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Monday, January 4, 2010

Monday, January 4, 2010

Fixing the Research Funding Structure

Gerald Barnett and I have a piece in today's Chronicle of Higher Education that combines some of this blog's consistent themes: full costing, budgetary transparency, the value of research, and matching public funding to our actual public ambitions.  The article also ties in with recent posts and commentary on the position of science in public higher ed.  Subscribers can find it here, and here's a temporary link.  Comments are more than welcome, our place or theirs.


Aldo Antonelli, UCD said...

That was a very interesting article. You guys argue effectively that extra-mural grants are actually a cost to the university because the indirect cost recovery rate is never enough to cover "F&A" costs. Two questions:

1. if that is the case, why do cash-strapped universities go after such grants? Is it not possible that universities are inflating their F&A costs, knowing that the granting agency will only cover a portion of their request?

2. I have heard arguments similar to yours rebutted by saying that universities would have to pay for F&A costs anyways, and therefore overhead on grants is a net gain to them. Which is which?

Gerry Barnett said...

My industry-connected friends tell me the F&A on federal contracts to commercial contractors routinely is over %100 of directs. It's hard to believe that universities are padding the F&A--if they are, "padding" means "still not enough to cover costs, doh". Given that the "Administration" portion is set by federal rule to 26%, it's actually impossible to go much beyond this for federal awards.

This report from 2000 has a clear discussion of the issues. http://www.rand.org/pubs/monograph_reports/MR1135-1/

A recent article puts the discussion in the context of how administration finds itself caught between the need to provide infrastructure and attacks on F&A from both funding agencies and from research faculty.


UC's policy is that extramural research fully cover its own costs. See APM 020, Section 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."


One might say, heck, just change the policy, or ignore it (which appears to be the present approach). But then we are back to an accounting of where the money is coming from to supplement especially the administrative side of the indirect costs required to carry out the research enterprise.

It would appear compelling that universities operating research programs at scale (beyond, say, $100m per year) are not fully recovering their costs and therefore drawing on other sources of revenue to supplement their extramural activities. More research, such as the ARRA funding, makes the shortfall more intense. While there may be temporary jobs for research personnel in the short term, the university more broadly is in worse financial condition for it.

There are implications, obviously, for how federal agencies "spread work around" rather than "pay the full cost", and for whether administrative functions could be reorganized to be more cost effective. One might add that universities appear also to have given up on making the case to extramural sponsors to pay sufficient amounts to cover the costs of extramural research.

Hence, the much easier attack on undergraduate tuition.

Kevin said...

The indirect cost rates could be greatly simplified if they weren't negotiated. Instead, the federal government should set a reasonable rate (say 70%) for all grantees. Those that are efficient in their use of funds will do well, and those that are wasteful would do poorly. No longer would it matter which agency the university happened to be forced to negotiate with or how much they could spend on creating the documentation to support their negotiating position.

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