The Coverage This Week

Coverage of UC this week included a story in the Sacramento Bee on how the University's stated poverty hasn't prevented it from raising salaries at the top. The Los Angeles Times decided that the leading idea from the Monday meeting of the Commission on the Future meeting was changing the term "fee" to the term "tuition."  UCOP has spent much of this crisis year pitching on-line education, but this idea got attention only in its coverage of itself.  It's pretty obvious that on-line ed will have only a marginal, incremental effect on UC's very large educational and financial problems, and it should now be given back to the people who already know something about how it works.

The big financial story was the size of the shortfalls in UC's coverage of its research costs. We've often covered this issue (around UCOF's recs, from a lab perspective, as a pay equity issue, in its administrative details, etc.)  The theme has been that research doesn't make money, but costs money.   A 2003 Senate report demonstrated this, the Council on Governmental Relations has long had non-circulating data on the subject.  Urban legend has convinced generations of scientists that through their grants they were the university's major breadwinners.  For reasons best known to themselves, research administrators let them think this, though they have always known that gross income was accompanied by net loses, and presented that data to each other at professional conferences.  See a particularly good primer, this one from UCSB, that states, "It is less well known that the university provides about 25% of the actual cost of facilities and administrative support for extramurally funded research, over and above what it collects in indirect cost return."

The crisis has for some reason finally caused this news to erupt out of UCOP.   The  size of the loses is remarkable. "UC receives about $3.5 billion a year in research grants and about $780 million to cover indirect expenses such as paying the electricity bill in labs and other facilities. But the actual indirect costs are about $1.5 billion, a $720 million shortfall."  This is a huge number, and it also means that UC provides 48% of the actual costs of facilities and administrative support over and above reimbursements.  Obviously this internal support for research is unsustainable.

Getting the money back is important, but will be easier said than done. Gerald Barnett and I, writing in the Chronicle of Higher Education, suggested a blanket, short-term increase in federal indirect cost recovery rates while real costs get sorted out.  The odds of this happening are rather low. The political question is even more awkward.  Two weeks ago, UCOP said it could cut $500 million in expenses with administrative reforms. Now it turns out it's been losing another $750 million a year in research costs it didn't pursue. This undermines UCOP's right to lecture the campuses about their alleged inefficiencies, weakens public confidence in UCOP's managerial abilities, and gives the legislature no reason to increase state appropriations.  Sure enough, the leg split on the restoration of the one-time $305 million cut, with the relevant Senate committee agreeing only if state revenues are $2 billion greater than the forecast in the May Revise (p 32).

The good news is that the media is starting to realize that UC's businesses aren't doing much for UC education.  In its story, "UC: Millions Lost in Research Costs from Grants,"  (on its way to becoming the title of all UC news titles of the future - "UC: Millions-Billions Lost"), the authors note,

As state funding declines, UC is relying more heavily on private sources of funding such as research grants and hospital fees. Those income sources fuel the university system's medical and research enterprises, and aren't used to pay for basic undergraduate education, which relies on student fees and the state's general fund.

Sorry, that was from the negative Sac Bee story about UC's high end salaries.   But it raises the possibility that the public will increasingly realize the value of direct public funding of the campuses themselves -- if they can be sure education, including research, is what the money will go for.

To inspire such confidence, UCOP will have to be much more straightforward.  On ICR, that would mean saying, "we took losses for two reasons.  First, we did it as a service to our faculty and to the state, because unless we paid indirect costs lots of great research wouldn't get done. Secondly, we took loses because our sponsors forced us to, from federal agencies who short us and require matching payments on some kinds of grants, to industry, which expects the public to subsidize high-risk research. It was great while it lasted, but we can't afford it anymore  We'll have a new proposal for cost recovery in a month."