Hyde Park, Chicago on June 25, 2017   

It’s great when you’re President of the United States and are unlawfully taking apart the national system for funding STEM research, and then some big universities step in and cut their non-STEM units instead.

 

Case in point: in July, UChicago’s Division of Arts and Humanities announced plans for a reorganization that would cut its number of departments in half, among other things.  The announcement came “just three months after UChicago Arts and the Humanities Division rebranded as a consolidated division.” In mid-August, the Division’s dean, Deborah Nelson, announced a reduction of PhD admissions for some departments and a full “pause” in others.  A week later, Nelson announced that the pause in PhD admissions would cover the entire Division, with a couple of exceptions. 

This is the first section of the talk I'll give at Disquantified: Higher Education in the Age of Metrics,  May 16th, 1 pm, Loma Peloma at UCSB.  We're headed towards conceptual and policy fixes for the widespread misuse of metrics and for the sidelining of qualitative knowledge.

There’s no intrinsic conflict between language and the numerical. But we do have a profoundly embedded cultural misinterpretation of their relation.

This year brings the 60th anniversary of CP Snow’s famous Two Cultures lecture.  Unfortunately, it still reflects the public understanding of the divisions of human knowledge.  Speaking in 1959, Sir Charles classed scientists as people with the future in their bones, and “literary intellectuals” as “natural Luddites,” people who are too focused on the price of progress to make any progress themselves.  This idea of literary intellectuals as critics rather than creatives carries on today.  Some of us have tried to get rid of the label – via the critique of critique for example—but so far this has reinforced it. 

In higher education, it would seem that we would have solved this two-culture division long ago. Liberal arts education is all about general learning and creating competencies in multiple domains.  Literacy and numeracy would seem naturally to go together. Every humanities major would, in a normal world, graduate with the ability to use basic numerical techniques.  French majors would know Stata or r for statistics, or the basics of Python or Java. Why not, since the world isn’t divided into two cultures such that we live in only in one of them?  Similarly, every science major could interpret complex language and have competency in at least one foreign language.   In many European countries, a version of these “two culture” competences are assumed to be the outcome of a high school diploma.  In the US, the full term has always been “liberal arts and sciences.”

There’s another Sputnik-era assumption to remember.  Liberal arts education was to be available at every type of college or university across the country.  This is a basic principle of Morrill Act land-grant legislation.  Full arts, sciences, and applied curricula  would not be limited to flagships: if you lived in central Wisconsin and couldn’t afford to move to Madison—or didn’t want to—you could get a generally equivalent  quality of liberal education at the University of Wisconsin at Stevens Point.  You could study biology in order to apply to medical school like your Madison counterparts. And you could at the same time become proficient in German or Spanish or Arabic, depending on your interests.  You could flip it around and study Arabic to join the foreign service while learning biology to better understand how the world fits together.  Having linguistic mobility and scientific competency were to be hallmarks of the educated person in the modern post-war world. And that is to say nothing of the many practical but nonmonetary benefits of having, say, physicians who speak a second language, and negotiators who understand ecology.  There was a powerful egalitarian assumption in the US university system—education quality would be spread widely in the student population, to reflect the wide distribution of human intelligence, and society’s complex needs.

This egalitarian assumption was largely honoured in the breach. That began to change through social and political pressures that came from outside universities and inspired students and some faculty within them.  I’m referring to the Black civil rights movement, the feminist movement, the anti-war movement, for starters. Liberal arts and sciences learned that they either connect to and study sociocultural and political movements or they do not correctly prepare students to live in their world as it actually is.  Isolated liberal arts, including historical study,  also produce flawed research.  So public universities were to avoid two false dualisms: the false dualism between numerical and language/ image-based forms of knowledge, and the false dualism between academic and social knowledge (or between “validated” and “standpoint” knowledge).  If universities couldn’t (or shouldn’t) integrate social groups, they could (and should) integrate heterogeneous knowledges across their multiplicity.

Two-cultures university education isn’t a luxury. It’s more like the base model of a degree to which people devote an entire four years of their lives – or five or six.  If a country wants to be a leading knowledge society, as the US claims it is, it needs in principle to create mass quantities of creative workers, people who also have intellectual autonomy and are capable of both conceptual and political movement.  I think of these as the elements that allow a graduate of any liberal arts or science major to start, pursue, and successfully complete a knowledge project.  My basic list has 14 steps.  (Slide mercifully omitted)

I’d propose this as a non-numerical framework for analyzing college educational quality.

A country that is serious about language and the numerical, would identify monetary but especially the nonmonetary or intellectual benefits that it wants from its colleges and universities, and then funds and structure those colleges accordingly.

So how are we doing with this?  Right now, not well . . . .

by Eva Cherniavsky, Andrew R. Hilen Professor of American Literature and Culture, University of Washington at Seattle

Earlier this year, the Seattle Times ran an excellent piece on the decline of the humanities at the University of Washington (UW) and nationwide. Katherine Long, a veteran education reporter, got crucial elements of this topic absolutely right. Her piece began, “You won’t find a single expert on the history of the American Revolution or the Civil War at the University of Washington anymore.”  She goes on to make an unusual connection: cutting the humanities hurts student learning and the university’s budget.

To its credit, Long’s article carefully observes both the intellectual and economic consequences of shrinking humanities departments. She notes that, historically, the humanities have effectively taught large numbers of students at relatively low cost, generating credit hours and revenue that was used to subsidize teaching and research in the high-cost STEM fields.  (There, as we know, faculty routinely require not only higher salaries, but laboratories, professional staff to run them, and students to work in them.  Thus a single STEM faculty hire can easily run into the millions.)  Shrinking humanities enrollments (indeed, more broadly, the shrinkage in what is now openly referred to at UW as the “non-STEM” fields) thus seriously exacerbates the budgetary crisis produced by the decades-long withdrawal of public funding.

