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Sunday, January 16, 2011

Sunday, January 16, 2011

Ending a Bad UC Week: What Points Might Help Turn Things Around?

This was one of the worst weeks in recent UC,CSU, and CCC history, as the new Democratic governor dished out triple $500 million cuts to all the segments ($400 m to the community colleges), thus matching the cutting record of his Republican predecessor.  Comments on this blog and elsewhere suggest that some people think this is a clever political ploy, but many people are on the verge of giving up on the idea that California higher ed will ever recover under our political system. 

In the midst of this, there was something oddly cheerful about UC President Mark Yudof's conversation with Patt Morrison in the Los Angeles Times. He may have felt obligated to exude a leader-like calm. Under the circumstances, it would be better to exude a leader-like determination to go full tilt at the emergency.

In content  it was one of Yudof's  best press outlings since he arrived at UC.

The Good:
  • Full cost accounting for Brown's proposed state cuts: "Remember, it's not $500 million, it's really closer to a billion, because unlike community colleges and state colleges, the state doesn't give us money for employer contributions to the pension plan, so that raises the real cost [of the cuts] to $700 million; then you have union contracts, energy contracts, inflationary increases -- we really have a billion-dollar problem."
  • The racial dimension of underfunding. This issue rarely gets broached in print, but it has to be. Here, Yudof says,"The truth is, the deterioration of [education] funding predates this horrendous Great Recession. It's not like things went really great between 1990 and 2007, and then all of a sudden we had this problem. Some of it's driven by demographics -- an aging population of voters [worried about] Social Security and police protection. We have a huge demographic of Hispanic youngsters. It's no time to trim back and say, well, they're not our children; well, they are our children, maybe not biologically, but they're our children."  Scratch the biological othering and you have an important statement of a major origin of our self-dissolution. 
  • Great salaries are not the UC norm: " [In] the nation's 62 top universities, our highest [paid] chancellor ranks 50th. And the chair of the group, from Santa Barbara, ranks dead last."  Incidentally, Henry Yang, UCSB's chancellor, is also the longest-serving chancellor in the system.
  • Centrality of Higher Ed to the Future. "Who's going to train the nurses, the veterinarians? Who's going to invent the better solar panels? Who's going to make sure the crops are safe? Business is not doing this.  If we eat our seed corn, to use a Texas analogy, there's not going to be anything to support these programs. You have to create the basis for long-term prosperity."
The not-so-good
  • Leading with the Pension Problem. "We have a $20-billion shortfall, long run, in the pension plan. I think it's going to take 20 years to dig our way out, but we have a plan."  No one wants to hear about UC's $20 billion pension hole -- out of context.  In addition to the New Year's Gang of 36 fiasco that sustained UC's reputation as rich enough to sponsor both high executive salaries and continuous internal maneuvering for bigger perks, the Right has turned cutting public pensions into a national crusade. The Economist declared war in a recent cover story, "The Battle Ahead,"  The Weekly Standard is pushing the idea that states should be able to declare bankruptcy so they can default on their obligations to public employees.  There are dozens of these examples, many with the intent of distracting from real economic problems like the transforming of private into public debt and the country's lack of viable innovation and employment policies.  Better either to engage and explain decent pensions as, among other socially-important things, compensation for UC's sub-market salaries, or say nothing at all.
  • Same Old Wrong Claim that the Humanities and Social Sciences Lose Money. "We roughly have a $20-billion budget; $3 billion comes from the state. That's the English department, the Spanish department, economics -- that have difficulty generating the big outside grants. I love the humanities; I'm a creature of the humanities. But the engineering colleges are going to bring in more external research support, and that money's crucial."  Mais non, c'est faux!  In fact, the big outside grants lose money, and are supported in part by cross-subsidies from high-enrollment fields in and out of the science and engineering fields that bring in big, important, and yet very costly grants.  UC has officially acknowledged this. For example, the third sentence of a Regents's item in November 2010 reads, "The UC system incurs $600 million in unreimbursed indirect costs every year."  A San Francisco Chronicle report on the original UCOF discussion of this issue put the figure at $720 million on $3.5 billion in research revenues, or a loss of about 20 cents on the research dollar. The Academic Senate's indirect cost recovery report calcuates that ICR is about 25% while true indirect costs "appear to be in the 65-70% range" (p 5).  Mark Yudof's repeated misstatement on this has at least two bad outcomes: (1) it undoes emerging public awareness of why education is so expensive; (2) it undoes emerging awareness among scientists that they are not huge profit centers for the university.  Science research should have more funding, not less (as should the social sciences, arts, and humanities, which are pitiful also-rans). But research should be fully funded and thus not damage the finances of struggling public universities. If Mark Yudof can't be clear about this, how can we find any of the $500 million in internal savings we will need six months from now?
