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Thursday, February 14, 2013

Thursday, February 14, 2013

How Public Research Universities Are Losing the Framing Wars

Does California, or any other "knowledge economy," want to have public research universities, in the sense of paying for them?  We have reached a point in the ongoing higher ed crisis where this is a genuine question.

By "research" university I mean one that conducts research across the disciplinary spectrum and that has the doctoral programs on which research depends.  But I also mean, for the state's undergraduates, a university that connects students to brand-new knowledge and thus to tomorrow's skills today.  

Putting regular folks on the technological, social, and cultural cutting edge is a unique and fragile--and enormously valuable--activity.  That is what public research universities uniquely do.

This week's Legislative Analyst's Office report on Gov. Jerry Brown's higher ed budget proposal displayed the LAO's traditional dismissal of the research university's interest to the state. But they are not alone. The recent California Higher Education Summit, MCed by KPPC Airtalk host Larry Mantle, also mounted a direct challenge to the value of the category public research university.  We have posted a base transcript of the exchanges between Mantle and UC president Mark Yudof (thanks to UCSB's Alysse Rathburn). 

Larry Mantle began the discussion by noting that the Master Plan was "the model to which everyone aspired.  For extremely low, or even no tuition, students had access to one of the three systems."  The frame is what I like to call mass quality, in which first-rate educational skills are not reserved for an elite but are distributed to every income level in the population.  

The opening question was about tuition hikes, and Mr. Mantle was so concerned about rising costs leading to declining access that towards the end he asked directly whether we could still say that the master plan system still existed.  One answer he got was "not in practice."  Around Minute 41, Mr. Mantle asked California Community Colleges system Chancellor Brice Harris what he could do to fix constant complaints that counselors give contradictory advice to students and slow their progress.  Mr. Harris replied, 
Well, you're bound to get concerns when you have a ratio of 2000  to 1 for counselors to students [sic].   
2000 to 1? (Mr. Mantle exclaimed)   
That's the average up and down the state. The Master Plan for Higher Education is still the most elegant public higher education system in the world. It's jut grossly underfunded.
Underfunding has been going on so long that it has terminated normal operations at the CCCs and CSU, who turned away hundreds of thousands of students, and compromised educational quality at UC.   

In addition, there is little sign that underfunding will end soon.  Leading lights like Jerry Brown and Barack Obama are first and second generation austerity Democrats, who call for next generation technologies, industries, and workforce skills on the basis of next to no new public investment.  

Given the intersection of public-sector poverty and imposed austerity, Mr. Mantle saw mass access being put at risk by the costs of the research segment, the University of California, which he described as elite. 

When the segment heads assured him that in fact per-student expenditures where not up but down, he asked, 

What about professors’ salaries though?  Because my sense is, at least for star faculty, maybe this doesn’t apply across the board – there’s been a kind of race to getting the top talent.  UC wants to get the very best and the brightest; as professors you’ve got to compete with private, as well as other really public institutions.  So, has the cost of faculty salaries not risen faster than the rate of inflation?  What used to be a very middle class job, hasn’t that become a very distinctly upper middle class job?
One possible response is that for younger faculty a UC assistant professorship is, in most fields, a lower-middle class job that entitles them to apartment rent and a long commune. But Mark Yudof did make some headway with averages: our faculty are 
a solid 10, 15 percent below our peers, both public and privates.  So I would say we have a very public-spirited faculty. If you teach at [UC],  . . . half your kids are poor. You are an agent of upward mobility.
Mr. Yudof continued on about the relatively low cost of UC's "60 Nobel laureates. I'd prefer they not leave our campuses."  Mr. Mantle, however, was worried about the costs of exactly this kind of elite quality. "It's a wonderful thing you've got them. But they cost money."

He made this more explicit later on. 

The University of Texas, your former system, President Yudof, has been ground zero in this battle between those who believe that maybe some of these elite public universities have become too elitist, and no longer affordable for states to fund them in this age of belt tightening.  So, is this question over whether we can still afford a University of Texas or a University of California with all of its overhead, with all of what goes on – is that a legitimate debate in your mind to have?  Or are things just great, these institutions need to be protected as is?
This is a profound, important social question that deserves two serious answers.