On the other hand, Long frames the humanities’ intellectual contributions in highly conventional terms: “Academics worry that the nation would be impoverished—both culturally and intellectually—if only an elite few understand the arc of American history, know how to find meaning in poetry, or can discuss the ideas of the great philosophers.”  This kind of formulation narrowly aligns the humanities with cultural tradition, and thereby, no doubt unwittingly, reproduces precisely the argument for its irrelevance as a relatively arcane body of knowledge that should perhaps be archived but that does not require ongoing forms of study and engagement.

Instead, we might readily substitute a more robust and informed articulation of the value of culture-focused fields. We could talk, for example, about the importance of fields that think power, identity, and rhetoric at a moment of simmering civil war, or we might emphasize that an understanding of modernity and the historical emergence of modern democratic forms is vital at a moment where democratic governance appears in crisis.  The absence of this deeper understanding of humanities knowledge has contributed to the humanities apparent decline.

The day of its publication, Long’s article circulated on the UW-AAUP list server.  The discussion that ensued moved between posts that asserted the regrettable inevitability of humanities decline, given plummeting student demand, and others that sought to make the case for the non-STEM fields, though largely based on asserting the value of non-STEM knowledge to technological and scientific endeavors (e.g. how the insights of anthropology are important to the development of artificial intelligence).

It’s worth noting that this was a relatively short-lived, low-energy discussion, especially when compared, for example, to the bounty of thoughtful posts on another recent topic, ownership of on-line course content.  But there is a relatively straightforward institutional/legal fix to the latter problem (demand faculty ownership of course content), which, moreover, also affects faculty in high-value STEM fields.   The fate of the non-STEM fields, by contrast, appears already given – a ‘fact’ to be explicated, rather than a policy to be contested.

The debate reproduced one of the major shortcomings of the Seattle Times article: discussing “student demand” as a cause, rather than effect. It assumed, in other words, that students’ choice of majors is based on their autonomous determination of their best interest, and thus sits outside the purview of what the institution directs and regulates.   This conviction resurfaced a few weeks later in another UW-AAUP list server thread, this time in response to a faculty member reporting that several of her non-STEM students were asking for references so they could transfer to other universities, an aspiration which (she noted) they all attributed to the oppressively STEM-focused culture of UW.  The discussion which followed this post consisted largely of testimonials; faculty cited conversations with students to suggest how deeply they appreciated both the humanities curriculum and a humanities pedagogy historically centered on smaller, intensive, discussion-focused classes. Someone needs to gather these stories and convey them to the administration, several posters suggested – as though, confronted with the documentary evidence of actual student preference, the university would rethink its distribution of resources.

Seriously?  It seems to me that anyone who considers this for more than ten minutes has to recognize that “student demand” is a construct: it is the product of a pervasive, cross-institutional pedagogy in social and educational value in which students are immersed from (at least) primary school onward.  If students are demanding STEM in record numbers, this is a because they have been systematically invited to embrace a number of interlocking beliefs: that

1. STEM fields matter to the welfare and future of human societies more than other fields -- that social problems respond best to technocratic solutions; 
2. college is a course of career training; 
3. college is an investment that ought to be maximized in order to yield the highest possible return in the form of lifelong higher income;
4. STEM fields represent areas of continuing high-growth, recession-proof employment. 

“Student demand” is a fact insofar as it reproduces these assumptions, which are already endemic to the privatized, market-driven university.  Other forms of “student demand” (for example, demands for a more racially and ethnically diverse faculty that better reflects regional and national demographics) are routinely ignored.

The university is by no means the only social institution to promulgate these neoliberal assumptions, but it is among the most important.  Certainly, the notion that the university is merely changing to “respond” to STEM-focused student demand is absurd, since the university, increasingly beholden to private philanthropy (vastly skewed toward STEM initiatives) and increasingly reliant on tuition dollars (and the model of education as investment that normalizes rising tuition costs)  has been a key purveyor of these views.

The absurdity of the “student demand” rationale becomes apparent, as well, as soon as we recall that the starving of the humanities (and other non-STEM fields) began long before the number of majors began to plummet. The humanities, but also many of the social sciences, have been bleeding tenure lines, compelled to rely on lecturers (who are not defined as researchers) and, worse still, part-time lecturers for decades, since long before the 2008 recession or the rise in STEM enrollments.  The story of the humanities begins with the rule of austerity, not with declining demand.

I would also argue that the withdrawal of resources from humanities fields has hampered to a greater or lesser extent the ability of their faculty to build the kind of cutting edge programs and curricula that can most successfully compete for student interest.  This has certainly been true in my own English department, where retirements have vastly outpaced hires.  Several years of an outright hiring freeze, followed by the acquisition of a single line when we made a compelling curricular case for three or four, have made it virtually impossible to reflect at the curricular level many of the most important and compelling developments in the field. And again, this is happening during years when majors were at an all-time high.

In short, the humanities and allied fields are not “dying” a “natural” (market-determined) death, but have been systematically murdered – starved of resources and plundered of the credit hours they generate.

Here we come to the final missing piece in this “decline of the humanities” story:  the relatively lower earnings of non-STEM majors.  This is invoked as one of the reasons for shifting “student demand.” But as Chris Newfield has shown, it is not that the skills these graduates bring are not valued in the marketplace, but rather that their possessors are perceived as interchangeable and thus easily replaceable. There is no need for higher pay when there is always someone else to fill the job (Unmaking the Public University, chapter 8). 

But what happens when years of downsizing non-STEM graduates means that the glut vanishes – when employers have to compete for workers proficient in, say, critical analysis, writing, or multi-cultural literacy?  It will not be possible simply to reboot the myriad departments that are now being cut to the bone – and beyond.  The damage being done is irreversible.  PhDs in the field are increasingly moving into community college positions or alt-ac careers, even as humanities graduate programs across the country are slashing ever further the number of students admitted. There will be no way back from this devastation when market demand picks up.

The idea of a university organized around market (mislabeled “student”) demand is radically unsustainable.  It is unsustainable because, in shrinking the humanities, the university cannibalizes its own budgetary life support (as Long's article makes vivid).  But it is, unsustainable, too, because one cannot simply eviscerate and then resurrect departments and programs according to the inevitably shifting and fundamentally short-term calculations of the market.

