UCI May 25, 2018   

We saw in Part 1 that UCI Finance attributes losses to the Schools –the academic core—rather than to the non-core or medical center activities associated with research and various auxiliary services.  We also noted that in FY23 UCI needed to find $132.3 million in institutional funds to cover research costs. One result is unfortunate: dramatic cuts are coming to the core. 

 

Non-core and UCI Health may be conducting layoffs as well, but I haven’t seen any indication of this. The UC rule of thumb has been cuts to the educational core come only as a last resort.  It’s often honored in the breach, and I don’t see that UCI is following it now. 

 

UCI’s core funding is governed by a new Budget Model and multi-year planning process. It was tried out in 2024 -25 (FY25) and has been modified for the upcoming year (2025-26 or FY 26). 

 

I certainly urge UCI folks to Know Your Budget Model by reading this page carefully, especially the Draft Framework (FY25) and Final Model Comparison (FY26) at the bottom. As former UCSB faculty I am retroactively jealous that you have at least these materials publicly visible for reading and discussion.

 

I’ll mention three things about the Final Model for this upcoming year.

 

            1. the student metrics are intelligently skewed towards department workloads rather than majoring.  Fields that are losing majors but still have lots of student interest as expressed in attendance, as do many humanities fields, have their teaching workloads acknowledged in the form of Student Credit Hours (80%).  “Enrollments” (the standard UC wrong name for “majors”) are only 10%, and degrees granted are another 10%.  

 

UCI people will know things I don’t about how this sausage was made, but as such things go it’s pretty good sausage.

 

            2. Central administration will now “cover 70% of each school’s average faculty salary and benefits. Remaining faculty, staff, and operating needs are supported through other mission-based budget model components (e.g., student metric-based and other core and non-core sources).”  

 

This is a modification of Responsibility Centered Management systems from the 1990s that have settled in all over.  They were to replace incremented budgeting by tying a unit’s ability to spend to that unit’s ability to earn money. RCM has various negative effects and this 30% version ties School revenues to (1), the student metrics.  Since the 70% and the other 30% of tenure-track faculty salaries and benefits have to be paid, shortfalls will affect non-tenure track “faculty, staff, and operating needs.”  But there’s a base of 70% of faculty payroll—tenure-track or “Senate” faculty, I presume.

 

            3. The FY26 model introduces a new factor, “Student Metric-Based: Differential $/Student.”  UCI Finance has taken disciplinary benchmarks from the National Study on the Cost of Instructional Productivity at the University of Delaware and applied them to UCI Schools.  (Falling participation has caused the sponsor, the Higher Education Consortia, to cancel the cost study after the 2024 results are published this month.)  

 

(1) and (2) by themselves would produce a quasi-egalitarian revenue pattern for instruction. The Schools of Engineering and the Humanities, for example, would each get 70% of payroll and then get the same amount per (weighed) student to cover the other 30% of costs—so more if they teach a lot of students and less if they don’t. Engineering would have much additional revenue based on Contracts & Grants income mainly not available to School of Humanities fields, plus ICR revenues, corporate contracts, and the like.  Higher facilities and equipment costs for engineering vs. humanities instruction was covered in the old incremental budgets based on past practice. However, high-cost schools (Arts if it has lots of studios), or Engineering if its extramural research has facilities and administration needs that run up losses (see Part 1), would require subsidies from central administration. These subventions are in my view completely legitimate in higher ed. Once the myths are punctured and everyone is used to the conversation, subsidies could be quantified and discussed on campus. 

 

But the inclusion of (3), the student FTE weighs, means that instructional revenues will not be equal. Some schools will get less per student and others will get more. This was always the case, but inequalities tend to get more extreme under pressure. Inequalities per student generate equity problems for students. A great way to get less money back in your education than you pay in tuition is to major in Social Ecology rather than in Physics, Bio, or Engineering.  

 

Benchmarks exist to identify real empirical costs and to conclude that the Social Ecology student isn’t getting screwed because the same quality education costs more in Engineering than it does in Social Ecology.  This claim has been an object of controversy in the literature for decades (an early classic is Michael Power, The Audit Explosion (1994, expanded as The Audit Society)). Social ecology might have reached levels of educational impact that it cannot under a benchmark that is basically an aggregate of past funding custom.  

 

This raises the question of why UCI Finance would use a benchmark rather than study its own units and engage in discussions with faculty, staff, even students about costs. Faculty and students would have views about what there aren’t able to achieve cognitively that they could with 25% smaller courses or whatever it is.  The discussion is more work and cost, of course, but it would involve the campus in setting educational goals and then structuring budgets around education.  

