President Donald Trump’s administration’s proposed budget for the 2026 fiscal year, which is currently the center of a government shutdown, will cut research grants for numerous universities, including the University of Michigan.
Detailed in a brief from the U.S. Department of Health and Human Services, the proposed budget includes a 40% decrease in Centers for Disease Control and Prevention funding and a more than 50% decrease in National Science Foundation funding. These cuts could impact nuclear research, studies on the Great Lakes, the arts and humanities and more, but could also harm the broader Ann Arbor economy.
In an interview with The Michigan Daily, Jason Owen-Smith, sociology professor and executive director of the Institute for Research on Innovation and Science, said academic research was historically funded by the federal government and warned redirection of federal funds could have widespread consequences for the University and the Ann Arbor community.
“The way the federal government seems to be thinking about research does appear to be changing, which has created some uncertainty,” Owen-Smith said. “This is making itself known in decreases in funding and in changes in grants, which may make this environment less hospitable to the kinds of businesses that are supported by our research. That’s going to have ripple effects that are negative rather than positive.”
Owen-Smith said researchers will better understand impacts of the cuts at the end of the University’s fiscal year in June 2026.
“So where we’ll start to feel the effects of these policy changes is in the grants that we didn’t get or that were delayed this year,” Owen-Smith said. “We’ll start to see the effects in this fiscal year. What we don’t know yet is whether those effects will be concentrated in specific areas.”
LSA junior Josie Anderson, who participated in the Undergraduate Research Opportunity Program during her freshman year before becoming a program peer facilitator, says she noticed changes in the availability of UROP opportunities since grant cuts were introduced.
“I’ve heard of lots of different scenarios where federal funding cuts have impacted UROP projects and mentors aren’t able to get the funding that they need,” Anderson said. “I was talking with another peer facilitator who had a student interview for (a project)… but the mentor had to say, ‘I unfortunately can’t take you anymore due to financial issues with the lab and funding being cut.’”
In an interview with The Daily, Brian Jacob, professor of economics, public policy and education at the Ford School of Public Policy, said that understanding indirect costs is important to understanding the secondary stakes of grant loss. Indirect costs, which typically range from 30% to 70% as of May 2025, are costs not directly tied to a project but essential to it, such as research facility maintenance or printing costs. Jacob said new 15% caps on indirect cost provisions within research grants announced in February would deplete a large source of revenue for the University across programs.
“So if instead of providing 50-55% indirect (provisions), the federal government provided 15% indirect (provisions) —that would be tens of millions, maybe hundreds of millions of dollars in revenue that wasn’t coming in,” Jacob said. “That would mean reducing the staff in that new institute, or the events that a new cultural center could put on. Less money into the University of Michigan means less money into the Ann Arbor economy.”
Jacob also said he anticipates declines in research funding will affect local businesses.
“Oftentimes, research projects will have funding for workshops or conferences or other events that bring in people even outside of the immediate research team,” Jacobs said. “That often generates business with restaurants or other local retail stores in the area.”
One potentially-impacted local business is M-36 Coffee Roasters, located on South University Avenue. In an interview with The Daily, co-owner Lisa Tuveson said the vast majority of the cafe’s customers are related to the University in some way and that they anticipate changes in business due to fewer research staff members.
“I’d say 90-95% of our customers are somehow related to (the University of) Michigan,” Tuveson said. “We have people who have labs and their lab people come in, so we’ ll be affected as less people are working in those positions. … It’s hard to combat it, because if you don’t have the money to spend, you don’t have the money to spend.”
Tuveson also said outside of the impacts federal funding cuts will have on local businesses, Tuveson believes research is vital to shaping the future.
“There’s a reason there’s research,” Tuveson said. “It’s for the future. So to me, it’s the last thing you should pull — there’s other things that can go first.”
Daily Staff Reporter Anuttara Lath and Daily Contributor Hailey Nichols can be reached at anuttara@umich.edu and haileyni@umich.edu.