In this moment, the resistance to the increasing privatization of the public university has taken the form of the demand for free tuition. This demand is fundamental to any effort at reclaiming public higher education.  But it is not a sufficient demand.  It must be linked to a broader recognition that market forces cannot organize the university – and that if this model becomes fully and finally entrenched, what we will have is not a university at all, but a high-priced career training center for the elite.

If this is permitted to occur, I predict we will lose both the battle for free tuition and the battle for the “non-STEM” fields.  The fate of the humanities is profoundly linked to the fate of public higher education.

My thinking about the formation of "UC Ventures" is influenced by the fact that today I am flying from London to Berlin to film some thin-film solar photovoltaic researchers and executives who have been living for years in the "valley of death" between important research results and commercial revenues. The photo is of the May, 2011 inauguration of the flagship building for Soltecture, one of the world's best thin-film PV companies that promised to bring zero-energy capabilities to old and new buildings a few years from then. When I stood in front of the building one year after this photo, it had closed, and the company was gone. 

Thus my questions about UC Ventures start with whether it will actually help avoid the collapse--or non-start-- of socially valuable technologies for lack of patient, long-term, adequate financial support.   Will UC Ventures be a "patient investor" that sides unequivocally with the technology--and with the future public that will use it?  Will it offer something special to late-stage technology by entering when others have left?  Will it help original, early-stage research with long-term commitments? Is it fish or is it fowl, or some other, political species?

Here's a bit more background, since it is missing from the Regent's materials.  Venture capital funds  socially-valuable technologies when they are likely to make a lot of money.  They avoid them, no matter how green or clean, when they aren't.  Around 2007, Silicon Valley VC declared clean tech to be the next mega market that VC would chase as it had semiconductors, internet software, and the like: Tony Seba's Solar Trillions (2009) caught the tone.  But energy technology is slow to develop and very expensive to make, unlike router software and apps, and by the time Solyndra went bankrupt in 2011, the Valley had moved on from clean tech to greener financial pastures.  No hard feelings: their job is not to save the planet but to make trillions for their investors, and if solar won't do that, then goodbye solar.  Literally--most advanced solar PV R&D has moved to Asia, often with technology they bought for pennies on the euro or dollar in Western bankruptcies. You can read Vinod Khosla's clear warning here; another denizen of Sand Hill Road assured me face-to-face that the Valley would not invest in clean tech just to keep the manufacturing here.

Soltecture and other thin-film PV companies demonstrate an important fact about the relationship between business and technology, which is that they regularly diverge.  Today's "shareholder" capitalism is all about short-term maximization of returns on investment.   If commercializing a technology will do that then it shall be commercialized; if not, it won't, and the technology will be abandoned.  Businesses exist to make money. Tech development loses money--until the product is finished and sold.  We often ignore this divergence, in spite of frequent critiques from environmentalists, public health advocates, and many many others, not to mention the many business books that discuss the way that the normal pursuit of returns on investment (ROI) conflicts with the R&D that leads to the returns (e.g. Clayton Christensen's The Innovator's Solution, Geoffrey Moore's Crossing the Chasm, William Lazonick's Sustainable Prosperity in the New Economy).  In spite of my recent criticism of Prof. Christensen for his bias against sustainability, I have always appreciated his brutal honesty about what shareholders demand, which is continuous sales growth that increases share prices by exceeding growth expectations.  That does not describe the life of high-impact, high-risk, high-difficulty technologies of the very advanced kind that create the breakthroughs and environmental solutions that we all want.

For a long time, all Very Serious People as Krugman calls them thought venture capital (VC) was the universal solution to tech commercialization in all fields: where universities left off, and mature companies couldn't move quickly, VC would provide capital to get a company from development to delivery to a large commercial market, offering management, development, financing, and marketing expertise along the way.  But VC enters "downstream," for products that are close to commercialization.  They have short time horizons - 3-5 years at most. They expect large multiples of returns on their initial investments, in part to cover their loses on their many bets that fail, in part because their core business is to get very large returns.  

Even this quick sketch reveals the problem: the road from "bench to bedside," from basic academic research to reliable product, is long and winding.  Though you can cash out on a good app in 3 years max, the Internet underlying it took 30 years of growth in the dark, with no market prospects and thus only government funding as the patient investor.  Even if the development frame is short, the social value of a product may greatly exceeds its market value to any given firm.  So firms will underinvest, producing "market failure," which then requires the fix of government support or rich corporations with decades-long horizons, like Japan seems still to have, and like the US used to have when monopolies like AT&T supported some blue-sky research in places like Bell Labs. I am not saying anything original here: mainstream economists like Kenneth Arrow and Richard Nelson began to analyze market underinvestment in research in the 1950s.

But when we talk about technology transfer (TT) from universities to business, we seem to forget this core lesson that business and its private investors are not there to insure the development of technology.  Writers like Joseph "Creative Destruction" Schumpeter and later apostles of "disruptive innovation" have confused the issue by making it sound like they are:  the right entrepreneurial spirit yoked to a big capital stock would automatically benefit society even as it created new wealth. But the bankruptcy of good--and socially valuable--companies like Soltecture, Q-Cells, or even Solyndra are the counter evidence.  Their death flows directly from the withdrawal of capital by investors who decide they aren't going to get major returns in the near future.  They may still love the technology and the company and believe in its enormous future market and great benefit to humanity, but they need to reinvest their capital right now for a higher return--sorry, no hard feelings.  Analysts usually blame the victim--bad management, overrated technology, unlucky price movements.  (If you think this conventional wisdom explains the Solyndra bankruptcy, we have a forty-page refutation that I'll happily send you.) The reality is that VC, start-up companies, and big shareholder-oriented companies (see Lazonick) aren't set up to support the full research and development process, which is better measured in decades than years.  The reality is that financial metrics do not measure science progress or social promise, period.

