Mike the Mad Biologist

Someday, a science reporter is going to hybridize with an economics reporter and then the topic of how science is funded will actually be covered accurately. Until then, you’re stuck with the Mad Biologist. By way of The Intersection, we come across this Chronicle of Higher Education commentary by Andrew Hacker and Claudia Dreifus. I think the overall point, which is that colleges and universities have strayed from their core mission, which is education, is a good one. But like much commentary on this subject, it neglects the harsh, cold reality of revenue (Got Pepsi?). Here’s their suggestion regarding high-powered research:

Spin off medical schools, research centers, and institutes. Postgraduate training has a place, as long as it doesn’t divert faculties from working with undergraduates or preoccupy presidents, who should be focusing on education–not angling for another center on antiterrorist technologies. For people who want to do research, plenty of other places exist–the Brookings Institution, the Rand Corporation, the Howard Hughes Medical Institute–all of which do excellent work without university ties. Princeton University has succeeded quite nicely without a medical school–which often becomes the most costly complex on a campus, commandeering resources, attention, and even mission. In fact, the “school” often becomes a minute part of a medical complex: Johns Hopkins has fewer than 500 medical students, but atop them sits an empire with more than 30,000 employees.

Full disclosure: I work at an institute that basically spun itself off. Notice that I didn’t say was spun off by the universities, but, instead, moved away.

And the universities weren’t entirely happy about it. Why?

Money.

I’ve discussed overhead and fringe costs on grants before, so the short version is that on a federal grant, usually somewhere between 30-40% of the total grant award doesn’t go to the researcher for research costs (salaries, supplies, etc.), but to the institution. Now, some of that money is spent on actual administrative costs, but the rest goes to the university*. So if the university spins off $50 million, or $100, or, in the case of the University of Iowa, $169,175,021 of NIH funding alone (never mind other government sources), that’s tens of millions of dollars that have to be recovered.

One option is a Magic Pony that craps platinum bars:

IMG_1877a
If you crapped bars of platinum, you would look like this too. You would not be happy.
(from here)

Meanwhile, on Planet Earth, you either have to raise tuition (or state taxes for public universities), or hope someone ponies up a huge honking endowment. I realize “huge honking” is a highly technical term, so to put some concrete numbers to this, if a university loses $15 million of indirect costs, it needs to raise $300 million of endowment ($15 million is a five percent annual payout).

Since I’ve called for more of a research institute model, I’m not opposed to spinning off research institutes. But I have no idea how universities that receive a lot of research dollars will make up the revenue shortfall. To gain any traction, that brutal reality needs to be addressed.

*A few years back, Stanford got in trouble for using some of this money to buy a yacht to wine and dine potential donors. There are limits, but they are honored mostly in the breach.

Update: ScienceBlogling DrugMonkey has some thoughts about this related to institutional reputation.

Comments

  1. #1 JohnV
    July 15, 2010

    Is the academic overhead rate really only 30-40%? And do research institutions typically have rates inline with universities? The nonprofit that I work at (for the next 2 weeks) has a vastly higher rate.

  2. #2 ecologist
    July 15, 2010

    Slight correction, but an important one. Ready?

    Education is not, and should not be, the core mission of the university.

    The core mission of the university is scholarship. The university is a place in which the creation, transmission, criticism, and development of knowledge is the paramount good. Part of that mission is the transmission of knowledge. Transmission is done by writing (in all the multitude of forms to which that has been generalized by technology), by speaking, by performing, and by educating. So, yes, education is a (important) part of the mission of scholarship, but it is only a part.

    We live in a culture in which “scholarship” gets little respect. “Education” sounds so much more useful, although we have all seen what happens when utility becomes linked to education as the core mission of the university. But scholarship is important.

    So, do not EVER let someone tell you that education is the core mission of the university, and all this pesky research and writing and scholarship is just a distraction. The true relation between education and the rest of the core mission of the university is much more complex and subtle than that.

  3. #3 Eric Lund
    July 15, 2010

    @JohnV: What’s confusing you (and what I had to read twice to understand) is that Mike is referring to the fraction of the total award that goes to overhead, not the overhead rate. The two are related; if the rate is uniform and there are no exclusions then

    percent going to overhead = 100 * overhead percentage / (100 + overhead percentage)

    So if your overhead rate is 50% (a little higher than my actual overhead rate, but somewhat lower than typical for private universities) and there are no exclusions, then 33% of the total amount awarded is overhead. In real life, certain classes of expenses may be exempt from overhead (or possibly subject to different rates depending on sponsor and/or purpose); at my institution grad student tuition is exempt from overhead, as is the amount of any subcontract over $25k.

    Yes, your understanding that non-educational non-profit organizations (let alone for-profit companies) charge higher rates than universities is generally correct.