  1. Research universities need to protected and upgraded.  Great ones deliver far more value to students and society than do average ones, especially in our absurdly competitive global innovation economy.  It would be a start to offer simple language about making California an "educational leader" once again.
  2. Research loses money now, for the sake of big returns later.  Only the public sector will take the important risks on high-value, basic research.  Private firms can't justify it to their accountants or shareholders. The state has to cost share with the federal government.
This is not what the audience heard.  Instead of (1), Mr. Yudof said that public research universities don't need to be protected, that we're not "going to have a 14 to one student faculty ratio" any more, and waxed on at a couple of points about how we're going to keep having bigger classes and more distance learning.  

This kind of answer just begs the question, so if the research university keeps getting worse, why does it keep costing more?  More generally, why would the public want to pay for expensive OK quality?

Instead of (2), explaining the real economics of research, Mr. Yudof doubled down on the false assertion that extramural research is a big profit center for the University.  Responding to a question about more sources of income, one exchange went like this. 

Yudof: We can raise more money from the private sector.  We have indirect cost recovery.  But if you’re sitting there at Berkeley you’re getting 240 million dollars from the state of California, and the faculty is bringing in 800 million dollars of research, would you, Larry – I have a question – would you give up the 800 million?

Mantle: Well, no.  And if research is actually making money, or paying for itself, why aren’t you going out hiring more professors to do research, if it’s that lucrative?

Yudof: We actually are.  Every time somebody does a study, and says, “Boy, you’ve got so many administrators," it always turns out that they’re either in the hospitals, where they’re doing booming business, or the research enterprise.  
Mr. Yudof is citing gross research revenues.  Net research revenues are negative, and an NSF report last fall finally confirmed that average losses are around 20 cents on the income dollar, even after indirect cost recovery is factored in (the one bit of UC coverage is here).  

I'm writing this on Valentine's Day, and am sorry to report that Mark Yudof's answers broke my heart.  

Public research universities are losing the framing wars because they aren't explaining why their costly knowledge-creation is special, or that this special function always needs public funding support.  

As a result, someone listening to this summit could reasonably conclude that (1) the higher costs of research universities are blocking access to basic college education for veterans, working class students, immigrants, among many deserving others, and (2) that the great money-making scientific enterprise could easily be used to support UC students.  So, this line would conclude, move UC's state money over to the suffering CSU and CCC systems, and let science profits make UC self-supporting.

This is where public research universities have long been headed -- towards self-supporting status.  But it is a political dependent and financially diminished one, which ironically includes exactly the higher tuition and lowered access that the public fears.

It's going to take a huge collaborative effort to tell the truth to the public and to state government about the real costs and real uses of the public research university.  


Gerry Barnett said...

You may want to reconsider serious answer #2 above: "Research loses money now, for the sake of big returns later."

UC policy is that extramural research is not supposed to lose *any* money. APM-020: "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." Link here: http://www.ucop.edu/research-policy-analysis-coordination/resources-tools/contracts-and-grants-manual/chap01.pdf

Over the past 10 years, UC has *lost* on the order of $5 billion and *ignored* its own written policy in doing so. The extramural program is to *pay its way* but it's taken $5 billion that could have gone to, say, instruction. If folks want to make a case to the public that research should be subsidized beyond what the sponsors are willing to pay: fine, do it, make that case. But don't divert the money, pocket it to advance careers and reputations, and then claim that the problem is the whiny students or the stingy state.

More: Show that research UC takes on is uniformly "high risk/high return." I suggest it is mostly "moderate risk/low return." If UC wants to reframe the public rhetoric, then document the top twenty-five "big returns later" research efforts, and how the returns matter to the state so much it should be chipping in its 20%.

More: "Only the public sector will take the important risks on high-value, basic research." This doesn't hold up. Look at the big corporate research labs--a lot of that is basic research. Same for foundation funding. And look at UC research--it lot of isn't "basic" at all.