  • Lionizing Arnold Schwarzenegger as the Education Governor. "[Former Gov.] Schwarzenegger had a huge regard for higher education. He understood its role in economic development. Great research universities take a long time to build and can be destroyed in a very short period of time; he understood that."  In reality, no modern California governor whacked higher ed like Arnold did, early and often.  He forced a Compact on UC and CSU that held down budget growth in good years, obligated annual tuition increases at 2-4 times the rate of inflation, and mandated infinite private fundraising to try (in vain) to fill operational holes.  He then welched on the Compact in a heartbeat in 2008 and cut UC 20%. He also crusaded tirelessly against public services in general, and tried to eliminate the UC pension along with those of all other state workers in 2005.  If the president of UC thinks this guy was a great higher education governor, then the UC president likes cuts and increasing dependence on private funds.  Mark Yudof clearly says he likes neither, so this kind of politicking should stop. 
  • Letting Jerry Brown off the hook.  Why not instead say, "I know a lot about budget deficits. But budget deficits are no excuse for unraveling a great public university system."  
  • Mixed Signals on Tuition Increases. "We've hit the students very hard, roughly 40% [of increases] in the last three years, I think. What we've given back? If you have a family income of $80,000 a year and you're financial-aid eligible, you don't pay tuition. I thought that was pretty good. And we didn't apply the increase to students [with family incomes] between $80,000 and $120,000."  So we didn't hit the students hard?  Full cost of attendance is making UC less affordable for low-income students, who in spite of Blue-and-Gold assurances borrow more both in percentage and absolute terms than do students of the middle-class.  UC needs to be much clearer that in spite of all the University tries to do, and its genuine good intentions, it cannot sustain student access with incessant, gigantic state funding cuts.
The omitted:
  • Credible internal budgeting and operating reforms that will lead to real savings. I don't mean this $500 million in "administrative savings" floated last year by CFO Peter Taylor, (and I certainly hope that the Brown administration didn't get its $500 miillion cuts figure from that claim).  I mean concrete measures to respond to many stakeholders' legitimate concerns about UC's opaque budgeting and fund distribution, not to mention concerns about unfair distributions of resources and operational blockages of the kinds frontline faculty and staff know all about.  Given Brown's statement that he will work wilth all "stakeholders," Mark Yudof should sponsor real cross-functional collaborations, and assure the public that all parts of the UC community, including the dreaded unions that represent close to half of all employees, will be full participants.
  • A timeline for public funding recovery.  Would it be possible for our president to say, "our plan, after making proportionately enormous sacrifices to the state deficit for the umptheeth time, is to rebuild funding to the $3 billion level by 2013-2014, and $4 billion by two years after that. Otherwise, I truly hate to say, we will be looking at $20,000 tuition for undergraduates.  Nobody wants that, but we have a duty to our students to protect quality, so we will do that if the state forces us to."
  • Presentation of UC, CSU, and the CCC as a counter-cyclical economic stimulus.   This is a no-brainer.  Jerry Brown is taking up the Arnold Herbert Hoover non-stimulation of the California economy that the last governor got such a good start on. All higher ed leaders should do this every chance they get.  People give a vote of half-confidence to austerity because the folks in charge offer no alternative.
  • A statement about the educational emergency. The deep crisis is not the budget crisis, it's the education crisis.  It's also the public services crisis --the meltdown in the high quality infrastructure and services that enable the creative, satisfied, productive population of today and tomorrow, with higher education being Exhibit A. California educational attainment has crashed, and both social and economic decline are already following. This has to stop. If we wait until the economy recovers, the economy isn't going to recover.
Somebody recently pointed out that institutions and societies don't fail because they never get second chances. They fail because they blow their second chances, and their third and fourth and fifth and sixth chances too.  Brown's budget is another chance to make our case, and Mark Yudof's interview suggests UCOP is somewhat more ready not to miss it.