 

However, external benchmarks have a couple of major managerial benefits.  One is avoiding exactly this kind of institutional discussion of resource equity, which involves distributed governance.  Another is that they are used to (re)distribute resources unequally—allegedly to reflect unequal needs.

 

Here are some figures based on the best current data that have come across my desk. 

 

Figure 1

 

 

 

These are UCI’s 14 Schools, with mostly student-based revenues (state, tuition, Student Service Fee, plus some research based Indirect Cost Recovery money (mainly in STEM Schools), plus some subsidies to soften budget cuts in some places, also from the same sources.  Cuts are not so far off the 3.5% percent the UCI Provost said would be the campus baseline. Generally the changes from 2023-24 (FY24) to this past year (2025-26, or FY26) don’t look so bad overall—compared to the budget mayhem in federal research if the U.S. Senate doesn’t block it.

 

Shifting to per-student funding tells a different story.  I believe that the exercise is to be applied to the 30% of School funding based on student numbers, but the figures used are School totals, so 100%. 

 

Figure 2   

 

 

 

 

Here the results of what seem a small reduction in overall core budgets (3.5%) are dramatic.  All Schools get hit. I don’t know how these per-student reductions could be implemented. Student instruction would be severely damaged, as would the faculty and staff that would undoubtedly be fired under this kind of a scenario.

 

Where do these cuts come from? It appears that the Delaware benchmarks are used to assign funding ratios depending on how much higher a particular UCI School’s State/Tuition/Other budget for FY24 comes in above the benchmark.  It is assigned a ratio in relation to new  gets a ratio which is used to give each School a new baseline of per-student funding. The reductions are startling: from $16,869 as weighted per-student FTE income at the end of FY24, to $8434 as a target per-weighted-student average in the year just ended (FY25).  That is half of the previous year.  The target reduction for the coming year, FY26, seems to be $6,825 per weighted student. 

 

The differences in marginal changes are also striking. If you compare Figure 3 to Figure 1 you can see that the percentage changes are mostly in single digits.  But the variance deserves discussion.  The educational effects need a full airing.

 

 

Figure 3

 

 

 

Why is this happening?  My main hypothesis is that this is how you use core funds to generate a surplus. You can move it from one School to another, and from core to non-core.   UCI does have to find $132 million or so to support unfunded research costs. 

 

This is the place where I’d normally issue a call to all university parties to address root causes, which always includes rebuilding the state funding that UC admin has basically given up on.  

 

But I don’t have a clear picture of where this model really wants to set School per-student expenditures, or why it set these very low baselines, or how a number UCI Schools can survive it without a messy array of one-time subsidies that keep getting renewed. So I urge my UCI colleagues to find out.  

Serpentine, Hyde Park London May 18, 2025   

UC Irvine is facing major cuts to its academic core, bigger in some places than others.  UCI lecturer Trevor Griffey analyzed them as the state budget was passed by the legislature. This post started life as the introduction to my analysis, UCI Part 2, but it has taken on a life of its own. 

 

As I mentioned in Part 1, there’s a national pattern at work, which is to assume and accept an even worse austerity norm – hyponormalization—rather than taking Trump’s assault on the foundations of the knowledge system as an opportunity to confront and change the university’s contradictory political economy. 

 

The confrontation will mean critique of various theories of the costs of college instruction that shape the thinking that operates universities. These theories are mostly bad, yet they are always with us.

 

One is that human teachers are inherently inefficient.  “Baumol’s cost disease” is often trotted out, in which productivity can’t rise in services as it does in manufacturing because it’s harder to get rid of people (Baumol famously noted that a quartet needs 4 musicians, not 3).  

 

Another theory is that U.S. college instructors are pampered elites with tenure and above-market salaries and benefits. Efficiency requires that their pay, benefits, and protections be dramatically cut. 

 

The cure for both is the same: automate teaching (digitalized extension courses and course management services in the 2000s, MOOCs in the 2010s, “AI” in the 2020s) while for the remaining humans sing “Yippie Ki Yay! Adios! Sayonara! Auf Wiedersehen! Au Revoir!” to faculty autonomy so you can treat professors like any other waged employee.  That’ll fix things.

 

There are better theories.  A third says service costs rise because the “standard of care” rises, which is a good thing. This was Baumol’s real point. Rivalry does increase costs, meaning marketization can raise rather than lower costs: If UCLA has a dedicated Learning Center than UCI will eventually have a dedicated Learning Center. 

