The Office of Management and Budget proposed changes on May 29 as part of a rewrite of the federal Uniform Guidance, which sets requirements for how federal grants are awarded and administered. The proposal would affect rules that govern research expenses and study abroad opportunities at Lehigh.
A proposed overhaul of federal grants could also give political appointees a greater role in deciding which grants are awarded, allow agencies to terminate grants before their scheduled end dates and impose new restrictions on how researchers use federal funds.
The changes are not in effect yet. Congress temporarily blocked their implementation through Dec. 11.
According to Christopher Carter, associate vice president for Lehigh Government Relations, Lehigh relies on federal funding for roughly 72% of its research budget, with the university reporting $62.4 million in research and development expenditures in fiscal year 2024. Carter also said federal research grants and contracts accounted for about 9.3% of Lehigh’s total operating revenue that year.
“The legislation does not withdraw the proposal,” Carter said. “But it does create a temporary pause, which is critical for institutions like Lehigh to prepare for several possible outcomes.”
Carter said Lehigh’s primary concern is that the proposal could make federal research funding more dependent on changing political priorities.
“The biggest risk isn’t just more and costly administrative red tape,” Carter said. “It’s the threat of unpredictable political intervention that could impact active research grants based on the shifting federal priorities of the administration.”
Political review could affect grant decisions
Under the proposed changes, political appointees would conduct pre-issuance reviews of discretionary federal awards, according to Carter.
Federal agencies would also be authorized to terminate active grants during their funding period based on federal priorities at the time of termination, he said.
Carter said Lehigh is concerned those provisions could introduce political considerations into a system that has traditionally relied on scientific peer review.
Lehigh urged Pennsylvania’s congressional delegation to reject what Carter described as politically-driven grant reviews. The university also raised concerns about changing federal priorities affecting grants after they’ve been awarded.
“We emphasized mainly our concerns about adding political reviews to grant awards, including the possibility of changing administration priorities in mid-cycle for active grants,” Carter said. “We also emphasized restricting currently-allowable research costs, which could limit dissemination of research findings and restrict professional development critical to early-career scientists.”
The proposal would also affect expenses researchers can charge to federal awards.
Carter said the proposed rules could restrict or require additional approvals for conference travel, publications and open-access costs, professional memberships and international research collaborations.
The proposal also includes broad restrictions on international engagement that could require prior approval for some cross-border research, Carter said.
The restrictions could impact researchers who depend on federal grants to attend conferences, publish findings or work with researchers and institutions outside the United States.
Federal funding is concentrated in research
Carter said engineering and natural science-based research heavily depend on federal funds for support.
The College of Education’s Office of Special Education Programs is another significant recipient, Carter said, with funds supporting research involving special education, literacy and school-based mental health.
Lehigh’s research activity has also expanded in recent years. Carter said the university’s total research and development expenditures increased about 50% between fiscal years 2021 and 2024.
The university hasn’t responded to the proposal by reducing its pursuit of federal research grants.
“Proposal submissions volume has held up,” Carter said.
Carter said more federal competitions are now structured around large, multi-institutional projects rather than individual awards.
Lehigh is now responding by pursuing partnerships with other universities, national laboratories and industries, he said.
Lehigh has taken concerns to Congress
Lehigh has pushed back against the proposed changes through its government relations efforts, according to Carter.
Carter said the university submitted official public comments on the proposal and shared them with Pennsylvania senators and representatives.
Carter also met with congressional staff in July and August to discuss the potential operational effects on Lehigh and asked lawmakers to support language blocking implementation.
Before the proposal was released, Lehigh had already been in communications with congressional offices about federal research funding.
Carter said those discussions involved concerns about funding from the National Science Foundation, National Institutes of Health and Institute of Education Sciences.
Lehigh is working with higher education coalitions and peer institutions as the federal rulemaking process continues, according to Carter.
He said there has been little direct discussion with federal agencies because the formal regulatory process is still underway.
Lehigh is asking the administration to withdraw the proposed restrictions and work with universities to change grant administration without weakening merit-based research, Carter said.
Smaller nonprofits could face greater pressure
The proposal could also affect organizations that receive federal funding through partnerships with Lehigh.
Lehigh works with local school districts, community colleges, health care networks and technology companies.
Carter said the proposed changes could place a greater administrative burden on smaller organizations that participate in federally-funded projects.
One proposed change would eliminate fixed-amount awards and subawards. According to Carter, those arrangements can allow funding to be tied to the completion of specific milestones, rather than requiring recipients to account for every individual cost.
Carter said eliminating those arrangements could require some partners to move to full actual-cost accounting and auditing. He said the added requirements could make federal funding harder for smaller organizations to survive and sustain current work.
The Pennsylvania Association of Nonprofit Organizations (PANO) has raised similar concerns.
Anna Keilly, PANO’s senior manager of policy and advocacy, said the proposed changes could alter how federal money is distributed and when it can be withdrawn.
Keilly said smaller nonprofits could experience changes in government funding differently from larger organizations, such as universities.
“Smaller nonprofits are always going to feel the impact of these changes,” Keilly said. “But in a different way than some of these larger organizations that may receive federal funding.”
PANO Executive Director, Anna Gingerich, said many Pennsylvania nonprofits operate with limited financial resources.
90% of Pennsylvania nonprofits have budgets below $1 million, while 86% have budgets below $500,000, according to Keilly.
Gingerich said nonprofits have responded to broader uncertainty over the past 18 months by planning for different financial scenarios, including identifying alternative sources of funding.
“Organizations are engaging in very specific scenario planning around their finances,” Gingerich said. “So if we lose this funding, then what?”
She said federal funding can help nonprofits secure additional money from local funders. If federal funding disappears, she said, other sources of funding could also be affected.
PANO plans to encourage its members to contact Congress before the new Dec. 11 deadline. PANO also participated in a national effort that generated about 500,000 comments on the proposed changes, Gingerich said.
“We do not want this to go into effect,” Gingerich said.
The proposal remains in limbo
Congress’s temporary blocking of the proposals gives universities and nonprofits additional time to prepare, but it doesn’t resolve the future of the proposal, Keilly said.
Carter said the continuing resolution prevents the administration from finalizing or implementing the Uniform Guidance changes through Dec. 11.
Lehigh is also watching individual federal agencies for additional changes, according to Carter.
Carter said the Department of Education and National Science Foundation have each proposed their own rules that could implement parts of the administration’s approach to federal restrictions.
The Department of Education published its proposal in August, while the NSF published its proposal in June, according to Carter.
“The big concern is the structural change OMB is making to federal financial assistance programs and the impact that will have on the quality of scientific research supported in future years,” Carter said.