OMB launched a preemptive strike against congressional action. On June 27 it published in the Federal Register a proposal that would cap the administrative portion of total indirect cost reimbursement at 26 percent and would create a separate facilities fund to make sure that institutions spent sufficient sums on repairs and renovations of their physical plants. It put the proposal on the regulatory fast track, giving institutions barely a month to comment and declaring that the new rules, once adopted, would go into effect October 1. Several universities complained about the financial burden it would place on them, warning that the loss of millions of dollars would force them to cut back on research and jeopardize existing jobs. In anticipation of a possible sudden cut, our president has rescinded recently announced salary increases and instituted what amounts to a university-wide freeze on faculty salaries.
Many department heads are concerned about losing first-rate people.
Cornell University's controller, John Ostrum, also was concerned about the effect of the proposal on the educational consumer. In practice, the major revenue source that can be adjusted on a discretionary basis is tuition. Only a handful of the approximately 150 respondees saw much merit in OMB's proposed revisions. Most of the responses came from professional societies, whose scientists expressed hope that the changes might yield a few extra dollars for investigator-initiated research. But even some supporters of the changes conceded that OMB's actions were driven more by short-term politics than by the need to address the underlying question of how best to sustain academic research.