They will need every last one of us to help them.


Anonymous said...

I'm guessing Yudof made some of the arguments you think omitted and reporter/editor edited them out or didn't have space to include them -- I thought it was a pretty good piece considering how the press usually mangles these things. For a counter example, look at this week's SF Bay Guardian where they hammer UC for student debt but the photos are of students accruing debt at private universities and the coverage not once mentions financial aid actions taken by UC to mitigate fee increases.

Anonymous said...

The blog post is wonderful- analytic, thoughtful, incisive. Bravo.
It is also hopelessly out of touch with the reality of most taxpayers. They don't want to pay more for UC or mitigate its cuts. They have their own problems. Brown's plan to raise taxes through the ballot will fail (it might not even make it to a vote) and the UC cut will double. UC's days as a largely state supported institution are through. Get over it.

Anonymous said...

Here is an alternative:

rather than trying to save the status quo ante (which is gone) or fight against privatization (valid as that fight might be), re-focus on a completely different direction and tactic to open a larger public debate about not just UC, but about all public services.

We can do that with UC by challenging the traditional one-fee-fits-all-Californian tuition structure. It is a regressive gift to the rich and upper middle class, and as tuition has risen the social consequences of this maldistribution have grown worse.

If the people of california will not demand that the wealthy and corporations pay adequately for public services, then it is unconscionable that the wealthy and upper middle class should continue to benefit disproportionately from the UC and CSU systems.

Tuition should be need based, on a sliding scale that does not provide a heavy subsidy for the wealthy.

This applies not just to UC, but to all manner of public services.

The big lie has been that public services are only for the poor, and we have not challenged this lie in an effective way. We need to do more than just say it is a lie. We can show it is a lie by making the wealthy and upper middle class pay the market rate for what their children get when they attend UC.

The wealthy get a $15,000-$25,000 subsidy when they send their children to UC rather than a private school. Why don;t we make that the issue?

Anonymous said...

Anonymous at 8:41 AM makes wonderful points but I don't think anyone outside UC is interested in "a larger public debate". I am not even sure they are interested in soaking the rich, however enjoyable that might be. And Brown has made it clear he doesn't want further tuition increases. So here is what we face:

The cut of $500M for UC translates to about $75M for my campus. Of our state funds about 80% are allocated to salary & benefits. That is split about evenly between faculty (40% of the state funds) and staff (another 40%).

You can't cut the faculty except very slowly through retirements, and there is always heavy pressure for new faculty hires to meet academic goals. I am not convinced that faculty numbers will go down.

That leaves the 40% of campus state funds spent on staff. The path is clear, the decision obvious - get rid of LOTS of staff.

Assuming a $50K average salary and another $20K in benefits, ridding my campus of ~1,000 staff saves ~$70M. At the same time this protects instruction, the heart of the university.

I am sure similar numbers apply to other campuses. Its time to stop blathering about "organizational excellence" and just make the cuts.

Anonymous said...

There really is no proof that research is subsidized at UC by cross-subsidization. What UC does not get from ICR that the Rand studies claim UC should get UC simply never spends at all. Ask anyone who brings in a research grant and tries to get the plumbing fixed in their labs, or simply tries to get financial data on their grant out of the 30+ year old computer system.

Anonymous said...

And this just in - the faculty are making a major pitch to the regents to increase their salaries.


Nice timing guys. Taxpayers are overburdened, students are overcharged, and you all want way more money. This is the sort of thinking that got the Gilded 36 in trouble.

close_reader said...

@anonymous at 8:47pm - read the links. The "proof" has been there for years, at Regental and at local levels. The money is being spent on infrastructure - buildings built in anticipation of ICR (look at all the CalISI budgets, at Riverside and Merced budgets, at medical or health science building proposal - look anywhere). Look at the Senate reports (at least three over the past decade), or the Regents' website. Grants do not even begin to cover the cost of utilities, accounting, health and safety administration, grant administration, etc. Each campus takes pride in building those things for prestige, in the hope of one day breaking even.

Anonymous said...