  4. #4 JohnV
    July 15, 2010

    Ahh there we go. Reading comprehension fail for me :p

  5. #5 DrugMonkey
    July 15, 2010

    JohnV, Eric Lund,

    researchcrossroads.com has a nice little Indirect Cost Agreement search tool. This link may work to take you directly there. otherwise use the navigation bar at the top

  6. #6 JohnV
    July 15, 2010

    Neat tool. Somewhere, however, a database isn’t up to date as it shows my employer at 66% whereas with the least year a new rate was negotiated (8x% can’t remember atm).

  7. #7 DrugMonkey
    July 15, 2010

    Ping, dude.

  8. #8 Morgan Price
    July 15, 2010

    I’m puzzled by the article’s claim that HMMI does excellent work without university ties. I thought HMMI spent most of their money on faculty that are nominated by the universities…

    On another note, I’ve heard many claims that research universities use tuition dollars to subsidize research. So separating the two activities might be painful but would a more undergrad-focused remnant university really end up in the red?

  9. #9 Eric Lund
    July 15, 2010

    I’ve heard many claims that research universities use tuition dollars to subsidize research.

    I have heard such claims as well, and they are almost always false, at least with respect to undergraduate tuition. (There may be an exception in the form of subsidies to involve undergraduates in research, which would be part of the university’s mission; also medical school tuition may well be different, and grad school tuition probably does end up subsidizing something.) At private universities, the student represents a long-term investment that if successful will pay off in alumni contributions to the university, preferably in the form of unrestricted funds (== more money for the endowment). At public universities, there is obviously the state subsidy. Even if the nominal tuition covers the expense of educating the student body, many students are on scholarships and/or financial aid. Endowment income is supposed to cover the shortfall.

  10. #10 mds
    July 15, 2010

    “I’m puzzled by the article’s claim that HMMI does excellent work without university ties. I thought HMMI spent most of their money on faculty that are nominated by the universities…”

    Indeed, most HHMI investigators are also university faculty. HHMI’s new facility in Virginia, Janelia Farm, is an independent research institute, but most HHMI research is done in university labs alongside projects funded by the usual grants. I’d consider this distributed approach superior to building enough institute facilities to accommodate all the researchers they support. Which is one way the article’s argument gets into trouble: there’s a lot of university infrastructure that can be “dual-use” for teaching and research. There’s not enough room or additional funding for all of us in academic research to move into Janelia, Rand, SAIC, etc.

  11. #11 Games With Words
    July 17, 2010

    “Since I’ve called for more of a research institute model, I’m not opposed to spinning off research institutes. But I have no idea how universities that receive a lot of research dollars will make up the revenue shortfall.”

    The easiest way of finding out would be to ask one of the many top-caliber undergraduate institutions that has no graduate programs (Swarthmore, Amherst, Williams, Grinnell, Oberlin). One of the beautiful aspects of American education — as opposed to most of the rest of the world — is that we have such institutions that, for centuries, have been dedicated solely to undergraduate education, and where tenure decisions are based heavily on teaching ability, though (undergraduate-based) research plays a factor as well.

    For some reason, this fact seems to get lost in the discussion.

  12. #12 Youryu
    December 24, 2010

    We live in a culture in which “scholarship” gets little respect. “Education” sounds so much more useful, although we have all seen what happens when utility becomes linked to education as the core mission of the university. But scholarship is important.

  13. #13 Megadosya
    December 24, 2010

    The easiest way of finding out would be to ask one of the many top-caliber undergraduate institutions that has no graduate programs (Swarthmore, Amherst, Williams, Grinnell, Oberlin). One of the beautiful aspects of American education — as opposed to most of the rest of the world — is that we have such institutions that, for centuries, have been dedicated solely to undergraduate education, and where tenure decisions are based heavily on teaching ability, though (undergraduate-based) research plays a factor as well.thank.

  14. #14 Oyun hilesi
    December 24, 2010

    Indeed, most HHMI investigators are also university faculty. HHMI’s new facility in Virginia, Janelia Farm, is an independent research institute, but most HHMI research is done in university labs alongside projects funded by the usual grants. I’d consider this distributed approach superior to building enough institute facilities to accommodate all the researchers they support. Which is one way the article’s argument gets into trouble: there’s a lot of university infrastructure that can be “dual-use” for teaching and research. There’s not enough room or additional funding for all of us in academic

  15. #15 Tek Link
    December 24, 2010

    So, do not EVER let someone tell you that education is the core mission of the university, and all this pesky research and writing and scholarship is just a distraction. The true relation between education and the rest of the core mission of the university is much more complex and subtle than that.

The site is currently under maintenance and will be back shortly. New comments have been disabled during this time, please check back soon.