And finally: "The state has to cost share with the federal government." No, actually the state doesn't *have* to cost share with the federal government. There is no mandate for the state to do so. You have to make a *case* for the state to *choose* to do so. Presently we have UC unilaterally *deciding* to divert funds to cover research losses, and then saying the *state* has to do this. Be candid with thyself, UC: you covertly diverting billions and trying to rationalize it. Meanwhile, students and instruction take a deep hit, a real hit, believing tuition doesn't cover even the full costs of undergraduate instruction, when it surely does. Why not come out in the open, then, make a real, thoughtful case for state subsidies, with actual financials that show the cost, the uncertainties, and the benefits? In the alternative, how about getting the F&A rates in line with expenses, or getting the research administrative practices in line with available funds?

Chris Newfield said...

these are very important points. Your final suggestions are good places to start. APM-020 is an important regulative ideal, especially since it's existing policy! In terms of getting cost issues "out in the open," we need to raise one issue at a time, leading with data so folks can see what's going on. If we kick open the trap door, and make it seem as though an abyss lies below, everyone will back away and things will stay the same. My suggestion is to embrace (2) as something to which the university aspires (largely actually in reality, in my view, among students, staff and faculty), use it as a unifying idea as well as an explanation to the public of what research U's do, and then have discussions and arguments about how to move the existing university towards a dominant focus on sustainable basic research. This would include full indirect cost recovery for universities (as appears already to be the case in industry) and slowly but surely moving federal "basic" funding toward universities and away from industry.

Unknown said...
This comment has been removed by the author.
Unknown said...

I don't believe the University loses money on externally sponsored research. UC gets $2.4 billion from the state and $3 billion from tuition. It gets $5 billion for extramural activities, most of that research. With all of the cross-subsidies going on, a lot of instructional costs are paid with that research money -- grad. student support, grad. students working on their dissertations in research labs, faculty buying out their teaching time. Yes, there are some instructional side subsidies to the research side, but common sense says those cannot be as large as the subsidies coming the other way. Sure, on a one time basis, a lot of research equipment and facilities are expensive, but those big ticket items are used for many years and need to be properly amortized. A place taking in $5 billion a year is not losing money on that part of the enterprise.

Chris Newfield said...

All you need to do to lose money on a gross
of $5 B is to have costs of, say, $6 B. See page 16
of the National Science Board report, e.g. the following passage.
funds from universities and colleges comprise
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
R&D in 2009. Since 1991, the overall
share of university support for research has
remained stable. However, the actual
costs to institutions during this period have
increased three-fold in current dollars, with
compliance costs representing a large
component. Institutional funds are directed
toward institutionally financed research
expenditures, including infrastructure, such as
buildings, laboratories, field stations, facility
renovation, cyberinfrastructure, and
unrecovered indirect costs and federally
mandated cost sharing.109 Research
universities make these investments to
support current and future academic S&E R&D
both independently and in partnership with
the Federal Government and others.
Institutional funds are partly used to cover
unreimbursed costs of federally funded
research resulting from Federal limitations on
reimbursement for the indirect costs of
research. Federal funding for academic
research includes both direct and indirect
facilities and administrative (F&A) costs. The
F&A rate is used to reimburse universities for
expenses associated with funded research,
but that are not easily identified with a
specific project. According to the NCSES
Higher Education R&D (HERD) survey,
unrecovered indirect costs of academic R&D
reached $4.7 billion in FY 2010." Internal"
university funds come largely from tuition and
state general funding, and this is why the NSF
has finally become publicly alarmed about
state funding cuts, which is the main topic of
this report. The full report is available at
See also the SFC piece for the Commission on
the Future-related Office of Research report
on funding shortfalls, linked above as well -

Unknown said...

So if it is true that research work at a university costs more than the federal funds, then the humanities and social science departments without any research should be a lot more wealthy and have more resources for faculty salaries etc than the science departments. Again, common sense says that science departments are wealthier because they have a revenue sources that exceeds their costs (diverse sources of revenues and large cross subsidies),

Chris Newfield said...

Hum and Social Sciences would be wealthier (depending on enrollments, s:f ratios, etc.) were it not for cross-subsidies flowing from them to more expensive operations elsewhere on campus. Please review the data.

Bob Samuels said...

