UNC's leading research universities need to prepare to bring in a lot less money from federal grants, North Carolina's State Auditor warned Monday.

State Auditor Dave Boliek warned UNC System Schools’ chief financial officers of the possible cuts making its way through federal courts right now in a message he sent to university officials. The money, tacked on top of federal grants from the National Institutes of Health, goes to pay for universities’ overhead, like lab space and grant administrators.

The memorandum Monday stated that because of an upcoming grant policy issued from the National Institutes of Health (NIH), a 15% rate would be applied to payments that universities, hospitals and other research institutes use to cover costs associated with equipment, facilities and personnel.

The National Institutes of Health said usually these grants are negotiated one-by-one.

“Pursuant to this Supplemental Guidance, there will be a standard indirect rate of 15% across all NIH grants for indirect costs in lieu of a separately negotiated rate for indirect costs in every grant,” NIH said last month on the matter. 

The NIH’s average indirect cost rate has consistently fallen between 27% and 28%. Some organizations have indirect rates exceeding 50%, and even 60% in some instances, according to NIH.

Though the policy is still in the judicial process, Boliek said if chief financial officers have not already begun preparations for the cuts, they need to now. 

“NIH is obligated to carefully steward grant awards to ensure taxpayer dollars are used in ways that benefit the American people and improve their quality of life,” they said.

The policy was originally supposed to begin Feb. 10, 2025.