Generations of New Jersey residents have benefited from revolutionary research breakthroughs in the medical, technological, public health and scientific fields.  

This was true when Thomas Edison popularized the use of the telephone and in-home electricity. It was true when major pharmaceutical companies located their headquarters and research facilities in our state in the latter half of the 20th century, creating drugs that fight cancer, cure infectious diseases and treat chronic conditions.  

And it is still true today. Just one example of this out of many is the life-saving diagnostic and treatment innovations that were pioneered at Rutgers University during the recent COVID-19 pandemic.  

Scientific advancements, and the huge economic benefits that flow from them, don’t arise in a vacuum.  A continued pipeline of innovation requires investing the maximum amount of hard-won research grant dollars directly into research activities.   

However, New Jersey’s ability to compete on the world stage is increasingly threatened by outdated rules that siphon off millions of federal dollars that should be going to support research projects and staff but instead are being diverted to pay fringe benefit costs for non-research-associated state employees. 

Rutgers receives an impressive $650 million in federal research grants and contracts each year. A portion of each grant award is allocated to “fringe costs” that pay retirement plan and health insurance benefits on top of the salaries for research personnel supported by grant funds. Typical fringe benefit rates at peer institutions in other states are between 30% to 40% of annual salary.  In contrast, the fringe rate for New Jersey researchers has been rising dramatically, going from approximately 45% in 2020 to a stated 68% for this coming fiscal year. 

The core of the problem

Adding insult to injury, this excessive rate is far higher than the actual cost of providing fringe benefits to university employees. The core of the problem is that the existing, outdated state fringe-rate formula assumes incorrectly that most academic employees receive a state pension, whose costs have ballooned over the past few years due to pension underfunding. In reality, most higher education employees are enrolled in an Alternate Benefit Plan, a defined-contribution plan where employee payments are matched by a smaller contribution from the state. This means that millions of federal research dollars flowing into New Jersey are being used to shore up a pension system that does not apply to state researchers or their staff.  

Research at Rutgers, NJIT, Rowan, TCNJ and Montclair State drives innovation in New Jersey, but our institutions cannot compete against universities where researchers have more funds to directly invest in research activities. Furthermore, why would a research scientist with a multimillion-dollar grant choose to work at Rutgers when such a disproportionately large amount of their funding does not contribute directly to carrying out the funded experiments? What prevents established, well-funded New Jersey researchers from taking their grants to institutions in other states with lower fringe rates to get more bang for their buck? And in the end, how many life-saving treatments and clever engineering solutions will fail to materialize because researchers must lay off highly trained staff to pay ballooning fringe costs in the face of fixed research budgets?  

A legislative fix to this problem that allows New Jersey researchers to pay only the actual fringe costs that apply to their employees is the only permanent, long-term solution.  Unfortunately, one such bill, sponsored by Assembly Speaker Craig Coughlin (D-Middlesex) and Sen. Andrew Zwicker (D-Middlesex), failed to reach the floor for a vote in the last legislative session.    

For the sake of future research in New Jersey, it is vital that an updated version of this bill rises to the top of the legislative agenda this session. We can’t wait for another budget cycle to protect New Jersey’s status as a leader in scientific research. This simple legislative fix is vital for preserving our competitiveness and growing our economy.  

We thus call on Gov. Phil Murphy and state legislators to act immediately to repair this self-inflicted wound before its negative impacts permanently and irreversibly cripple health research in our great state.