Millions of Unspent NIH Grant Funds Available for Use

HRD-84-24: Published: Dec 13, 1983. Publicly Released: Dec 13, 1983.

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Franklin A. Curtis
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During a review of indirect cost rates for National Institutes of Health (NIH) grantees, GAO identified an opportunity for NIH to realize a one-time funding windfall of from $41 million to $143 million by offsetting grantees' estimated yearend unspent grant fund balances against the next period's grant awards.

NIH has permitted grantees to carry over any unspent grant funds but not to expend them; thus, they are available but not used for an entire year before being offset against future grant funding. Regulations require grantees to either: (1) report promptly when a grant is expected to exceed needs by more than $5,000 or 5 percent of the grant; or (2) include an estimate of expected unused funds in their applications for the next period's funding. To ensure that grantees have sufficient funds in case their estimates of unspent funds are overstated, NIH generally does not offset any of the unspent funds against the next period's grant awards. GAO estimated that about 27 percent of the NIH fiscal year 1981 total grant awards had unspent fund balances in excess of $2,500 and that between $23 million and $126 million of these balances involved individual fund balances of $10,000 or more.

Recommendation for Executive Action

  1. Status: Closed - Not Implemented

    Comments: The agency disagreed with the recommendation. The response recognized that the NIH staff has discretion to either offset or support the science as originally approved and stated that the report and the the response have been called to its attention. The auditor assigned to this review stated that there is little likelihood further action will be taken in the future.

    Recommendation: The Secretary of the Department of Health and Human Services should require that the Director, NIH, adopt a policy that requires NIH grant awarding offices to offset unspent grant funds in excess of $2,500 against the next period's grant award.

    Agency Affected: Department of Health and Human Services


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