Over at Remaking the University, Christopher Newfield has a new essay about higher education policy. It is well worth the read. Newfield’s primary focus is the lack of policy movement in university administrations, despite chronic lack of funding–“permausterity,” as he calls it. Among other issues, Newfield argues that university research, especially research at scale in the big research universities, generally loses money:
In 2012, the National Science Board published Diminishing Funding and Rising Expectations:Trends and Challenges for Research Universities, and in the same year the National Research Council of the National Academies released Research Universities and the Future of America. Both criticized the states’ wholesale retreat from public funding. Both reports noted that universities are increasingly on the hook to pay for research from their own internal funds–even when the research has an outside sponsor. Institutional funds are now the “second largest source of funding for academic R&D, accounting for $11.2 billion of the $54.9 billion of academic spending on S&E [Science &Engineering] R&D in 2009” (NSB p 16). The NRC report stated that “The institutional contribution to research has been growing faster than federal funding,” which, they added, diverts money from necessities like instruction and maintenance (NRC p 125).
The big takeaways are that universities’ internal funds are the fastest-growing source of research funding, and that universities’ share is large. The total university contribution has grown again since the NSB and NRC reports, from $11.2 billion to $13.7 billion per year.
Over the period from 1976 to 2012, the share of R&D expenditures assumed by colleges and universities has grown faster than any other category. Institutional Funds accounted for 21.6% of all R&D expenditures in 2012 (adjusting out the ARRA effect) as compared to 12.0% of all R&D expenditures in 1976—a growth factor of +80%.
What is booked as 21.6% “Institutional Funds” is largely also “costs not covered by extramural research sponsors.” The label “institutional funds” makes it appear that universities have dollars lying around that get swept up for use in research. But they don’t. “Institutional funds” come from somewhere. Where? University administrators aren’t saying.
University administrations are not in a position to argue that sponsored research loses money because for years they have made it appear to the public and faculty alike that sponsored research is a “source of revenue.” Worse, some institutions, such as the University of California, have formal, fundamental policy statements requiring extramural research to recover the full costs–direct and indirect–of sponsored research. Admitting research loses money is equivalent to admitting that universities have violated policy in their “race to the top” to see who can land the most research awards.
Newfield argues that states should be supplementing federal research grants to public universities. If a federal agency offers $1M to a university to conduct three years of research, then the state should chip in the extra $200K that it typically costs to spend that $1M grant.
From the state’s perspective, when an academic research gets a grant, the state is expected to subsidize that research without ever getting a say in what sort of research, or how much, or with what expected outcomes. The research could be on anything–and not necessarily meaningful even to the industry in the state, since the sponsor could be from out of state, or even out of the country–and somehow university administrators and faculty alike expect the state’s taxpayers to write a happy check to make up what the sponsor is not willing to pay, or what the university is unwilling to charge.
The “high cost of higher education” is not the “high cost of instruction.” When a public research university reports, say, $800M in research awards for the year, the import is “we demand an additional $160M from the state to spend this $800M”–without accounting to anyone, as if it is a right. If the state won’t pay, then the university administrators dip into tuition, rationalizing that the research is good for the university, good for America. But the administrators don’t think the research is important enough for them to take out personal loans or take a cut in pay to support. But they do think it’s fine if students go deep into debt to support university research. That’s where those much of the “institutional funds” come from.
If university research is a public good–and it ought to be–then faculty and administrators need to make a case directly for such research. The argument cannot be “more research is better research.” The argument cannot even be “all research is a public good, just for being called research.” If taxpayers are going to support research, they need to see the results. The argument most certainly cannot be, “we will make students believe they are being subsidized by the state and take the extra money for research,” when it is the administrators who are being subsidized by the state, and students are paying the full cost of their instruction–and more.
Perhaps you see where university technology transfer comes into the picture. Tech transfer is part of the public rhetoric about research. Fund research and there will be inventions. Patent the inventions, and make money for the university. But this is a sloppy argument. If the argument is true, then taxpayers don’t need to fund research, because those lucrative patent licensing royalties will. And if there aren’t lucrative patent licensing royalties to do the job, then it is not the fault of the technology transfer programs–fire as many folks as you want, change the name of the office five times in a decade, reorganize–it is a problem with the conduct of the research. That’s where the argument gets us, like it or not. And the upshot is, most universities are not making anywhere close to enough money from their technology transfer operations to make up for the losses in university research. States are not making anywhere close to enough money in taxes to make up for the losses in university research.
Or, it is a problem with the argument that always more research is better research. That $800M a year for research is a sign of “excellence” when it could be an indication of out-of-control costs, of overcapacity, of taking more than can be usefully spent, of hiding costs of research from those that should pay for that research.
1. Indirect costs charged by public universities are half of those typically charged by industry for similar work. It’s time for indirect cost rate reform. If sponsors want the research done, pay the full cost of doing that research. Why make states pay out of tax dollars for sponsored research shortfalls, when the sponsors apparently don’t want the research done badly enough to pay the going rates in industry?
2. University carrying capacity for research can be exceeded. More research is not necessarily better research. Lots of funding does not mean lots of results. Universities need to reconsider what research they host, and why. Continual expansion is not the answer. Universities need to get off the idea that more research awards is a sign of more “excellence.” It’s not, just as more and more fat is not a sign of better health. At some point, there’s enough fat, and more is a problem. A university can indeed have too much research to manage, exceed its carrying capacity, and enter a space of diminishing returns–expensive administration, lost connection with creative talent, too many rules, and taking resources from other parts of higher education and the state to pay for the empire building.
3. Public research must make a direct public case for subsidies. Private universities can cater to wealthy students and charge whatever they want. But public universities have a different mission, a vitally different mission, and so cannot run up tuition and student debt just to put on a show of appearances. Make the case–show that the rhetoric is valid. No more faked and overstated metrics.
4. Technology transfer cannot be the bottleneck between faculty and industry. It must be a catalyst if it is anything. University patent policies must be reformed to be aligned with research impact, not used to promote the growth of technology transfer programs and metrics. Universities get the money they need when a region is prosperous. Want more research money? Focus on prosperity. For that, start by lowering costs. Tuition, say. Even if that means reducing administrator salaries and backing off on expansion plans.