Like other research universities, the University of California's special contribution to the knowledge ecosystem is basic research--"upstream," early-stage, blue sky, high-risk, wild and crazy, stupid or brilliant, waste or genius, nobody knows in advance.  Yes, I realize universities do lots of applied research, and I certainly agree that no simple line should be drawn between basic and applied, that "Pasteur's Quadrant" is where applied questions produce basic results, etc.  But American capitalism has a huge bias towards both applied and especially the nearly-commercial because that is where the money can be made.  The system has already flushed basic out of the corporate world, which still gets more than 2/3rd of federal R&D funding to do D, making the university's role in basic R more important than ever.  Bear in mind too that STEM research funding is less than it needs to be, and that universities are struggling mightily to support it by digging deeper into their internal funds. 

Enter UC Ventures. How does it define the problem that its existence could solve?   The problem is said to be not enough VC for faculty start-up companies, which are a common--but risky and fragile--step in the commercialization process.   A Regental Working Group on Technology Transfer concluded, "UC should establish a mechanism to invest in UC start-up companies, either through the establishment of or participation in a venture capital fund or funds."  The regents went with the first option, starting their own fund, staked with $250 million from the endowment they directly control, and managed by a "Team" that will be appointed by the Chief Investment Officer while staying independent of that office and of UC in general. No UC employee will serve on the start-up investment Team.  UC Ventures is thus to "support the University ecosystem by providing capital to UC Startups."

Among various details, two others are of special note. The fund will invest in start-ups meant to commercialize UC inventions, but since UC is defined as an "ecosystem," it  includes former UC employees, UC alumni, UC donors, and I imagine anyone who can be designated a "Friend of UC." In other words, current UC researchers will not necessarily have first crack at the fund, so this is not an investment firm devoted exclusively to advancing UC science and engineering.  

The second detail is ambiguity about fund's main role. If it is more a VC fund under the CIO, then the fund's main job is to increase returns for the UC endowment, which is the CIO's actual job.  Accordingly, UC Ventures ultimately reports to the CIO and not, say, to the University Provost, the Office of Technology Transfer, or the Office of Research.  A venture fund, in that context, must have an overwhelming bias for research with near-term commercial promise in the largest market possible, preferably one with low costs. This means that it will necessarily pass over more or less everything that we could call basic research, but also over most late-stage, applied research as well.  If UC Professor Pharma has a start up for a molecule whose patent may yield a high monopoly price in high-income countries, and UC Professor Publichealth has a novel treatment regime for inexpensive drug-delivery in low-income countries, the VC fund, following normal investor practice, must pick Professor Pharma.  Whenever science and markets are at odds, or society and markets are at odds, the VC firm must favor markets.  

Much high-tech business talk dodges the problem by saying that markets, technology, and society all line up sooner rather than later.   But saying it doesn't make it true. The Regents' document takes the same kind of shot (page 3):

Specifically, UC Ventures will aim to maximize financial returns while leveraging the University's unique research and knowledge base, as well as the wider University community, to gain access to attractive opportunities emerging from the University's ecosystem.  The OCIO will design UC Ventures to maximize alignment of interests, minimize costs, and provide a long-term investment horizon.  The OCIO believes there is a compelling opportunity to generate attractive rates of return by selectively investing in early-, mid-, and late-stage companies arising from the UC ecosystem.

There's a tone here of UC Ventures as an especially patient investor, but UC research is one big input in what must be the CIO's strategy to "maximize financial returns."   For late stage R&D, I don't see what advantage UC Ventures will have in the crowded VC world other than having first look at UC product.  For early-stage research of the kind that is harder and harder to fund,  UC Ventures is irrelevant.  (It is, however, already a major PR coup, having gotten quite a bit of media attention of the kind that accepts the popular myth that investing for maximum returns is the same as helping science's public mission.) 

US science needs countercyclical investment, which puts money where other people won't because the work has value Mr. Market can't see. VC firms are cyclical: they do try to get in first, but not too soon, as they don't make money on inventions whose coolness is visible only to them. They need other investors piling in to pump equity values, consumer interest for future sales, and in general a certain obviousness to the value that is never the case in the early or sometimes even in a late phase.  To take Solyndra as an example, when their private investors pulled out in late summer 2011, the Department of Energy, acting cyclically, pulled its loan guarantees.  

What socially valuable research needs--e.g. research like Solyndra's cylindrical solar cells for the flat-roof vastness of the industrialized worlds--is an investor that says, "OK. you've missed every one of your cost milestones, your manufacturing process doesn't work like you said, and five years in, your tech is still crap.  But it's important crap.  And your job now is to make it uncrap, and finally make this whole thing work.  So you said five years? You lied, to us and to yourselves.  So what--R&D is always like that. If it only takes 10 years total you'll be lucky.  So here's five more years of loans, so you can fix your strategy, get more and different engineers, start talking to your customers, create a social buzz around turning Wal-Mart green, do something about your oversensitive equipment, and get back to work."

DOE should have said that. They didn't.  Would UC Ventures ever say that? Not if it's a VC fund.  So what exactly is the research point?

It would be cleaner, and probably more effective, to use some small part of the endowment to have a regular VC fund and not make a big deal out of it, and then use another part of the endowment, say $250 million, to fund fundamental research at UC across the disciplines--in STEM and non-STEM--particularly where the research is so interesting and strange that no one else will fund it.  The seed funding we most need is not for start-ups, where there's no shortage of VC capital sniffing over late-stage ideas, but for embryonic ideas that no outside sponsor will fund.  That wouldn't do as much for UC's corporate image, but it would do more than UC Ventures for knowledge and innovation.

Higher ed policy is suffering through a long siege  of intellectual gridlock.  The default result is what I've been calling permausterity, a chronic funding shortage for public colleges that now rests on a chronic lack of confidence in the job they're doing.  This has become a vicious cycle that feeds itself.  

Making matters worse, faculty responses are fragmented, when faculty respond at all.  Some of the most eloquent voices are increasingly disenchanted: William Deresiewicz got so much pushback for his recent piece, "Don't Send your Kid to the Ivy League," in part because he seemed to be saying that even our premier universities are turning America's most successful students into mercenary sheep.

