H.R. 422 — No Subsidies for Wealthy Universities Act

This section establishes definitions for terms used in the Act, including "(1) agency" (as defined in 5 U.S.C. §551); "(2) direct cost" (as defined in 2 CFR part 200, subpart E); "(3) endowment fund" (as defined in section 312(c) of the Higher Education Act of 1965, 20 U.S.C. §1058(c)); "(4) Federal research award" (i.e., agency support for research via grants, contracts, cooperative agreements, or other transactions); "(5) indirect cost" (as defined in 2 CFR part 200, subpart E); "(6) indirect cost rate" (i.e., the ratio of a project's indirect costs to direct costs under 2 CFR part 200, subpart E); and "(7) institution of higher education" (as defined in section 102 of the Higher Education Act of 1965, 20 U.S.C. §1002).

This section establishes annual reporting of endowment fund values by institutions of higher education with program participation agreements under the Higher Education Act of 1965 and uses such data to categorize institutions and cap indirect cost reimbursements (i.e., overhead payments for administrative, facilities, and other non-direct research expenses) on federal research awards as follows: (1) prohibits indirect costs for institutions with endowments exceeding $5 billion; (2) limits indirect costs to 8% for institutions with endowments between $2 billion and $5 billion; and (3) limits indirect costs to 15% for all other institutions. The Commissioner for Education Statistics must collect endowment data by September 30 each year (as of the prior September 30), identify qualifying institutions, and submit lists to the Office of Management and Budget, which distributes them to agency heads, Congress, and the public by September 30; caps apply to awards in the current fiscal year based on prior-year lists and override other laws. This section further amends the program participation agreement requirements of the Higher Education Act (20 U.S.C. 1094(a)) by adding a new paragraph (30) mandating annual endowment reporting to the Commissioner.

This section directs the Comptroller General of the United States to submit an annual report to Congress on indirect costs reimbursed under federal research awards to institutions of higher education for the preceding fiscal year. The report must (1) determine, to the extent practicable, the amounts of such reimbursed indirect costs used for (A) administrative staff compensation at those institutions and (B) compensation for administrative staff with diversity, equity, and inclusion responsibilities; (2) identify the research fields receiving the highest levels of funding from those awards; and (3) identify (A) the agencies awarding the highest amounts of such funds to those institutions and (B) the institutions receiving awards from those agencies.