6 ms·

I am not in academia but the 53% overhead to an outsider is absurd! Probably the same reason tuition has gotten so high, someone has to pay for all those deans,

I am not in academia but the 53% overhead to an outsider is absurd! Probably the same reason tuition has gotten so high, someone has to pay for all those deans, vice deans and vice vice deans!

light_hue_1 5y ago
Compared to industry? That's very low! Universities are cheap. 53% overhead works out to be 34% of the total money. I've written grants with many industrial partners (companies you would recognize). All have had much higher overhead rates. Normally these rates are kept secret, but here's a fun memo from the Federal Transit Administration talking about 127% overhead rates! https://www.transit.dot.gov/funding/procurement/third-party-procurement/overhead-rates https://www.transit.dot.gov/funding/procurement/third-party-... The DoD gives as an example a rate of 125%! > For example, in recovering the indirect costs associated with particular contracts during the year, each dollar of engineering direct labor worked on a contract is burdened with an engineering overhead of 125.95 percent. https://www.dhg.com/portals/0/headers/industries/government-contracting/fundamentals-of-government-contracting-webinars/Navigating-the-Sea-of-Overhead-Reference-Documents.pdf https://www.dhg.com/portals/0/headers/industries/government-... This puts universities in some context: https://www.healthra.org/wp-content/uploads/2018/08/Nature_Keeping-the-Lights-On-Article.pdf https://www.healthra.org/wp-content/uploads/2018/08/Nature_K... You'll see that non-profits and hospitals tend to have far higher rates. This doesn't include industry though. Which would be far higher.
- Anechoic 5y ago
  The DoD gives as an example a rate of 125%! For DOT engineering design firms and environmental firms, a typical overhead rate is 165%-ish, I've seen ranges from 125% to 250%. Over 180% is considered "high".
sndean 5y ago
I've heard Harvard's is/was 96%? Or at least that was for a NIH R01-seeking person there in ~biochemistry in 2015. Where I'm at it's probably around 100% but I really don't want to know. We're all expensive.
- Fomite 5y ago
  It's 69%, so you were...close I guess? https://osp.finance.harvard.edu/files/univ_july_2021_signed_rate_agreement.pdf https://osp.finance.harvard.edu/files/univ_july_2021_signed_...
dwohnitmok 5y ago
That overhead honestly doesn't seem that high to me. If I think about private companies with low need for physical equipment (e.g. software companies) I suspect the overhead would be comparable if not greater. Usually I hear ~100% as an average figure (keeping in mind that overhead is defined as a percentage of non-overhead costs so 100% means half of your money spent is on overhead). But I'm not that confident. Would love to hear from business owners.
- michaelrpeskin 5y ago
  I’m at a small software company that does lots of smallish (500k-1.5M) contracts like this. The government does audits to determine our overhead rate. Our is 2.8. That is my billing rate to the government is 2.8 times my hourly rate as determined by my salary. That pays for rent, benefits, and for things like the employees who aren’t on direct labor (e.g. accounting, HR, etc)
  - bena 5y ago
    That means your overhead rate would be around 65%.
    - dwohnitmok 5y ago
      No it does mean the overhead is 280% if defined the same way as the university (overhead is calculated as percentage of non-overhead costs, not overall costs). But I'm not sure whether the company would count just an employee's salary as non-overhead costs. I'm fuzzy on the details of how overhead is usually calculated.
      - OMGWTF 5y ago
        > No it does mean the overhead is 280% if defined the same way as the university (overhead is calculated as percentage of non-overhead costs, not overall costs). But he said: > That is my billing rate to the government is 2.8 times my hourly rate as determined by my salary. Doesn't that mean that the government pays a total of 2.8x his salary, so overhead would be 180% (+100% salary = 280% total)? Or what mistake did I make here?
deleted 5y ago
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ta988 5y ago
And if you look at the budget of most R1 state universities, you'll see that tuition is really far from covering the cost of education.
ModernMech 5y ago
Keep in mind that many researchers are given a huge startup package at the beginning of their career to jumpstart a research agenda. They also don't pay for any rent for lab space, electricity, and other campus resources. All of those expenses are basically paid for by the overhead tax. It's the lifeblood of any academic research institution.
- Fomite 5y ago
  While "huge startup package" varies wildly - epidemiologists are cheap, for example, you are by and large correct. The data center where my nodes for HPC are kept? Indirects. The salary of the folks who review and submit the proposals, manage the budgets, and make sure we're complying with neat things like human subjects protections? Indirects. Journal subscriptions? Indirects. Direct costs cover remarkably few things.
Fomite 5y ago
53% is both not particularly that high and not unusual. Keep in mind that in private industry, that stuff is built into the price. I've also seen the indirect rates for several private research firms - they're higher. I think the telling thing is that, even at that rate, companies often find working with us to be cheaper than working with another industry partner. Our pricing just tends to spook people because it comes in a big chunk just labeled "Indirects" rather than snuck into all the other budget lines.