Look also at DANR, the Division of Agriculture and Natural Researches (where no teaching happens and yet tons of UC money is expended on research). Look at QB3 (California Institute for Quantitative Biosciences), CITRIS (Center for Information Technology Research in the Interest of Society), UCHRI (UC Humanities Research Institute), CNSI (California Nanosystems Institute), CCREC (Center for Collaborative Research for an Equitable California), Calit2 (California Institute for Telecommunications and Information Technology) and IGCC (Institute on Global Conflict and Cooperation).

Chris Newfield said...

Thanks for the comments. Anon 1:22 - the LAT and Bay Guardian pieces each have their limits, but we need a much more honest discussion about the inability of the Blue and Gold plan to cover the cost of instruction, about the real hardships faced by low-income students, and about the fact that low-income students borrow more, not less, than middle-income students. Higher ed leaders need to stop saying that the main victims of tuition hikes are middle-class students. It's not true, and it contributes to the middle class refusal to raise taxes, which is a topic of many of the other comments.

Anons 6:06 and 8:41. Taxpayers' problems have been made worse for decades by the decline of cost-sharing for high-quality public services. When a neighbor pays property taxes, then pays tuition at a Catholic grammar and high school for her 5 kids because the local publics aren't good, she's paying twice for local schools. It would be far cheaper to pay for good public schools in the first place. Ditto the folks who pay for private health insurance access to private hospitals for their families: if public hospitals were properly staffed, they would save say $700 a month by feeling OK about public hospitals. We're now doing to UC, CSU and CCC - I mean our new Democrat governer is doing - what "we" did to K-12 and the health care system. It is grossly inefficient because it violates the fundamental principle of mutualizing the costs of common goods that helped make the United States a GENERALLY prosperous society for a few decades. I don't accept the new normal because it will send the vast majority of Californians back to the futile hardships of the pre-WWII past, something I was raised hearing about from my own grandparents in addition to my formal training. Yudof, Brown, et al have not yet begun to make that case correctly. Anon 8:41's suggestion may be part of the solution, but then it's a form of progressive taxation that would be better (more efficient) if applied to the state as a whole. Yes that means raising taxes by a few percent on people that make more than $500,000 a year, and over $1 m a year. Look at historic tax rates during the US golden age (http://www.taxfoundation.org/publications/show/151.html) and ask whether our top 1%, which has tripled its share of national wealth since Reagan's presidency, has done something to deserve immunity the other 99% don't have from the fate of the surrounding society from which they so enormously benefit.

To Anon 9:21 - I don't see a call for immediate salary increases in this doc. I see a lot of data on compensation that points out problems for the University: an aging faculty, increasing proportions of non-ladder appointments, a salary gap of 11.2% behind the Comp 8 average, and an accelerlation of private U salaries away from the publics'. All this is bad for the 80% of students who go to public universities in general and for UC students in particular.

Anon 9:41: The idea of wholesale firings of staff is operationally self-destructive and morally unacceptable. If we can't come up with more positive and unifying solutions to our common problems, we will never recover!

Anonymous said...

Anon 9:41, firing the staff is not just immoral, but also short-sighted. What are we going to do when the next $500M cut comes down? Fire another 1,000? Do we have to get to the point where there is nobody left to answer the phones before we see that this solution does not work?

Anonymous said...

Anon 9:41:
Do you really work at UC and have so little regard or understanding of the work that lower level staff do on campus? UC will keep cutting staff until it is "broken" and nothing gets done any more. Including scheduling classes, processing your reimbursements, advising of graduate students, cleaning your floors, representing UC to the general public, paying of bills and following state and federal compliance regulations (which have added to staff workloads immensely over the past 20 years).

Perhaps everyone should be laid off except for me and you....and sometimes I wonder a bit if that job that you hold is truly necessary!

Anonymous said...

We shouldn't forget that on top of the impending State budget cuts we also have the Regent's commitment to significantly increase employer and employee contributions to UCRP over the next few years.

And as someone mentioned above, it's quite likely that Brown won't get the extension of the tax cuts he figured on.

All in all, it looks like we are truly facing dire financial times ahead.

IMHO, UC could be forced to lay off thousands of employees before this is over.

Anonymous said...

Ok I agree firing of staff is immoral...and shortsighted...and will leave the university in bad shape.