Looking at the SF Chronicle article, we read the following:
“UC could gain $300 million a year if it were more serious about demanding that grant providers shoulder more of the secondary costs of doing research, grants director Mary Croughan and UC Santa Barbara Chancellor Henry Yang, the advisory group's co-chairs, told the UC Commission on the Future this week.
"This is real money - and it's costing our students," UC President Mark Yudof told the commission after the presentation. "We're not aggressive enough in our cost recovery. We need more oomph." “UC wins about $3.5 billion per year in research grants, of which $780 million is for indirect costs.
It's not nearly enough, Croughan reported. Research support actually costs $1.5 billion per year, or $720 million more than UC recovers.” "We're losing about 20 cents on the dollar," Croughan told the commission. "Harvard complains about losing 5 cents on the dollar. I would argue we've not been aggressive enough." This article appears to argue that research was losing $720 million, and the UC could reduce that amount by $300 million if it negotiated better indirect cost recovery rates. What bothers me is Yudof clearly knows this, but he constantly says the opposite. A missing part of this story is that at this time, while the federal indirect cost recovery rate for UC was about 55%, and it was much higher for Stanford and Harvard, the total UC average ICR rate was 26% because the UC was getting a much lower rate on non-federal grants.

Anonymous said...

Chris, as you know there is a great difference within the HUm/SS in terms of how self sustaining, "wealthier," they would be without cross subsidies. Small departments with low enrollments are subsidised by more popular ones like English, Psych, etc, depending on campus. So how to avoid the each-dept-is-a-business-unit is probably part of the problem, right? We may not like where we end up pushing this line of inquiry to logical conclusion...

Chris Newfield said...

yes - I am pro-cross subsidies. They need to be quantified, disclosed, and discussed, where the discussion includes the losers as well as the winners, and where justifications can be analyzed. I am also in favor of more research, not less, and want science grant submissions to have higher rates of success, not lower. But we can't solve the core budget problems that have been festering for decades and are now making us politically vulnerable (on top of hurting students) unless we can admit what the problems are.

Gerry Barnett said...

For an account of the research losses at UC see http://uclafacultyassociation.blogspot.com/2010/06/uc-millions-lost-in-research-costs-from.html

It may seem counter-obvious that the major research universities are losing money spending extramural research money. However, they are, and the money to make up the difference has to come from somewhere.

I, too, have no problem with cross subsidies among core instructional functions, but I don't think it is better not to know the accounting. Better to face it than allow administrators to manipulate the accounting as well as the public (and faculty) perception of where the money is and who are "contributing" and who are the "slackers" who should be replaced with on-line courses, saddled with low salaries, and slighted for resources.

I'm not keen when the cross subsidies take money from tuition and hand it to administrators whose priorities are financial adventures that have nothing to do with instruction--even if those adventures include research empire building. Such flows of tuition money away from instruction leave students and their families in debt, and faculty should be shocked by this, rather than feeling that it's a problem for students to work out over the next decade of their lives. Worse is the manipulation of public perception that the state's cuts necessarily must mean cuts in instruction or higher tuition and student debt--rather than, say, cuts in non-critical money-losing research, or cuts in something inconsequential, such as senior administrative salaries and positions.

These sorts of cross-subsidies need to be laid out first. I don't care how the lucre of English department tuition income gets shared with physics or history instruction. I do care when tuition money ends up applied to something other than undergraduate instruction. If all UC tuition is going to instruction, fine: prove it.

Chris Newfield said...

whereas I am fine with some tuition going to cover research costs as well as instruction, since I see these as intertwined, now more than ever when our undergrads need to be knowledge creators rather than rule-followers. I obviously agree with Gerry that the accounting has to be done correctly with the results, and policy choices, then discussed openly. There is a very old principle here, called in one famous historical moment "no taxation without representation." University admin and science policymakers should enact the principle, and I believe that showing this kind of respect for all the parties, including students and the public, will decrease suspicion and make it easier to have a rational conversation about the fair and effective sharing of resources.

Michael Meranze said...

To add to Chris' last point one of the virtues of a clearer understanding of cross-subsidies is that it will make it more difficult to separate faculty from each other and from students. One of the most pernicious and debilitating of recent administrative rhetorical moves has been the pretense that departments like English do not raise revenue for the University. But of course they do since they teach large numbers of students who pay tuition. The lack of clear accounting allows critics of the University to overstate certain costs and also prevents faculty across campuses from seeing how intertwined our futures really are.

I don't mind the cross-subsidies. I mind the denial that they exist and then the effect of that denial to diminish the contributions of different parts of the University.

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