 

But intrinsic improvements raise costs to match quality of service, not just a commercial rivalry. When a dentist uses a microscope rather than a magnifying glass during a root canal procedure, it reduces the patient’s pain while also shortening recovery time. So all dentists who perform root canals will need to shift to microscopes sooner rather than later. 

 

The same happens in every kind of classroom and laboratory space at universities: In the 1990s and early 2000s, every campus building needed to be hardwired for the internet. Then every campus building needed to be converted to wireless. The same goes today for lab and studio equipment. Employers like to complain that college grads aren’t ready for plug-n-play into their available jobs, but were that possible or desirable, a prerequisite would be cutting-edge hardware and software that no one is funding public universities to buy. Advanced mathematical and language skills are best taught in small tutorials, but students can’t afford this high-quality attention out of pocket.  The outcome of 2025 college should be smarter graduates as they face an unstable post-AI economy, but that will take budgetary increases coming from an intensity of budgetary campaigning and then on-campus budget intelligence that doesn’t exist today. 

 

A fourth theory, compatible with the third, is that instructional costs are heavily influenced by a university’s accounting practices.  Central administrations have the power to retain a chosen portion of revenues generated by any unit on campus.  Students bring tuition and state funds to their major and all the courses they take. But these funds arrive on campus not through students but through the chancellor or president and their budget offices, and are distributed according to formulae those officers create.

 

To take a dramatic example, Middlesex University in London closed its famous department in continental philosophy on the basis of an alleged chronic deficit that turned out to be induced by a central administration’s tax on the department—a tax of 55% on the department’s revenues. (That unit, the highly-ranked and more importantly, the intellectually distinctive Centre for Research in Modern European Philosophy (CRMEP), is now being pushed out of its subsequent home, Kingston University.)  

 

A second example is yesterday’s guest post from the Australian National University. Senior managers construct financial requirements independently of analyses of teaching and research aims—and of their quality and socio-intellectual effects-- that take place in departments and academic disciplines. The financial requirements become academic ones.  Finance thus controls academic freedom, and non- or ex-academics decide root possibilities for academics.  

 

In theory, there could be collaboration. Finance and academics could enjoy their division of labor in the context of iterative dialogue and shared authority over decisions. Genuine shared authority would allow a dean of humanities or a chair of Political Science to reject their budget and restart negotiations without getting fired from their post.  The distinctive skills of professional staff—with budgeting, for example—would work in complementarity with the faculty’s deep substantive academic expertise.  

 

In my experience, this never happens. Budgets are formed in isolation from the academic world of the campus, and then imposed upon it. 

 

The rule of academic finance has been TINA, Thatcher’s framework of There Is No Alternative.  Sure, this doesn’t work as advertised, TINA says, and it’s hurting you and what you do, but There Is No Alternative.  End of discussion.  

 

This keeps happening even though, for decades now, complex and top-down budget architectures regularly generate austerity, poverty, shortfalls, layoffs, closures, or at a minimum a general stagnation in quality of service in particular units on campus. 

 

There’s tragic irony here. The university is the place where professionals seemed to have won some (limited) self-determination in society, but then they lost it. 

 

There was no golden age, especially for women and faculty of color. But votes of no confidence used to matter, even if the senate’s Committee for Planning and Budget never really decided anything.  But the professoriat, that class “between labor and capital” named by Barbara and John Ehrenreich as the “professional-managerial class,” didn’t do the institutional confrontation and political-economy reconstruction that would have led to real power.  The professionals’ focus was too narrow, too internal, too self-interested, too white-male, too intellectually ethnocentric), and also too passive, too disconnected from the social movement world’s active engagements with power that would have enabled the proverbial march through the institutions.  “They,” the tenure track faculty, assumed they were doing well without budget power and political unpleasantness. 

 

The PMC deal was steadily withdrawn for the professional majority starting decades ago—right as many more people of color and women were entering the academy. Professors lost their management allies (and most of their professional staff allies, who saw which side controlled money, power and their employment). Yet professorial strategies haven’t shifted from the personal side-deal to collective organization. 

 

This is a historical realignment of the place of knowledge workers in Western societies that Trumpism another other trends is making post-knowledge societies.  Knowledge workers, especially academics, need to study, analyze, decide, oraganize, and fight like they never have before, not even in unions.

 

More narrowly, nothing will change about the budgeting I’m in the midst of discussing unless the professoriat breaks with this past and becomes fully engaged with their own institutions.  That will mean both collaboration and confrontation for which they have little training, but which can indeed be learned.  