But we are facing a $500M cut (which as Yudof notes in the original post is actually in effect really a $700M cut).

The Gov has said we can't raise fees or he will cut even more state money.

We can't cut faculty and we shouldn't reduce instruction.

Where is the $700M cut supposed to come from?

$700M is a big number. Most state support to a campus is spent on salaries. How can you cut $700M without causing a large number of (non-faculty) people to lose their jobs?

If someone can explain to me how we can meet a $700M cut while protecting all the faculty (mandatory) and staff positions please post it here.

At some point the math takes over.
1) A $700M cut.
2) Most state money is spent on salaries & benefits.
3) No increase in fees
4) Can't lay off faculty

What does that leave?

Anonymous said...

What Anon 12:29 is describing is a non-tenable situation. The university will pretty much cease to function if it lays off vast numbers of staff. It would have to close multiple departments, which would then adversely affect faculty. Given the rules of the game described above, assuming those are indeed the rules of the game, it isn't going to work and UC is already broken, it just hasn't fully collapsed yet.

Anonymous said...

Yet this is the text of a memo we have just received regarding how to alleviate the anxiety staff are feeling as these new announcements about layoffs are coming out:

"The purpose of Operational Excellence is to create a culture of world-class operations in support of
our world-class teaching and research. By clearly articulating how the changes in your unit will help achieve this purpose, you will help your employees move beyond their apprehensions about current
changes and reinvigorate them for the tasks ahead."

Nothing about those nasty ol' budget necessities. It's all because we have recently started to crave excellence, and every employee should be ready and willing to sacrifice her/his livelihood if it has been determined to be standing in the way of this world-class excellence.

Just how stupid do they think we are?

Anonymous said...

close_reader Re: Indirect costs.

The costs you cite are fallacious. New (empty) buildings should not be charged as indirect costs of research. They might be, but this is just an administrative trick to argue for more federal money.

Faculty with large grants are frustrated by this. They know that they can form an independent Institute, move off campus, pay rent, utilities, and salaries out of indirect costs on their grants and come out way ahead. Some have done this.

To say that science and engineering is losing money for the university is just wrong.

Do you really think the university would be better off financially turning down all federal research grants?

Anonymous said...

In answer to Anon at 1:32PM-

They think we are REALLY stupid. And child-like besides.

cloudminder said...

this comment made by "former ucb employee":
"You ask who is being "voluntarily" separated from their jobs.( I think you are exactly right to put that word in quotes!) In my former department (I was laid off last year) this was accomplished in a couple of ways. The first way was by the administration of the department determining that a certain position could be eliminated, and then telling the person holding the position that she had a choice: she could "bump" a person from another position (because she had more seniority) and take it, leaving that person unemployed (an awkward situation!) So the person getting laid off was *not* the person whose job was eliminated, but a more recent employee with no say in the matter. At least in one case I know of, a woman refused to "bump" someone, so she agreed to be separated from the university. I would hardly call this "voluntary", though.
The other way was to pressure employees who were 62, 63 years old to retire. Some of these people went willingly but others weren't planning on retiring so early.
I agree with other commenters that there should be more emphasis on trimming the ranks of the top administration. So many of these jobs are totally unnecessary to the core functions of UC, but the elite protect their own, so no big surprise there.
Today, 9:55:50 AM"

posted at this story Operational Excellence Efforts Under Way
is really disturbing for what it portends about the future culture and morale at all UC campuses :

1-those employees who bump will still feel targeted for future layoff, termination.

2-those employees who are vulnerable to being bumped are not going to feel a part of a "team"- etc.

it just gets worse and worse.
and of course the news stories on the budget cuts all say that there will be additional cuts in future years.
what a mess- a real mess.

cloudminder said...

this comment made by "former ucb employee":
You ask who is being "voluntarily" separated from their jobs.( I think you are exactly right to put that word in quotes!) In my former department (I was laid off last year) this was accomplished in a couple of ways. The first way was by the administration of the department determining that a certain position could be eliminated, and then telling the person holding the position that she had a choice: she could "bump" a person from another position (because she had more seniority) and take it, leaving that person unemployed (an awkward situation!) So the person getting laid off was *not* the person whose job was eliminated, but a more recent employee with no say in the matter. At least in one case I know of, a woman refused to "bump" someone, so she agreed to be separated from the university. I would hardly call this "voluntary", though.
The other way was to pressure employees who were 62, 63 years old to retire. Some of these people went willingly but others weren't planning on retiring so early.
I agree with other commenters that there should be more emphasis on trimming the ranks of the top administration. So many of these jobs are totally unnecessary to the core functions of UC, but the elite protect their own, so no big surprise there.
Today, 9:55:50 AM

posted at this story Operational Excellence Efforts Under Way

cloudminder said...