(1) Why Can't College be Cheaper?

Dr. Deresiewicz's piece upset many supporters of the college ideal (e.g., Jim Sleeper), and one reason is that it seemed to lend credibility to this year's leading higher ed question: "is college worth it?" If Yale sucks too, why not give up on rebuilding funding and learning and get on with the inevitable consolidation of higher ed into two dozen university-corporations along the lines of the media industries and IT? The Apollo Group could provide the management, Coursera the online platform, Pearson VUE the assessment, and Harvard-MIT-Stanford the quality control.  Three percent of the college population could still go to prestige-brand research universities and liberal arts colleges, which is about the percentage that goes to them now.  Everyone else would, in this scenario, get converted over 10-15 years to varying combinations of blended learning and online-only. In spite of the MOOC ebb that began last summer, tech-based disruption and downsizing remain at the top of the national higher ed agenda.   

There are good disruptions that should be implemented, bottom-up, in universities, and also obvious reasons not to turn universities into digital learning corporations.  One of these reasons has to do with how people actually learn (as opposed to how they receive and replicate information packets). Some of the growth in student services is a market-driven "amenities race," but much of the growth comes from new structural support for better learning. Fixing the country's educational levels is going to require more and not less money for student services, more and not less funding for active learning, and more and not less payroll to hire permanent faculty.  Adjunct Nation has new allies in Congress, which will also support a deeper discussion of educational quality. We need post-contingent education (see, for example, Jennifer Ruth's recent posts (here and here).

Another large cost is research.  The country expects the vast majority of its basic research to come from universities.  And yet few policymakers and general voters understand who pays for research and how much it costs.  The traditional funders have been the federal and state governments, but states have been reneging on their side of the deal for years, leaving the feds in the lurch.  At the same time, the feds have been partners in this decline, having never explained to state policymakers, much less to voters, that they did not fund the full cost of research.  Admitting that research loses money has been taboo, since it conflicts with Washington's demand that science lead directly to economic growth.  States have cut funding in part because they didn't know they were in effect also cutting economically strategic STEM research.

But in the last few years things have been looking up.  Washington D.C. agencies are finally going public with their concern that we don't know how to pay the full costs of university research after all.

(2) Research Shortfalls are Real

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).

Then, this past June, the Council on Governmental Relations, a leading research university lobby, chimed in with the same message and more graphic detail.  Under the title, "Finances of Research Universities," its report offers a good primer on the differences between private and public university funding and then gets into some of the gory details of research costs.  If one of your summer resolutions is to tone up your skill with calculating F&A overhead on MTDC, then this is the report for you.

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%.

COGR provides a number of interesting tables, using in many cases data from the NSF's Higher Education Research and Development Survery, or HERD). Here is one:

Reseach and Development (R&D) Expenditures by Funding Source as a Percentage of All R&D Expenditures

State support for R&D is a third of what it was pre-Sputnik (1956) (although unadjusted totals continued to grow).  Federal support, though much more stable, is now heading back down towards its pre-Sputnik share. Over the same period, universities have doubled the size of their piece of research funding. Their share has doubled since the 1970s, in spite of excellent growth rates of federal research funding--or actually, because of this federal growth.  In 2011, a useful article in Nature pointed out a further problem, which can be seen in one of its figures: 

Public universities do twice the dollar amount of research that privates do, and yet spend twice the share of their own funds in subsidizing it (24% vs 12%).   Hence the title question, how can public research universities afford to do the research society does in fact want?

Back to the COGR report, which concludes with some bureaucratic fighting words:

The university subsidy is a legitimate issue and one that use be addressed honestly and constructively by all stakeholders.  [Forcing] universities to fund real, unreimbursed costs through non-federal revenue sources [makes them] potentially reduce investments in core missions and infrastructure. Ultimately, this impairs a university's ability to strategically plan and invest in its future research enterprise. (23)

In other words, concealing true research costs hurts the overall university while also hurting research.

I'm happy that a high-level organization is now explicitly saying that unrecovered research costs "are a financial burden with severe implications for the future productivity of research universities" (19).  This is progress.

(3) How Much of the Research Shortfalls are Recoverable?

There's a big wrinkle we now need to consider.  What kind of research costs are universities covering through their Institutional Funds? 

Universities need to support extramural research with outlays for facilities and administration (F&A), whose reimbursements have been capped at 26% since 1991, though only for universities. They also need to build and renew overall infrastructure and pay for research that isn't supported by outside sponsors (which includes nearly all research in the arts, humanities and qualitative social sciences).  They must help start new labs, sometimes build new buildings for them, seed new projects that may attract outside funding at some future date, and provide bridge funding for faculty who are in-between grants but have labs to run and grad students to train.  A combination of these and other activities accounts for the $13.7 billion that universities spent of their own money on research in fiscal year 2012 (out of a total of nearly $66 billion).  (The NSF breaks down costs by university in this table.)

The NSF tries to figure out how much money goes to various research categories through the HERD survey mentioned above.  The COGR report cites its findings as follows:

Of the $13.7 billion, 56% ($7.7 billion) was in the form of direct funding for faculty or student research projects, 9% ($1.3 billion) was devoted to cost sharing, and almost 34% ($4.6 billion) represented unrecovered indirect costs. (2012 HERD Survey)

In other words, somewhat over half of university research expenditures supports the research of their own faculty and students. A third goes to cover costs incurred by sponsored research that are not covered by the sponsors. Another tenth goes to cost sharing, which always involves sponsored projects. Summing up these figures, we might conclude that 44% of Institutional Funds subsidize extramural sponsors, while 56% cover internal research projects.  All of these costs are within the normal scope of research university activity--and, to get pious for a second, form part of its obligation to society.