Australian National University    

by Prof. Kylie Message-Jones, The Australian National University

The Australian National University (ANU) has said it needs to reclaim a budget shortfall of $250m. To do its bit, the College of Arts and Social Sciences last week published a roadmap to meet the University’s goal for its areas. Its change proposal boils down to a list of cuts that will damage staff, students, as well as local families, communities and economies. 

 

It might help to put the ANU’s situation in context. Although ANU is a small institution by Australian standards, with roughly 4500 staff and 22,000 students, it has historically been high performing. In the recently released QS 2026 World University Rankings, ANU, a member of the prestigious Group of Eight network, slipped slightly to come in fourth out of 36 Australian universities and 32^nd globally.

 

ANU is based in Canberra. The university’s staff make up roughly 1.2% of Canberra’s population, and if students its representation increases to about 6%. But many more Canberrans are ANU alumni or have a child or relative studying or working there, meaning the proportion of Canberrans who have a direct interest in ANU is significant. Job losses will have an economic, educational and cultural impact on the city.

 

Equally important is the effect the proposed changes will have on ANU’s core functions. How will ANU continue to meet its national remit – and defend its ongoing receipt of the National Institutes Grant – if it is cutting areas that contribute directly to its mission? 

 

This is not an abstract question because ANU was founded in 1946 in the national capital to be unlike any other university in Australia. Its vision is to develop national unity and identity, improve our understanding of ourselves and our neighbours, and provide world-leading national research capacity and education in areas vital for our future.

 

ANU receives an annual “block grant," which in 2023 was $220,367,000. Called the National Institutes Grant, this funding was endowed to ANU in 1946 to help it deliver on its special mission.

 

The block grant has historically maintained and evolved excellence in research, supporting the development of areas that would not gain funding from sources such as student fees. This has allowed the University to “develop sovereign capability on behalf of the nation against the swings in student demand and popularity”. It provides research, as well as research infrastructure, used by people who otherwise have nothing to do with ANU. 

 

The Humanities Research Centre is one of the areas supported over the years to provide research support, excellence, outreach and training. It was established in the early 1970s to have – like ANU itself – a unique function. 

 

Although the Centre is located in the College of Arts and Social Sciences, it provides a significant outreach and engagement hub for the whole University by hosting international and interstate academics from a range of disciplinary and interdisciplinary fields. 

 

Up to 40 paid and unpaid visitors per year have historically undertaken research projects and written publications at ANU, bolstering the University’s impact, reputation and funding. They have built collaborations, mentored local staff, given public lectures, run workshops for PhD students, and provided a pool of international expert examiners for student assessments. They also positively report on ANU for world university ranking exercises. 

 

The Centre has a genuinely international reputation, having attracted some of the world’s most famous scholars over its 50-year history. To this day it is the only centre of its scale and impact anywhere in Australia and the Pacific. It has successfully attracted external funding for the benefit of its programs.

In the last three years the Centre has focused on relationships with national cultural institutions in Australia and around the world. It has run ground-breaking courses for graduate students with the National Museum of Australia. It has run public film screening events with the National Film and Sound Archive of Australia, and public sculpture walks. It has directly contributed to the establishment of the Vietnamese Museum Australia. It has hosted First Nations people from around the world with Indigenous communities in Canberra and across Australia. It has made podcasts and radio shows showcasing ANU’s research and research infrastructure. These activities have led to recruitment of new students and extended the University’s connections with diverse communities. 

 

These functions are central to the mission of ANU and deliver on its funding obligations.

 

The change proposal put forward by the College of Arts and Social Science’s executive proposes to disestablish the Centre. The Centre’s functions are not being performed anywhere else in the University to a remotely equivalent degree. They could not be replicated under the proposed new structure. This means ANU would lose a critical research incubator that has served its mission successfully for over half a century.

 

The cuts are rationalized on purely financial grounds. However, the HRC was already running on a shoestring so any savings made from the destruction of this core piece of humanities infrastructure seem no more than a drop in the ocean.

 

According to ANU reports the University spent $1,487m in 2023. In 2024, the College of Arts and Social Sciences spent $64.4m. Even at its most well-funded, the budget for the Humanities Research Centre in 2023-24 was just 0.62% of the whole College Budget.  This covered a director's salary, visiting programs (including travel and accommodation) and all activities. 

By 2025, the activities and fellows budget was reduced to zero. 

