within the University of California system, there are 8 students for every instructor, and 4 students for every administrator.

Writing more than a century ago, the economist and social critic, Thorstein Veblen, offered a blunt assessment of university administrators:

“They are needless, except to take care of needs and emergencies to which their own presence gratuitously gives rise. In so far as these needs and difficulties that require executive surveillance are not simply and flagrantly factitious …, they are altogether such needs as arise out of an excessive size and a gratuitously complex administrative organization…”[1]

Having known more than a few university administrators, including my late father, I’m inclined to be more charitable, but Veblen was right: administrators produce complexity which can only be managed by (you guessed it!) more administrators.

In an article bemoaning the growth of academic bureaucracy, Bloomberg reporter John Hechinger recounts a conversation with an associate vice provost hired to oversee a cluster of committees working to revise the university’s academic calendar. “[My] job,” said the administrator, “is to make sure these seven or eight committees are aware of what’s going on in the other committees.” Sadly, similar examples of administrative excrescence are legion.

As is true with administrative jobs generally, university administrators are seldom accountable for improving outcomes or reducing costs. Mostly, they report to other administrators, and are measured and compensated based on activity, not impact. Says Todd Zywicki, a law professor at George Mason University and the author of The Changing of the Guard: The Political Economy of Administrative Bloat in American Higher Education, “The interesting thing about the administrative bloat in higher education is, literally, nobody knows who these people are or what they’re doing.”

To be fair, bureaucratic bloat isn’t just a problem for universities. Across the US economy, the number of managerial and administrative jobs has increased by 145 percent since 1983, roughly three times the growth rate of all other job categories. As Michele Zanini and I argue in Humanocracy, the costs of bureausclerosis are becoming untenable—for organizations, economies, and societies. While the NIH’s blunt attack on academic overhead lacks nuance and may disrupt the process of discovery, one shouldn’t be surprised that President Trump’s efficiency mavens are intent on shrinking the size of the academic administerium.

[1] Thorsten Veblen, “The Higher Learning in America: A Memorandum on the Conduct of Universities by Business Men,” B.W. Huebsch, 1918, p. 277.