But is this breakdown correct? The COGR report suggests it is by singling out the $4.6 billion as the main subsidy burden universities bear. It equates, in the report's terms, "to a staggering multi-million dollar obligation per university," and raises a "widespread concern as to the sustainability of the significant investments made by research universities" (19). COGR thus implies that only about one-third of universities' research outlays could be recovered by fixing reimbursement policy.

Other documents tell different tales.  The COGR report itself offers a case study (Chart 13, p 20) of a "Private Research University, Southeast."  This university spent $505 million on research but received $390 million in revenues, which required it to chip in $115 million of its own money.  So nearly 23% of this university's total research costs came from Institutional Funds.  The line-item breakdown of expenses lists University-Funded Research at $33 million, or  a bit over 28% of the Institutional Fund contribution.  This is half of the average for "direct funding for faculty or student research projects" in the HERD survey.  (It is also only 6.5% of this university's total R&D expenditure.)

To take a further case: when the University of California's Commission on the Future tried to get a handle on the university's costs, they summarized research losses like this:

In recent years, the University has received over $3.5 billion per year in extramurally-sponsored research grants, of which over $780 million per year is designated for indirect costs such as facilities support and research administration.  But the actual indirect costs of extramurally-funded research are estimated to be $1.5 billion. (page 111)

UC was thus losing $720 million a year on a research gross of $3.5 billion. This meant that 20.6% of its R&D expenditures came from internal funds, which is very close to the national average.  But this statement suggests that sponsored research caused the entire shortfall.

So we have three stories about the extent to which research universities must spend more money than the public understands in order to cover costs on behalf of research sponsors. 

1.  A third (or at most 44%) of Institutional Funds go to subsidizing costs of sponsored research, costs that the private sector would likely insist be paid in full.  About 56% goes to non-sponsored or "internal" research for faculty and students.
2. Something like a quarter of Institutional Funds go to non-sponsored research.  That leaves three-quarters supporting extramurally sponsored research. 
3. More or less all Institutional Funds go to filling in these shortfalls in sponsored research funding.

Which story is correct? I think the best answer at the moment is all of them, depending on the university. Wealthy private universities may well be close to (1), spending most of their internal funds on their own faculty's non-sponsored projects.   Less wealthy privates and some major public research universities may be close to (2). Both of these stories are about major research losses of somewhat different sizes.

The extreme case of (3), in which nearly all Institutional Funds subsidize sponsored research, may be right for the case for which it was developed, the University of California.

To check whether this could possibly be true, I offer some seat-of-the-pants numbers for one campus, UCLA.  It has formally recorded Institutional Funds expenditures from at least two sources, its Academic Senate Committee on Research, and the Office of the President's Research Grants Program Office (RGPO). The former, in the pre-cut year of 2007-08, dispensed about $2 million in travel and research support.  The latter, over a three-year period 2010-13, spent $44 million per year (  Annual Report page 25).  (I apologize for mixing years but here I'm just going for scale).  I'll assume that UCLA got about one-fifth of RGPO system resources based on its large size.  That means the campus spent $11 million of Institutional Funds through formal channels on faculty and student research projects in a period when it was grossing around $1 billion a year in extramural research funding.  In other words, UCLA spent 1.1% of its Institutional Funds on designated faculty research. 

(UPDATE 04/15: Having looked again at the RGPO awards for the relevant period, I think UCLA's share may be half of my estimate here. It's hard to say because they do not publish dollar amounts.  In addition, newer COR reports are online. Award totals are the same in 2013-14 as in 2007-08, my baseline here. The 1996-97 COR award $1.9 million, which is about $2.84 million in 2013-14 dollars: UCLA's COR now awards about half the amount it did 20 years ago.  "Half" seems to be the theme today: RGPO has awarded about half the number of multi-campus grants in this cycle compared to the last.)

This is obviously not the whole picture of internal research funding, but we don't have public information on the use of discretionary funds retained at various administrative levels--but also no reason to think a large percentage of this unknown figure goes to non-sponsored faculty research.  Throw in the fact that Committee on Research funds go to some extent to top up extramural grants. You can then see why the UC Commission report rounded up to the claim that essentially 100% of Institutional Funds go to paying for unreimbursed indirect costs of extramural research.

The implication of all of these stories, especially 2 and 3, is that public universities can pay for research, but, as we go forward, only if federal, state, and private funders stop asking them to subsidize a large chunk of indirect research costs.

(4) A Few Steps Towards Improvement

Regardless of which story is correct for a given university, they all point towards the following list of to-do's.

A. University administrations should say openly and often that research loses money. It must be publicly supported because it loses money.  The more fundamental the research, the greater its long-term social potential, the more likely it is to lose money for years if not decades. The Internet provides an easy example of this point. 

B. Point out that effectively freezing public funding to hundreds of research universities is undermining the country's research ecosystem.  Converting higher ed to online, in whole or in part, will wreck that ecosystem.

C. Act on these NSB, NRC, and COGR calls "to cover the full costs of research projects and other activities they procure from research universities in a consistent and transparent manner" (NRC Recommendation 6, p 122).  (It is already official University of California policy to charge sponsors enough to "cover all expenses, direct and indirect" (APM-020 Revised Regulation No. 4, II. 3)  Set up a multi-year plan for fixing at least the one-third of the problem that all agree is attributable to sponsors' underpaying of indirect research costs.

D. Sort through Stories 1-3 above. Get clean numbers, campus by campus, for "indirect indirect" costs--all the set-up costs that support extramural research rather than research that is ineligible for extramural funding. This will mean distinguishing clearly that research which, for historical and institutional reasons, depends wholly on Institutional Funds. It will also mean campus admins publishing those numbers to their communities, so that they can be understood and discussed.

E. Identify and quantify the needs of the large, complicated sphere of this (mostly) qualitative and/or truly experimental research that cannot receive external sponsorship. Explain why its ineligibility to receive external sponsorship follows from the historical shape of Western scientific, military, and industrial development rather than from a lack of merit or social value.  (This needs to be done for a society that doesn't generally understand market failure, spillover effects, or noncommercial social value.) Then make sure that this research has equal or superior claim to Institutional Funds.