 

The current proposal, which also abolishes other centres and ends research projects in the College, represents a retreat by ANU from its national mission--and its claims to international standing and excellence. The result will only be a further reduction in the University’s capabilities and reputation, and a withdrawal by ANU from many of the most important conversations being carried on around the world today.

 

The College executive claim that extensive consultations have been undertaken to inform the development of the change proposal. However, I am yet to find anyone who agrees this has been the case, including amongst the hundreds of visiting fellows, alumni and countless members of the Canberra community who have benefitted from the research impact and educational opportunities the Humanities Research Centre has delivered.

 

The cuts will undermine the ability of ANU to deliver on its mission. Claims to the contrary are false and in my opinion should be rejected. 

UC Irvine on May 8, 2018   

As Trump’s blunderbuss shoots the bottom out of the research boat, how will UC Irvine, the system’s middle case, stay afloat?

This is actually a national question. Trump has done a classic “heighten the contradictions” of the political economy of the US research university. 

 

This political economy has always been unstable, and three decades of reductions in per-student state funding have kept the boat rocking back and forth. Now the Trump Administration has blown holes in most sources of federal research funding. Meanwhile, state funding is mainly flat or down, and will be under renewed pressure as the provisions of Trump’s tax cut bill come into effect.

 

Colleges are taking on water, and this is to say nothing of the deeper crisis of social mission and public support, embodied in editorials like “It’s a Bad Time to Be a Graduate.”

 

The US university sector now has a choice: it can face its structural crisis, in particular the crisis of its research funding system, or force campuses to dig even deeper to subsidize it. 

 

In a recent post, I discussed the evidence that the senior management of the University of Minnesota is choosing the second path. I presume that this is the default choice across the country. That’s not good, because this path means, at best, austerity and, more likely, major cuts to instruction and to non-sponsored research, which is most research in law, arts, humanities, and the qualitative social sciences. 

 

Couple this with what Peter Byrne calls “AI hypnosis,” which can be used as an excuse for further instructional cuts, and the cognitive gains of completing college face gradual evaporation. Or so goes one default path.

 

Like the University of Minnesota, UC Irvine offers an important case study. Its administration  has been proactive. The Division of Finance wrote an informative “Budget and Financial Overview: Fiscal Year 2024-25 (FY25).”  The Budget Office has a new “Budget Model and All Funds Multi-Year Planning” mechanism.  This is coupled with a “Financial Stability Plan” that is responding to a campus structural deficit that they have presented publicly. So far, so good.

 

I’m going to tell the story of the UCI Budget Overview. I’ll then have to dispute its overall portrait of the campus economy—of who loses money and who doesn’t.

 

**

 

UC Irvine is a $6.7 billion university operation. (It was 56^th in the US in R&D expenditures in 2022-23, so is more typical of the body of research universities than giants like UCSD or UCLA.) Half of that income comes from UCI Health, the medical center which has recently acquired four more hospitals and does a massive revenue business—nearly $3.5 billion in 2024-25 (FY 25).  

 

In the Overview, medical business is booming, and the Overview claims that “funds flow from the health enterprise to the campus, contributing significantly to academic and support functions across the main campus, including the UCI School of Medicine” (p 7). 

 

The non-medical operation is split 3:2 between “non-core” and “core” operations.  Non-core funds include auxiliary units (like housing and parking) as well as research contract and grant expenditures (C&G).  Research is of course fully academic and core to the educational mission in spite of being put in non-core.  Research funds depend on academic faculty submitting successful research proposals to funding agencies with the full involvement of staff, postdocs, graduate students, and lecturers who also cover the teaching that grant-writers aren’t doing.  Faculty apply to federal agencies like NSF, and also get lesser funding from state, corporate, and foundation sources.

 

Figure 1

 

The UCI Overview presents this 4/5^th of UC Irvine as robust and profitable. It presents the “core” as not so much.   

 

Note that in Figure 1, all the entities, even the medical center, are trying to help the core’s Schools by sending money, apparently with nothing being generated by the Schools.  The Schools are charted like a sinkhole—Schools aren’t givers but takers

 

The core is inseparable from the campus and teaching students. Although the “core missions” are “teaching, research, and public service,” nearly all of UCI core revenues are tied to instruction.  This means both state funding and the many kinds of student tuition that UC campuses now charge. Some grant-based indirect cost recovery (ICR) is here as well, some investment earnings, etc.  But the core’s salaries for tenure-track faculty, lecturers, Graduate Student Employees (GSEs), and staff are tied to revenues from instruction. 