I am not in academia but the 53% overhead to an outsider is absurd! Probably the same reason tuition has gotten so high, someone has to pay for all those deans, vice deans and vice vice deans!

light_hue_1 5y ago

Compared to industry? That's very low! Universities are cheap. 53% overhead works out to be 34% of the total money. I've written grants with many industrial partners (companies you would recognize). All have had much higher overhead rates. Normally these rates are kept secret, but here's a fun memo from the Federal Transit Administration talking about 127% overhead rates! https://www.transit.dot.gov/funding/procurement/third-party-procurement/overhead-rates https://www.transit.dot.gov/funding/procurement/third-party-... The DoD gives as an example a rate of 125%! > For example, in recovering the indirect costs associated with particular contracts during the year, each dollar of engineering direct labor worked on a contract is burdened with an engineering overhead of 125.95 percent. https://www.dhg.com/portals/0/headers/industries/government-contracting/fundamentals-of-government-contracting-webinars/Navigating-the-Sea-of-Overhead-Reference-Documents.pdf https://www.dhg.com/portals/0/headers/industries/government-... This puts universities in some context: https://www.healthra.org/wp-content/uploads/2018/08/Nature_Keeping-the-Lights-On-Article.pdf https://www.healthra.org/wp-content/uploads/2018/08/Nature_K... You'll see that non-profits and hospitals tend to have far higher rates. This doesn't include industry though. Which would be far higher.

Anechoic 5y ago
The DoD gives as an example a rate of 125%! For DOT engineering design firms and environmental firms, a typical overhead rate is 165%-ish, I've seen ranges from 125% to 250%. Over 180% is considered "high".

sndean 5y ago

I've heard Harvard's is/was 96%? Or at least that was for a NIH R01-seeking person there in ~biochemistry in 2015. Where I'm at it's probably around 100% but I really don't want to know. We're all expensive.

Fomite 5y ago
It's 69%, so you were...close I guess? https://osp.finance.harvard.edu/files/univ_july_2021_signed_rate_agreement.pdf https://osp.finance.harvard.edu/files/univ_july_2021_signed_...

dwohnitmok 5y ago

That overhead honestly doesn't seem that high to me. If I think about private companies with low need for physical equipment (e.g. software companies) I suspect the overhead would be comparable if not greater. Usually I hear ~100% as an average figure (keeping in mind that overhead is defined as a percentage of non-overhead costs so 100% means half of your money spent is on overhead). But I'm not that confident. Would love to hear from business owners.

michaelrpeskin 5y ago
I’m at a small software company that does lots of smallish (500k-1.5M) contracts like this. The government does audits to determine our overhead rate. Our is 2.8. That is my billing rate to the government is 2.8 times my hourly rate as determined by my salary. That pays for rent, benefits, and for things like the employees who aren’t on direct labor (e.g. accounting, HR, etc)
- bena 5y ago
  That means your overhead rate would be around 65%.
  - dwohnitmok 5y ago
    No it does mean the overhead is 280% if defined the same way as the university (overhead is calculated as percentage of non-overhead costs, not overall costs). But I'm not sure whether the company would count just an employee's salary as non-overhead costs. I'm fuzzy on the details of how overhead is usually calculated.
    - OMGWTF 5y ago
      > No it does mean the overhead is 280% if defined the same way as the university (overhead is calculated as percentage of non-overhead costs, not overall costs). But he said: > That is my billing rate to the government is 2.8 times my hourly rate as determined by my salary. Doesn't that mean that the government pays a total of 2.8x his salary, so overhead would be 180% (+100% salary = 280% total)? Or what mistake did I make here?

deleted 5y ago

[deleted]

ta988 5y ago

And if you look at the budget of most R1 state universities, you'll see that tuition is really far from covering the cost of education.

ModernMech 5y ago

Keep in mind that many researchers are given a huge startup package at the beginning of their career to jumpstart a research agenda. They also don't pay for any rent for lab space, electricity, and other campus resources. All of those expenses are basically paid for by the overhead tax. It's the lifeblood of any academic research institution.

Fomite 5y ago
While "huge startup package" varies wildly - epidemiologists are cheap, for example, you are by and large correct. The data center where my nodes for HPC are kept? Indirects. The salary of the folks who review and submit the proposals, manage the budgets, and make sure we're complying with neat things like human subjects protections? Indirects. Journal subscriptions? Indirects. Direct costs cover remarkably few things.

Fomite 5y ago

53% is both not particularly that high and not unusual. Keep in mind that in private industry, that stuff is built into the price. I've also seen the indirect rates for several private research firms - they're higher. I think the telling thing is that, even at that rate, companies often find working with us to be cheaper than working with another industry partner. Our pricing just tends to spook people because it comes in a big chunk just labeled "Indirects" rather than snuck into all the other budget lines.