Universities need finally to get ahead of the curve on research costs. If they don't, the "unbundling" pressures will only increase.

Business Week thinks so: its headline is "Krugman Move Boosts CUNY Effort to Escape Columbia, NYU Shadow."   In this piece, cool is a public city college doing the following things:

• stealing star faculty from rich private universities, recalling the glory days when CCNY "graduated 12 Nobel laureates between 1930 and 1950."

In recent years, CUNY has hired a number of professors away from elite universities, including Jeremy Kahn, a mathematician from Brown University; Vijay Balasubramanian, a theoretical physicist from the University of Pennsylvania; David Joselit, an art historian from Yale University; and Cathy Davidson, a technology scholar from Duke University.

• reclaiming the core mission of mass quality:

CUNY has about 274,000 students seeking degrees and almost 250,000 in continuing education and certificate programs, said William Kelly, interim chancellor and past president of the graduate school. It has 24 campuses spread across five boroughs.
“A university can be both public and provide access to a half-million students and pursue the highest goals imaginable,” said Kelly. “What has happened here is that the university has reclaimed its commitment to both access and excellence. Public universities need to do both.”

• hiring large numbers of full-time faculty: "CUNY has stepped up faculty recruiting, boosting the number of full-time professors to 7,500 from about 5,000 over the past 10 years."

• not saddling its students with debt: at CUNY "about 80 percent of baccalaureate and associate degree students graduate without debt."  Prof. Davidson made a particular point of saying "part of the draw was the university’s high quality and the low cost to students."

•  having high levels of innovation: Prof. Joselit remarked, “Public universities are much more willing to experiment with the format, at least in the humanities and social sciences,”

Is public anything more experimental than its private version?  That's how it reads.   Although the job moves of these major scholars are largely symbolic, their visibility, along with statements like these, might help make public colleges seem exciting again.

* * *

How has CUNY been able to do all this full-time faculty hiring at its tuition level of under $6000 per year?  Not by suppressing wages: faculty salary tables at the Chronicle of Higher Education show CUNY sometimes above and sometimes below average salaries in all professorial categories (2012 Almanac).  The recipe seems to be to staff most of the campuses like colleges rather than like research campuses--with the obvious exception of the Graduate Center.

Graduate Center staff consists of about half full-time and half part-time professors (75% of full-time professors are tenure-track);  about two-thirds of its overall teaching staff are graduate students. On the other hand, a check of a few of the CUNY colleges shows lower percentages of full-time faculty.  Hunter has 705 full-time and 1175 part-time faculty (or 37.5% full time): the comparable figures are 38.3% full-time at CCNY and 41% at Queens.

Teaching loads are also pegged to standards for teaching rather than research universities, judging from the experience of the faculty I know at Queens, Brooklyn, Hunter, and Baruch Colleges, meaning that everyone I know in the humanities and social sciences is teaching three or more courses per semester rather than 2 and 2. 

As for research itself, CUNY does much less bench science than universities of comparable size.  The NSF's Higher Education Research and Development Report for FY 2011 ranks the top CUNY unit, CCNY, in 182nd position, with expenditures of less than half those at lowest-spending University of California campus, UC Riverside. Hunter is at 219th, Queens at 265th, and so on.  The Graduate Center doesn't appear, and may be lumped together with CCNY, but it's worth noting that none of the recent hires mentioned in the Business Week piece require laboratory facilities.

One conclusion is that it's easier for public universities to be experimental when they don't have to pay fo rexperimental science.  CUNY also isn't paying for full-scale, full-time research faculty spread throughout the system.  CUNY hires great full-time research faculty at all of its colleges, and then doesn't give them research faculty conditions. Obviously this limits  CUNY faculty's overall research output.

Can public universities maintain or upgrade instruction while staying major players in basic research? The first answer is yes, in the sense that they have been maintaining their 2/3rds share of overall R&D (Appendix Table 5-3).

A second answer is no, they won't sustain this going forward, since they are already having a hard time affording STEM research. For example, they spend nearly twice the share of their own resources supporting research as do private universities: "Public academic institutions supported a larger portion of their S&E R&D from their own sources—22%, compared to 13% at private institutions."

A third answer is that public universities will always be able to sustain or even increase research output--if they increase the share of non-STEM research in their mix.  CUNY can lag in overall R&D expenditures while still having a huge arts, humanities, and social sciences research output since these fields (borrowing the AHS acronym from Gerald Barnett) spent only $3.5 billion of the $65.8 billion spent on R&D in US universities was spent on STEM.)  You can be 265th in expenditures while being an AHS powerhouse, given these fields' much greater bang for the buck.

* * *

A contrasting example appeared in the news last week--Duke University--whose costs were the subject of a piece at NPR's Planet Money.  Duke, the article noted, claims that the University loses money on the $60,000 a year it charges to go there, since it allegedly spends $90,000 per student per year.  This is about 6 times UC's combined per-student in-state tuition --minus financial aid--plus state general fund).

The gap in per student expenditures between top privates and mass publics is shocking and socially inefficient: it's something this blog has been denouncing for years, that the Delta Project's studies made visible to policymakers (Figure 18), that education economists like Archibald and Feldman have analyzed, that I've argued causally reduces attainment and increases racial disparity.

The innovation in the Planet Money piece is that an MSM outlet stages a debate between standard and alternative higher ed accounting, juxtaposing Duke's provost Peter Lange and UC Berkeley's independent budget analyst, professor emeritus of physics Charles Schwartz.

Using the standard approach (I am describing, not endorsing it), Duke reports that a quarter of the $90,000 of per-student expenditure is affluent students subsidizing other less-affluent students, and that another quarter goes to paying faculty salaries. (In the context of familiar claims that academic salaries are the core of higher ed's "cost disease," this is not a large slice.)   Another quarter goes to "sponsored activities," which is close to the normal 20% or so that research universities spend to subsidize extramurally-funded research. The final quarter of the pie chart goes to overhead, which includes facilities and non-teaching staff.