 

UCI defines the problem of the core in simple terms.  Core revenues go up 1-4% a year (Chart 3.2).  Core expenses go up 5-8% a year (Chart 3.3).  Costs rising at twice the rate of income has led to a projected $70 million deficit in 2026-27, or 5% of the core budget. 

 

The only good revenue news for the core is ICR, which gets special praise.  More on this in a bit.   

 

So, UCI defines its budget problem as the core’s expenses, and the Financial Stability Plan as the solution. It’s a model, but at heart is a plan for cuts, of familiar kinds. The UCI core will proceed by “not filling vacant faculty and staff positions, increasing revenue where possible, reducing programs and services where possible, leveraging existing non-core resources, and reducing other operating costs.”  The idea is to reduce instructional staff and services—that is to reduce instruction itself. (The only hint of growth again comes from “non-core resources.”)

 

In the UCI Overview story, all losses are occurring in the academic core, founded on instruction.  It assigns no losses to the non-core or to UCI Health. Therefore, all the cuts might logically come from the core as well.  

 

**

 

The UCI core does lose money, particularly on teaching California resident students, because the state has long underfunded the University very badly, refusing to compensate for quasi-frozen residential tuition, among other things.

 

But, contrary to the Overview story, the rest of the university loses money as well.   Even massive clinical revenues and other auxiliary activities barely cover costs in specific units. (And UCI seems to have negative “uncommitted reserves” (Figure 4)).

 

First, there’s UCI’s Medical Center, subject to audited systemwide Financial Reports.  In the most recent Report, for 2023-24, UCI Health’s Income from Operations was negative $28.6 million  (p. 60). Its Change in Net Position is negative $230.8 million (p. 60). Its Transfers to University is negative $91.9 million, meaning the campus sent it about $92 million that year (p 62).  

 

Caveats: these numbers fluctuate from year to year, there are others one could report, they require interpretation (cash flows from Med Center to UC campus are likely repayments / recharges for activities not specified in financial reports), med center accounting is very complicated, and I am not an expert in it.  

 

That said, the Budget Overview is not justified in presenting UCI Health as a general financial donor to the core and its Schools.  The arrows in Figure 1 are at best misleading when they show the Schools getting surplus funds from UCI Health, while generating none of their own.

 

This is an especially dangerous claim at this point in time, as the 1/3^rd of UCI Health that comes from Medicare and Medicaid reimbursement will be subject to further reductions when Trump’s health care cuts become fully effective after the 2026 midterm elections.

 

Next, there’s the “non core,” with its very large research expenditures. The Overview story is that non-core runs in the black and that ICR is a special boon.

 

Of the core fund sources outlined here, one source that has kept pace or exceeded inflation has been indirect cost recovery (ICR) from grants and contracts, which grew 15% each year for the past two years. This accomplishment reflects years of intentional investments in faculty, infrastructure, pre- and post-award administration, and incentive programs that have resulted in clear progress toward the strategic goal of increasing the impact of UCI research. The resulting growth in indirect cost recovery resources helps to cover existing costs for administration, maintenance, utilities, and other research-related costs that cannot be charged directly to grants. Continued growth at a steady pace is essential to achieving a sustainable financial model for the campus.

 

This is mostly crazy talk.  It’s obviously right about the rate of ICR increase, but the ICR growth rate is a function of UCI faculty’s increased grant acceptance rate, not an independent revenue stream. And those grants have costs that ICR is supposed to cover--rather than supply free cash flow to the campus.

 

Which gets us to the next point. ICR is also not a positive revenue stream on top of the allegedly positive net revenue of Contracts and Grants. 

 

 I’ll focus on this in a bit, but note in passing a third problem. That is the Overview’s suggestion that ICR comes from the administration’s capital investments rather than from the labor of the faculty, staff and students who write the grants (5-10 proposals for every success) and who then do the research. They are not mentioned here.  This is not petty carping about wording: academic accounting misrepresents academic reality in large part because of its abstraction from universities’ core academic work.  “Continued growth” in research activity is labor first, with secondary capital support that in fact, at all UC campuses, Irvine included, struggles to be adequate. 

 

**

 

Back to ICR.  The idea that ICR is a positive revenue stream is one of the most destructive myths in university political economy. 

 

ICR is the supplement to direct research costs that are covered more in less in full by an extramural grant. However, in the U.S. and the U.K., ICR does not cover the full indirect costs associated with running a research grant at a university. Not ever.

 

Many or most of these indirect costs fit under “Facilities and Administration” that many grants need and share.  (The American Association of Universities has a short primer). The Trump cuts to ICR from 56.5% at UCI’s campus down to 15% are still tied up in court, but will be devastating if they go through. The reason is not only because they cover real expenses, as has been stressed in this crisis period, but because they aren’t enough even at 60% or 75% to cover a university’s costs in laboratory research.