(cont.)the above is really disturbing for what it portends about the future culture and morale at all UC campuses -
1-those employees who bump will still feel targeted,
2-those employees who are vulnerable to being bumped are not going to feel a part of a "team"- etc.
and of course the news stories on the budget cuts say that there will be additional cuts in future years.

Anonymous said...

re cloudminder's comment on the effects of future UC culture and morale, one wonders also how the two-tier pension system will change the political/cultural environment.

For example, how will cultural changes related to the two-tier pension system impact the likelihood of resumed State contributions to UCRP?

At present there is some hope, albeit a constantly diminishing hope, that the State will one day resume its contributions to UCRP. However won't the State's sympathy for UC employees and thus the its probability of restarting its UCRP contributions diminish in direct proportion to the salience of the UC two-tier pension culture, since after all, the proportion of UC employees who would benefit from the restarted State contributions will be in constant decline?

Or, put differently, why should the State demonstrate sympathy for the retirement needs of the vested employees if the vested UC employees are not demonstrating sympathy for the retirement needs of the new and future UC employees?

Gerry Barnett said...

Anon 12:29 lays out the standard premise of the present rhetoric nicely. One answer is "new sources of revenue". This leads to more jobs in development (more donors), technology transfer and corporate research (more companies paying), financial aid services (help students get loans), and retention (keep the students already in the system paying). This leads to an argument for *more administration* and, because these roles are *crucial*, thus also to *well paid administration*. It's not like there is a faculty or community outcry for this stuff. No need. It all seems perfectly reasonable, almost natural in its necessity.

This rhetorical positioning also leads to "the new sources of revenue will take time to develop". So we still need to "privatize", meaning impose financial discipline and focus on profit by means of analogy to "shareholder accountability" (or, "run like a business") and raise tuition to function on the model of private institutions.

In this mindset, $20K a year--even $25K--for tuition is still a great bargain, the impact is mitigated by more financial aid, and the higher tuition is justified because the university admits the proposition that the public should not be subsidizing the private credentialing of those with the ability to pay.

In the "it's natural to derive from your assumptions what you have contributed to them" dept, one might see such moves as inevitable, given the circumstances. If you don't like firing people and ruining the whole show, then we will have to add administrative positions in critical roles and raise tuition, saving the university as we know it. In the meantime, fire the weak and vulnerable and concentrate on income-producing activities.

There are alternatives to all this--in the statement of premises, in the rhetorical development, in the actions that may be taken. It's just that once the university is on this particular chosen pathway, why would anyone introduce doubt and inefficiency that merely adds costs and delays the inevitable?

Chris Newfield said...

On the research costs issue - I certainly want UC to keep and add to its grants. I just want them to be correctly budgeted. The suggestion that faculty could take their grants off campus into an institute is a very interesting one. I discuss a teaching version of the same idea in the talk linked at the bottom of this post (http://utotherescue.blogspot.com/2011/01/at-mla-view-from-2020.html). FAculty from all fields are starting to raise the question of whether the infrastructure is in a sense paying its way -- could we do better in "bootleg universities" without a built-out environment that seems to spend increasing amounts of time and money on its own metabolism? The answer will be different under different circumstances, and we need to discuss this across disciplines and not let this become an arts vs. sciences debate.

fwiw, I agree with the sense of "checkmate" in Anon 12:29 among others, and with Gerry's sense of the circularity of the current logic. This is what needs to be broken open with new organizational ideas.

JoelN said...

There are, in fact, PI owned and operated private research organizations that thrive with an overhead rate considerably below UC's rate. It's not inevitable that extramurally-funded research never pays for itself.

cloudminder said...

yes JoelN exactly.
you have used the word "private"- the electric third rail. no one in power wants to discuss them by name and in detail to say what they give and what they take from the university- and who suffers for it- this is the big problem.
i don't understand the difference between those setups and a "bootleg institution"?