Prof. Schwartz's point has long been that faculty research time gets lumped together with teaching time, so that the faculty cost of instruction is exaggerated.  Provost Lange counters that research and teaching are intertwined at a research university.  (For the record, Prof. Schwartz has never denied this, but has shown how they can be disaggregated so we at least know how much universities are spending on what.)  The Planet Money piece produces an accurate description of the debate:

In the end, Schwartz and Lange don't disagree on the value of what goes on at places like Berkeley and Duke. The disagreement is over the story that Duke tells its undergraduates.

So if you're a student at Duke, are you getting a massive discount on the cost of your education? Or are you subsidizing a giant educational edifice that you as an undergraduate student will barely come into contact with?

The answer sort of depends on what kind of student you are.

If you're engaged in research and capitalizing on your professors' expertise, maybe you're getting something that's worth more than what you paid. If you've got a good financial aid package, you're definitely getting a good deal. But if you're a full-paying student, who's not learning much from professors outside the classroom, it's the university that's getting the deal.

This formulation puts huge pressure on elite universities like Duke to subsidize student costs and to make sure every single student is experiencing artisnal research-learning.   This would be a big change for students who are buying a brand affiliation that will get them to the head of the line for the careers of the 1%, which, judging from Laura Newland's alarming memoir of her Duke undergrad years, is most of them. (You can listen to Doug Henwood's interesting interview with her January 30, 2013).

After many lousy years, I think momentum is starting to shift back towards public colleges. The challenge for them now for has several parts:

• Get affordable for students again--by being honest about the limits of financial aid and restoring correct levels of public funding.
• Define hands-on and research learning that brings Duke-style intensity to public university students.
• Build budgets that allow research and teaching to interact at all types of public colleges. This means transparency about research costs so that research activity can be increased.  

Fewer people than ever will pay $60,000 or even $16,000 for a degree. But they will pay for real learning--if they understand its costs. 

Officials at UC and other universities have been scrambling to replace resources lost to public funding cuts.Most seem still to see extramural research funds as net positive cash flow for the institution, which they are not (one news link from our ample coverage plus one previous post).  But grants do provide funds for salaries, including partial salaries for faculty investigators, and with that in mind the Joint Senate-Administration Compensation Plan Steering Committee has hatched a plan for a new policy -- and new personnel section APM-668 --called the Negotiated Salary Program (NSP).

The basic motive is that the University needs to find funds to retain those faculty most at-risk of being recruited away by competing institutions.  The rationale is that since state funds keep shrinking, the University must look to non-state funds to fill in the gaps, meaning looking to federal as well as private grants and donations.  The model is the Health Sciences Compensation Plan (HSCP), which the prosposal would extend to the campuses.

Agencies tie salary paid from a grant to research effort on that particular grants. The proposal discussion cites NSF and NIH language that forbids use of grant funds to augment a faculty member's salary (pp 4-6).  The NSP is meant to be a workaround. It would allow faculty to apply to members of their campus administration, starting with their department chair, to use some portion of extramural revenues as a salary augmentation ("negotiated salary component") for a finite period (1-2 years).

We post below a comment from Stanton A. Glantz, a faculty member in UCSF's School of Medicine. It discusses the major issues raised by the NSP proposal in the context of his knowledge of the health sciences plan itself.

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.

by Anonymous, continuing Part 1

Response to future cuts

The leadership of our research unit is responding to UC budget reductions by seeking to increase revenue and cut costs.  Beyond what has already been done, one near-term cost-cutting plan is the elimination of all non-SOE lecturers, thus requiring ladder-rank faculty to teach more (a rumor suggests faculty will be allowed to "buy out" from teaching).  Another strong possibility is that research-series faculty, who currently receive half of their salaries from institutional funds and half from their own grants, will have the institutional component of their salaries cut.  A third cost-cutting measure is stronger encouragement for older faculty to retire (and go RTAD if they are still productive).  We may also expand our small and technically self-supporting professional masters program since that returns some money directly to our department.  Obviously, anything and everything that can possibly be charged directly to extramural sources will no longer be supported by institutional funding (except for short-term start-up packages for new appointees).  In the long term, our leadership expects to substantially reduce the number of faculty in our unit (primarily through attrition of research faculty) since faculty salaries are the largest part of our continuously decreasing core UC funding.

Apart from a restoration of UC core funding, the most desired revenue-enhancing measure is to have a greater fraction of the indirect cost recovery (ICR) we generate from extramural funding returned to us rather than diverted elsewhere in the UC system, but this plan has met with little success with the campus administration and UCOP.  Since we do get a third of our ICR returned, we are nonetheless striving to increase the amount of our extramural funding to an even higher level.  Private fundraising makes a small contribution, although this has fallen off in the current economic climate.  The leadership of our unit also plans to increase the faculty teaching load and is encouraging professors to develop new large-enrollment undergraduate classes.  Considered alone, these actions would be revenue enhancing because we receive funding through the campus partially on the basis of the number of undergraduate students taught and the number of graduate students enrolled.

It remains to be seen, however, whether any additional teaching pays off since we may merely cannibalize students from our current courses.  Moreover, every hour spent by a professor on teaching is an hour not spent on preparing a grant proposal.  In terms of incentives for individual faculty and payoff for our unit, additional extramural funding is much more remunerative than additional teaching.  This is the case even though only a third of our ICR is returned and only about 30% of grant proposals in our discipline are successful (a percentage nevertheless higher than that for almost any other discipline).  Our leadership has acknowledged that the faculty cannot indefinitely continue doing more with less, but they hope we have not yet reached the breaking point.

While we have been able to temporarily substitute federal funding for some of the shortfall in state funding, this is only a short-term solution.  Start-up packages still need to be offered, matching funds from the institution may be required, and maintenance of facilities cannot be directly charged to a grant.  Science faculty may ride out a brief crisis by paying themselves from extramural funds, but in the long term they will leave and go to an institution that provides more hard-money support.  Extramural funds cannot replace core funds; they merely leverage core funds to support a greater amount of research.