 

Here are two ways of depicting the universal ICR shortfall at universities.  The first comes from the UK’s Office of Students’ Transparent Approach to Costing (TRAC) database. TRAC tries to account for the “full economic cost” of all university activities. Here’s the picture from the 2023-24 TRAC Report.

 

Figure 2

UK universities lose money on teaching home students (dark blue bar) whose fees are quasi-capped (much like California resident student tuition).  They lose even more money conducting research (mint green).  Each year, the gap between full recovery and actual recovery of real research costs gets bigger, as do their losses. 

 

The TRAC report spells out the problem: 

The full economic cost recovery rate showed a deterioration to 66.0 per cent compared with 68.5 per cent of full economic costs for 2022-23, and notably lower than in 2010-11 when the recovery rate for research peaked at 77.8 per cent. The median rate for full economic cost recovery was 58.1 per cent for the UK sector.

 

The typical UK university loses nearly £400,000 for every £1 million of research it conducts. This is double what it lost a dozen years earlier. If sponsors paid the full cost of UK university research, the fiscal crisis of the UK university would go away.

 

The second ICR figure comes from the AAU primer, and brings us back to the U.S.

 

Figure 3

This figure expresses an implied loss on sponsored research: it is expressed by the share of research expenditures that come out of the university’s own pocket. In the AAU’s prose, 

Federal data show that colleges and universities pay for 25 percent of total academic R&D expenditures from their own funds. This university contribution amounted to $27.7 billion in FY23, including $6.8 billion in unreimbursed F&A costs. These institutional commitments to academic R&D significantly exceed the combined total of all other non-federal sources of support for academic R&D: state and local government (5 percent), industry [businesses] (6 percent), and foundation [other non-profit organizations] (6 percent) support in FY23. (emphasis added)

 

AAU objects to the myth of research funding as a net positive revenue stream and stresses how much universities are out of pocket. What does that mean for UCI’s “non-core’s” Contracts & Grants allegedly running in the black, even making money on ICR?  

It means this happens only because UCI spent $132,261,000 of its own money on research (FY23 Table 22, Rank 56, the most recent federal data).  In other words, 21.7% of its overall R&D expenditures that year ($609.6 million) came from its institutional funds.

 

Caveat: a small percentage of these institutional funds went non-STEM fields (an NSF accounting category) perhaps as direct internal research funding.  

 

Figure 4

 

 

 

But it’s a very modest non-STEM number ($8.2 million for the humanities, for example, and $36.8 million for all non-STEM fields (Table 58, rank 60); some share of it goes to subsidize (much smaller) losses on non-STEM research. (More analysis on these issues can be found at Liner Note 13, “Humanities Decline in Darkness” or, for detail, Stage 2 of The Great Mistake).  

 

So about one-fifth of UCI C&G funds take the form of internal subventions of extramurally sponsored research.

 

**

For the record, I am zealously pro-research and think there should be much more of it, not less. But the sector has long needed to stop bullshitting itself and pay for it fully and honestly, now more than ever--without pushing costs on universities who then have to sacrifice instruction or research in politically weaker disciplines like history and feminist studies. 

 

(This is not a new issue with Trump: for ye historians, here’s a call for full research costing on this blog—in July 2009, or Gerald Barnett and I kicking off the 2010s with a Chronicle piece on the same subject, or me trying to use UCSD losing three core members of its Center for Theoretical Biological Physics to Rice University as a teachable moment in 2011, or trying to use UCLA losing a neuroimaging lab to USC as a teachable moment in 2013, etc..)

 

The reason it’s even more urgent now is that the Trumpian war on the knowledge system is slated to cause universities to lose much more money on research than ever before. Their administrations will be looking to free up resources everywhere, very much including the large payrolls tied to the instructional core.  

 

Given the damage this will cause, they are likely to set it up as UC Irvine has done: say research is profitable for the university while instruction runs at a loss that must now, in trying times, be staunched.  UCI finance, having obscured the $100+ million it spends to subsidize research (leaving aside UCI Health), plans to cut its Schools of Humanities and of Arts and then keep the reductions to about 4% next year with subventions in the $2.8-$2.9 million range.  

 

I’ll discuss this issue in Part 2 of this piece.  But we should go into it with the understanding that “subventions” are the lifeblood of higher education. They can be made very large when education needs or wants them large, as with basic research in the STEM disciplines.  