JoelN said...


These private PI-owned organizations have no affiliation with any university. Individual PI's fund their own salaries through grants and whatever commercial/consulting business they can scrounge up. They're just like soft-money researchers at UC, except things are better run in the private organization.

I don't understand what you mean by a "bootleg institution".

Gerry Barnett said...

If one looks at the F&A, the big problem is that the federal government limits the A portion--administration--to 26%. No matter what the total indirect cost rate is, the A part is 26%--all one can negotiate up is facilities. If a university cannot keep its A under 26%, it has to subsidize. Either more efficient, or fewer positions, or paid lower salaries.

Rather than privatizing instruction via student debt, threatening attainment, why not go ahead and privatize a whole lot of extramural research. More Institutes for Systems Biology, run privately, with focus, with big-time A efficiencies. It appears that in expansion of research, A does not provide an economy of scale, but rather just the opposite--more overhead, more risk adversity, more levels of review, more thumbs in the pie.

Privatizing extramural research to non-profits off campus (or even in leased space on campus, like HHMI is provided with) would be good for innovation, good for industry relationships, good for doing more with less overhead, and good for focus, decision-making, and risk management. Do it. Unload 75% of extramural research. It will save money, stimulate the economy, and eliminate layers and layers of administration.

Michael Meranze said...

JoeIN and Gerry--

I am curious--and that is not a rhetorical device, I am genuinely curious--about how these private institutes that exist (and that Gerry is calling for expanding) would relate to instruction. JoeIN says that they are not connected to universities in any way--so that would mean that they don't involve teaching correct? So are you proposing that there be a total break between teaching and research institutes? Are these PIs buying their time out (and then what happens with retirement and benefits etc)? It is one thing to say that PIs can organize private research consortium but I am not sure how that would help those who remain in the university.

cloudminder said...

how would a bootleg institute be different from something like this?:

or would it be the same?

Gerry Barnett said...

There are all sorts of private institutes that may have strong relationships with universities and yet be independent administratively. In Seattle, this is the case, for instance, with the University of Washington and the Fred Hutchinson Cancer Research Center. There are opportunities for internships, research assistant appointments, and post doc positions, just as in a university, and in collaboration with a university, but administrated independently.

MSRI looks like a fine instance. Oregon Research Institute is another. In Santa Cruz, the New Teacher Center should be, but can't get free of the UC campus. The faculty need to be able to move between their public duties and their private ones, just as they do now for duties with scholarly journals, say. That's something UC treats as conflict of interest, but that's because UC insists on claiming research and inventions, when it could let these go.

I helped Behavioral Tech, another instance, get out of UW some time ago. Any number of small companies are formed by faculty to go after SBIR and STTR grants, often subcontracting research to universities. Any and all of these are possibilities.

The UC does not lose anything important in helping research units form independently except bragging rights for a big, useless number that misleads the public as to its resources. It gains a great deal. It gains focus (on departmental research, on instruction, on professional programs), it sheds wasteful administration, and an A cap at 26% that it cannot get under without reducing its research and focusing its research. It keeps donations, it keeps grants without huge compliance overhead, it keeps its medical research where that is integrated into patient care. It keeps its faculty. Private research is just another practice plan, like biomedical has now.

The government has government-owned contractor- operated labs and government-owned, government-operated labs. UC could have UC-owned, private- contractor operated labs as well, and entirely private, non-profit research centers on campus, such HHMI does now. Make that the standard, not an exception.

Privatizing chunks of extramural research would be the single greatest release of public value that UC could do. I have worked as point for industry sponsored research and IP at UC, and I have would jumped at the chance for putting research in its own organizational packaging and creating operating relationships matched to objectives.

Oh, and doing so might finally after decades bring UC into compliance with its own Regulation 4, II, 3: "For all tests and investigations made for agencies outside the University, a charge shall be made sufficient to cover all expenses, both direct and indirect." Gosh, and folks have been losing millions for years, not complying with policy.

In a focused, independent research institute, no PI can afford to pass costs off onto administration or ignore compliance--because it's not someone else's problem lost in a huge bureaucracy.

