Brian Barth | Penn’s biggest worry under the Trump administration

Penn received just shy of $15.8 billion over the 2024 fiscal year, which ended on June 30, according to the University’s recently released Annual Financial Report. This figure is by far the highest in the Ivy League, dwarfing Columbia’s $6.6 billion, which is the next highest in the conference. This is largely due to the University of Pennsylvania Health System, which accounts for roughly two-thirds of Penn's entire balance sheet. Revenue generated from patient services alone amounted to $9.48 billion of the total $15.8 billion.

So, what fills the gap between that $9.48 billion and two-thirds of Penn’s total revenue of $15.8 billion? That can be attributed to the National Institutes of Health. Penn reported that the NIH contributed $811.3 million to the University for “Sponsored Programs,” which primarily entails giants that fund the wide variety of medical research conducted at the University — one of the reasons Vice Provost for Global Initiatives and renowned medical ethicist Dr. Ezekiel Emanuel calls the Perelman School of Medicine “the best in the world.”

You may be asking, “Why does this matter?” but the better question would be, “Why does this matter now?”

On Monday, President Donald Trump’s inauguration ignited a massive regime change in the White House, a place that has been very supportive of Penn’s endeavors for quite some time. But, that isn’t always a guarantee.

Budget cuts affecting various federal organizations, including the NIH, are clearly forthcoming based on the actions of Trump’s previous term as well as his plans for his current administration. In a previous Trump-proposed federal budget, the NIH was predicted to lose as much as 18% of its funding. A decrease like this would, in turn, lower the grants given by the NIH to institutions such as Penn.

So, how does this appropriation even work? According to Emanuel, the entire grant is actually split into “two buckets”: direct and indirect costs. The direct cost is what “the researcher [is paid] to do the research project” while indirect costs cover “things not on a grant but necessary to do the research.” This can include, but is not limited to elements like machines, electricity, housing animals, rent, and even the janitors who clean the lab nightly.

Once the NIH allocates an amount to a university's indirect costs, it adds an additional percentage of that figure to account for indirect costs. This percentage, like the amount of direct costs, is whatever is deemed necessary by the NIH budget. The combination of these two outputs is the current $811.3 million from the NIH given to Penn in FY24.

Vice Provost Emanuel spoke about the seemingly imminent decrease in funding, which could involve both elements of the grants. “That’s probably the biggest, real threat,” Emanuel said. This means that the federal government could decide to lower the percentage Penn receives in indirect costs in addition to lowering the base amount of direct costs. That would lower the overall grant amount from both sides of the equation — Penn will receive fewer extra pennies on fewer dollars.

Although the complete elimination of these grants is not anticipated, Emanuel said that any impending NIH budget cuts would be “potential threats” that are “bad for the country, and bad in particular for Penn.” He stressed the notion that it is “important to be prepared” for whatever may be coming (or in this case, not coming) Penn’s way.

Regardless, a substantial decrease in funding would not do the University any favors. It is clear that University stakeholders — in whatever capacity that may be — should be aware of possible future operational changes, whether noticeable or unnoticeable.

“People are spending a lot of time thinking about what we would do [and] how that would have to be addressed,” Emanuel said. He also believed that this specific situation was incomparable to anything he’s experienced over his tenure at the University.

The Health System does “cutting-edge research” on gene therapy, microbiomes, weight loss, and cancer, among many others. Many of these projects could take hits in the coming months. “It's a threat to those kinds of advances,” Emanuel said. “One of the great things about RNA — prior to COVID, no one had any idea that [it] would be the big breakthrough … that's part of the brilliance and wonderfulness of sciences, breakthroughs happen that you don't anticipate.”

It is not only the Health System that can be affected by the NIH budget cut: These grants can make their way to the Schools of Dental Medicine, Nursing, and Veterinary Medicine as well. But it doesn’t end with the NIH; Trump has also proposed eliminating the Department of Education. Even though the Department of Education grants are often directed to the liberal arts and sciences — the School of Arts and Sciences and the Graduate School of Education, for example — these grants are much smaller than the ones given by the NIH.

This means the impact of disrupting that revenue stream could greatly affect SAS and GSE much more than other schools on campus. Emanuel explained that taking away much smaller amounts of money from these schools could be just as, if not more, impactful than the hundreds of millions in the Health System.

The federal budget is normally an item rolled out in an administration’s first 100 days — typically in early February — so there is still some time left before any decision is made at the federal level. This is certainly not something anyone will know in the opening days of Trump’s presidency. It will certainly not go into effect until the government passes the budget, which could be as late as the end of the summer.

The man charged with manipulating the federal budget starting on inauguration day is Russell Vought, the presumptive nominee for Director of the Office of Management and Budget. Vought previously held this same position for the second half of Trump’s initial term. 

Vought is also a key player in the 2025 Presidential Transition Project — a potential strategic framework for Trump’s second term that is also known as “Project 2025.” This is despite the President-elect’s consistent denial of having any connection to the initiative, even after his election to the nation’s highest office in early November.

Politics may also play a role in the decision-making process, as Robert F. Kennedy Jr., the presumptive nominee for Secretary of Health and Human Services, has historically expressed his opposition to vaccinations. This is something that hits close to home for Penn, as the Health System has been a leader in the research and development of mRNA vaccines. “[With] the money we made from mRNA, one of the main things we did was to invest in more vaccine work,” Emanuel said. “If they’re hostile to vaccines, a lot of that investment might go.” 

Nevertheless, Emanuel said that various University departments are in an “active waiting game” in preparation for the potential decrease in government funding. Offices across the administration and in many of Penn’s 12 schools are currently engaged in “situational planning,” running through scenarios that could impact them due to less revenue.

“Could we weather this storm, obviously, it depends how deep the cuts are [and] how long they last,” Emanuel said. “We very well are going to have to change how we operate [and] if they're very substantial, we will change.”

BRIAN BARTH is a College first year from New York. His email is bbarth@sas.upenn.edu.