 

The political economy of universities rests on the socialization of costs. It’s just a matter of whose costs and whether we admit them or cover them up. 

 

Dún Laoghaire Ireland on June 18, 2025

I haven’t found dissent in the standard places about Penn’s capitulation to Trump on transgender women athletes.  Maybe it’s because the deal seems to have gotten Penn’s $175 million back—those federal funds that Trump’s people had unlawfully suspended.  So let me say why it’s so bad. 

 

You may have heard that Penn president J. Larry Jameson settled with Trump’s Department of Education over the alleged Title IX violation of allowing transgender swimmer Lia Thomas to compete for the Penn’s women’s team in 2021-22. This was actually Title IX compliance, since NCAA and Title IX guidance then required Penn to include trans women in women’s sports. (The Athletic has a good overview. See also Johanna Alonso at IHE.) 

 

The Trump Administration approaches most issues through coercive bargaining.  The play is always the same: accusation, conviction and punishment come first, pleading out the charges come after.  “First I hit you in the face. Then we’ll sit down to make a deal.”

 

Penn had the same three main choices as do other universities.

 

1. Comply with current policy as demanded by the Administration. In this case, that means the outcomes described by the Department of Education: “specifying that UPenn will not allow males to compete in female athletic programs or occupy Penn Athletics female intimate facilities.” 

 

Penn also went the extra mile: “UPenn will adopt biology-based definitions for the words ‘male’ and ‘female’ pursuant to Title IX and consistent with President Trump’s Executive Orders.”  (If the agreement said “consistent with biological science” it would have the opposite of Trump’s intended effect, but it’s Trump defining the biology of the Penn agreement.)

 

2. Contest the policy on procedure or substance or both. Build alliances to organize independent policy formation through federal procedures. In this case, that would mean the NCAA, Ivy League Athletics, etc., continuing to defend Biden-era Title IX rules for trans inclusion on various grounds: harms exaggerated and politicized rather than defined; known biology analyzed and incorporated; and equity, ethical, psychological, and rights issues accomodated. One goal would be creating a better public discussion to counter the current bigoted and dangerous discourse established by Trump’s Executive Orders.

 

3.  Comply with current Trump policy and also retroactively repudiate your own.  

 

Option 3 has become more likely as U.S. elites have largely collapsed before Trump’s coercive bargaining. They seem to think playing dead will make Trump go away.  This also means that Option 2 isn’t happening, though it has to happen if higher education is to recover its autonomy.  

 

Some university administrators, like Penn’s, also erase the difference between Options 1 and 3.   They aren’t only knuckling under to rules they opposed only months ago, doing U-turns to unfreeze federal funds that the Administration has unlawfully withheld. In Penn’s case, they are in effect endorsing the Trump-McMahon position and repudiating their own.

 

Penn’s president Jameson did this when he agreed to McMahon’s language and then stripped Thomas of her medals.  Treating her like a cyclist caught doping says that she cheated in the competitions because a trans woman is not a woman. McMahon’s Department of Education confirms this when it writes, “The Department commends UPenn for rectifying its past harms against women and girls.” 

 

Penn’s Note on their record page makes it worse. ““Competing under eligibility rules in effect at the time, Lia Thomas set program records in the 100, 200 and 500 freestyle during the 2021-22 season.”  In other words, she competed because of a regulatory fluke, and very much not because trans women are women.

 

Penn’s settlement is a Pandora’s box from which many bad conclusions can now be drawn by the wider public. Here are six.

 

1.     University modes are wrong (science, gender studies) and “traditional values” are right. 

2.     Civil rights means excluding transgender people, not including them.

3.     Universities pretend they care about vulnerable and oppressed people because they stand for principle. But they will not fight for them. They’ll take the money instead.

4.     Universities demand independence on the grounds that they answer to a higher power—thought itself—but they answer to power, just like everybody else. 

5.     Trans women are not vulnerable people in need of civil rights protections but oppressors, starting with oppressors of cis-women. (See McMahon’s testimonials.)

6.     Universities are wrong and Trump is right.  (That is the headline for the whole saga.)

 

Universities are supposed to stand up for truth even when it is unpopular.  Here Penn endorses fake truth and the premises of Trumpian persecution.  This undermines public respect for university research findings and deepens society’s knowledge crisi.

 

In a single capitulation, Penn’s administration has made both transgender people and universities easier prey to Trumpism.  

 

My heart goes out to the former, including Lia Thomas.  As for the latter, senior administrators--my god what will school these people?