Gerry Barnett said...

In response to Michael, not a complete separation. There is still department research, still focused research supported by foundations and industry through donations. Free the research, however, that isn't tightly bound to instruction. Let that research connect with its sponsors, with the public without the overhead of state agency requirements, without the legacy of every problem ever encountered in UC that has made its way into policy.

The Free Research Movement. Sounds like something for Berkeley to launch.

Gerry Barnett said...

Oh, and I meant that UC treats moving between public and private research duties as conflicting, not journal editing. Academic Personnel Manual 025-10c(1)puts research into Category I activities--which are said to "on their face raise conflicts of commitment": "Administering a grant outside the University that would ordinarily be conducted under the auspices of the University, which is generally not allowable (see the Policy on the Requirement to Submit Proposals and to Receive Awards for Grants and Contracts through the University (12/15/94))."

Acting as an editor for a professional journal, however, is a Category III activity. Category III activities are "integral to all disciplines and ordinarily do not present issues of conflict of commitment. They are accepted as part of the faculty member’s scholarly and creative work. Even if compensated, they are allowable and not counted within the 39/48-day limit.

Change research administration and receiving salary for it to Category III, provided the organization is a non-profit or if a for-profit does not require a confidentiality agreement or restriction on publication other than to comply with federal and state regulations and contract requirements (like HIPAA or Bayh-Dole).


JoelN said...


A lot of research that goes on in public universities is done by soft-money PIs, who have no teaching responsibilities. These private research organizations are really a home for soft-money researchers rather than ladder-rank faculty. The PIs in a private research organization get their benefits and retirement from that organization. If they are affiliated with a university, it would be through appointment as adjunct.

I'm not advocating that all research be moved out of the university and into private organizations -- I'm just saying that the existence of these organizations demonstrates that extramurally-funded research can be done on a cost-neutral basis. In an focused, independent research institute, as Gerry says, the PIs all have a mutual incentive to make sure revenues meet costs. They also can be assured that indirect cost recovery from their grants will be returned to support them rather than sent elsewhere at the whim of higher-level administration.

Bob Samuels said...

I will be meeting with several legislators next week and here is the outline of the plan I am working on: make a deal with the state where they reduce the budget cut by $250 million if the UC reduces its administrative costs by $250 million. If we take into account the tuition increase, the total reduction is actually $138 million. We also ask the state to start contributing $100 million to the pension plan, and the other $91 million will be borrowed from STIP.

If over the next few years, we increase nonresident enrollments by 10,000 (each now pays $34,000), we bring in an additional $340 million. If we increase our indirect cost recovery rate by 10%, we bring in $400 million.

This is a growth model that does not require enrollment reductions, fee increases, or layoffs. It does require hiring more assistant professors and lecturers, but ones dedicated to teaching. Campuses will have to have more classes throughout the day, but there will no need for more classrooms. Also, more lower division students means more revenue for everything else (including research).

Gerry Barnett said...

UC cannot increase the F&A for federal grants unilaterally. It is a negotiation with a federal agency on behalf of the government and has to be supported by compelling financials. The A portion is capped at 26% anyway, so all that's being negotiated in an increase in the overall rate is facilities. PIs don't want a higher F&A rate, for all that, because it makes them less competitive for grants. Program officers at agencies don't like F&A going higher because that means fewer grants awarded.

Further, increasing F&A may mean fewer grants awarded, and that in turn will diminish any return that one may be anticipating. There is no law that UC research awards will always be more than last year.

Where UC can deal with changes in F&A is in industry and foundation awards, since those do not carry the same cap on A. But this won't result in huge income gains because so much of UC's research is federal.

Without reform of research administration, any effort to cut UC "administration" will mean more cuts to departments, more excellence, so to speak, as in truly excellent pushing the weak and vulnerable to save the salaries and positions that are keeping UC's A over the 26% limit.

What JoeIN says--not all research goes out. But soft money projects and staff, and let faculty have joint appointments, and move those interactions to Category III activities that have no conflict of interest. Then let folks find the most effective way of doing research--if outside, fine, that relieves UC of volume, fuss, exceptions, and compliance problems. Free Research!

cloudminder said...

can we talk about percent time reporting now? ;-)

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