This post continues Part 1 and Part 2
Part 3: Does extramural research pay for itself?
Extramurally funded research has sometimes been described as "revenue generating". In fact, the leaders of our research unit have argued to higher administrators that we should not suffer further budget cuts because we provide a large amount of indirect cost recovery (ICR) to UC (so far this argument has not been successful). Does extramurally funded research actually pay for itself? My guess is that the answer depends on how costs are counted and what is considered to be a payoff. It turns out that our research unit currently generates more ICR for UC per year than we receive from UC in core funding per year, so by that limited measure extramurally funded research does come out positive. But does it pay for itself when ALL costs are considered, such as building construction and maintenance, libraries, staff to do the contracts and grants paperwork, etc.? That seems less likely.
Even if extramurally funded research were a net financial positive for UC, I doubt that it could be a long-term benefit to the general budget. Faculty who bring in considerable outside funding do not do so to subsidize the rest of the system -- if they are squeezed too much, they will leave for another institution that provides more resources. Moreover, it seems that those faculty members who are effective at getting more funding from sources outside UC also happen to be quite effective at getting more discretionary funding from within UC. For this reason, I think the question of whether extramurally funded research is a net positive or negative is immaterial -- any positive can never be of general benefit, except in the short term. What really matters is whether the research is worth the cost to UC in the long term.
Of course, it would be beneficial if UC could raise the indirect cost rate on federally funded research above ~54% (but at least that is considerably higher than the 10% rate I've received for state funded research). It would be interesting to know why private research universities are able to negotiate higher indirect rates than public universities. I calculate that UC income from federal research would increase by 8% if we were to receive the Harvard indirect cost rate (67%), corresponding to an additional $180 million for UC, thus filling in a large portion of the cut in state funding. On the other hand, it will be difficult for UC to argue for a higher indirect rate to cover the full cost of research when UC is currently using a substantial fraction of ICR as discretionary funds rather than reimbursing the actual indirect costs of research. The return of only one third of ICR to our research unit is not sufficient to maintain the infrastructure, but at least one third is higher than the fraction we used to receive.
If there is no direct financial payoff to extramurally funded research, why is everyone, including historically teaching-only institutions, trying to do more of it? Extramural funding has a perceived indirect payoff in that it is reputation-enhancing, both by direct measure of the funding level and by the increased research that it supports. Institutions with greater reputations can attract more private donations and find more students willing to pay higher tuition. This system of seeking after ever more extramural funding is not sustainable, however. The number of institutions, PIs, and grant proposals increases faster than the federal science budget, thus yielding diminishing returns on invested time and effort. There will be a big crunch the next time the federal science budget goes flat.
Part 4: Privatization?
There has been much talk about the "privatization" of UC (e.g., substitution of student tuition for state support). Our research unit is explicitly following that path, except that we are attempting to substitute private philanthropy for state support. Our long-term goal is to become as well endowed as other research institutions in our discipline that were built up without previous years of generous state support. It's true that the market goes down at times, but at least it comes back up again. State support, especially for research, only goes down. For example, when UC finally managed to get the legislature to restore a cut in state research funding several years ago, it was line-item vetoed by the governor.
Increases in UC tuition do not affect our graduate students because their tuition is paid by grants and a few other sources. Tuition increases are a slight burden on grants, especially when they unexpectedly occur midcycle, but we have been able to handle it so far. Since the tuition paid for our graduate students does not return to us, we have no incentive to raise it, aside from the fact that it will increase revenue to UC overall.
Some faculty have expressed the desire to somehow disaffiliate from UC, reasoning that we would be better off alone because the ICR we generate for UC exceeds the core funding UC provides to us. Considering all the factors, though, I'm not certain the numbers would work out in the black (putting aside the issue of ownership of the land and buildings). But this sentiment does illustrate the deep dissatisfaction over the low level of service and infrastructure maintenance we receive for all the ICR we provide to UC. UCOP is especially disliked since it skims off a large amount of money without providing much obvious value in return.
From what I've heard, our faculty support the values of "maintaining excellence" and "encouraging entrepreneurship" because they believe our unit will fare better under those criteria. We've been disappointed, however, that the reality has not yet matched the rhetoric and that cuts have been applied across the board at the system-wide and campus level rather than selectively directed at particular units (other than ourselves). Our fear is that cuts will be applied to our unit at a rate faster than we can accommodate and that we will lose our excellence in research -- followed by loss of top-notch colleagues and high-quality graduate students and diminishing extramural funding and private donations.
2 hours ago