When “crisis” and “extramural funding” are mentioned, most academics think about problems such as the low percentage of proposals funded by federal agencies (now approaching single digits in many fields) or inadequate indirect-cost recovery rates that fail to reimburse universities for all costs of research. These are great problems draining resources away from public universities in an era of severe budget cuts, but they are merely the symptoms, not the underlying malady. The real problem is that for several decades the quest for outside funding has come to play a central role in an increasing number of colleges and universities. The current system of federal research programs cannot sustain the demands put upon it, however, and the pressure to increase extramural funding is threatening to supplant the core values of the public university.
There is nothing intrinsically wrong with extramurally funded research. Indeed, the system of competitively awarded funding has greatly benefited the American research enterprise and accelerated technological innovation. Funding from federal agencies has enabled universities to accomplish much more research than would have otherwise been possible. The practice of peer review and awards conferred according to merit has generally given resources to those with the best ideas rather than the best personal connections. Yet this system is now failing as cutbacks to state support for higher education drive universities to use extramural funding to replace rather than enhance their own resources.
Cuts to the Core
My department, the Scripps Institution of Oceanography at the University of California, San Diego, is oriented primarily around research and graduate students, though it has substantially increased its undergraduate teaching in recent years. We have relatively few teaching assistant positions available to provide stipends and tuition remission, so graduate students are supported largely by federal grants and fellowships. Graduate students are also the constituents for the majority of the courses we teach. Our department’s faculty supports many postdoctoral fellows, project scientists, technicians, and laboratory facilities through extramural funding as well. As is common for science departments in public research universities, most of our total budget comes from federal research grants rather than from core state funding—in our case, only 14 percent comes from the state.
Unfortunately, this 14 percent produces 90 percent of our headaches. Our department has reached the limit of its ability to substitute extramural funding for core state funding, so further cuts will be devastating. We must maintain safety and financial compliance, we must continue the required matching contribution for our research ships, and we can no longer reduce the bare-bones local administrative staff. All that is left to cut is faculty salaries (70 percent of the core), but eliminating faculty lines has the multiplicative effect of eliminating the students, staff positions, and facilities supported by faculty members through the extramural funding they obtain. As has occurred in science departments at other public universities, explicit or implicit expectations for faculty members to pay part of their academic-year salary from outside grants are likely to take hold. Such expectations can be made explicit as a condition for appointment; furloughs (which have already been implemented at my university) or increased teaching loads (which will be implemented next year in my department) can provide further inducement to rely on outside grants.
Although the substitution of extramural funding for state support has occurred as a response to state budget cuts, pursuit of extramural funding for its own sake has become widespread over the past several decades. The apparent goal of many universities is to expand research without any institutional contribution, or even to gain in net revenues through extramural funding. One prominent example of this shift in attitude is the creation of research centers that are entirely dependent on extramural funding. The faculty and staff in the centers receive 100 percent of their salaries from federal grants, and the cost of the building and infrastructure is repaid through indirect-cost recovery on those grants. Or at least that is the plan; as increasing numbers of universities compete for limited federal funds, they are finding that programs built “on spec” do not always pay off and frequently require bailouts.
Flaws in the Funding Model
One fundamental problem with the notion that extramural funding can increase research productivity without any institutional contribution (at best) or substitute for state cutbacks (at worst) is that there simply is not enough money to go around. When faculty members seek extramural funding only for summer salary and support for a few graduate students and a small technical staff, demand is naturally bounded because professorial lines and state-constructed building space are limited. No bound exists, however, to the possible number of principal investigators and buildings funded entirely through outside money, and the federal science budget can never grow enough to meet demand. As competition for grant money increases, success rates decline, and investigators respond by submitting a greater number of proposals. This, in turn, requires a greater number of mostly unpaid peer reviewers, who are drawn from the same community as the proposers. Universities respond by adding staff to help investigators develop bigger and more competitive proposals. The end result is that the same number of awards is given, but much more effort is wasted in the preparation and evaluation of meritorious proposals that are not funded. As faculty members spend more time writing proposals, they have less time available for teaching, service, and actual research.
Worse than the decrease in productivity accompanying a decline in funding rate from 30 or 40 percent to 10 percent is the effect on science: the best work is no longer supported. The success of truly innovative ideas may not be obvious ahead of time, and it is difficult to distinguish them from merely good ideas with a few probable flaws. If 30 or 40 percent of proposals are funded, the best 10 percent are likely to be included somewhere among them, but when only 10 percent of proposals are funded, reviewers tend to choose “safe” projects that will deliver certain but only incrementally useful results. To remedy the problem of low funding rates, a recent editorial in the leading journal Science has recommended that universities be required to contribute a larger fraction of their own resources in order to deter submission of an unlimited number of proposals. Such a change appears impossible in the face of state budget cuts, but it would return us to the conditions that favored rapid scientific advancement in postwar America.
Another fundamental problem with the hope that extramural funding can compensate for lost state funding is the fact that sponsored research is usually a net drain on university budgets. This is obviously the case when matching funds are required, but the indirect burden of extramurally funded research on personnel systems, energy usage, building maintenance, regulatory compliance, libraries, and so on is often forgotten. Federal agencies generally reimburse what they believe is the full indirect cost of research, though with a cap for administrative costs. This reimbursement is less than what universities think is appropriate, so, at best, federally funded research is a break-even proposition. Since private industry and foundations typically do not fully reimburse indirect costs, such research is carried out at a loss. State agencies often provide the worst indirect-cost recovery rates, reasoning that the state is already covering indirect costs through core appropriations to the public universities (this is less true with each passing budget cycle).
The opacity of university finances makes it difficult to account properly for the indirect costs of extramurally funded research. Because federal agencies regard indirect-cost recovery as reimbursement for expenditures already made, they place no restrictions on how universities spend it. University administrators have a strong tendency to view indirect-cost recovery as “free” money available to be spent on a new venture or for patching the latest budget hole rather than to ensure that a sufficient amount is returned to the unit that generated it in order to support the research actually sponsored. As a result, science departments are simultaneously wealthy and impoverished. My department has been very successful overall in obtaining extramural funding, yet the infrastructure is crumbling around us because, in our view, too much of the indirect-cost recovery from our grants is sent elsewhere rather than used to maintain our facilities. Our local administrators are admirably transparent about how money is obtained and spent, but that is definitely not the case at higher levels of university administration.
A Destructive Trend
Experience suggests that greater availability of extramural funding in a field is correlated with decreased availability of institutional resources, even for nonresearch tasks. For example, professors at teaching-oriented public universities in my state are provided with new desktop computers every few years to enable them to carry out their instructional and service responsibilities. Yet neither I nor any of my colleagues in science departments at public research universities have ever received computers and printers to help us with our instructional and service responsibilities; instead, there is a strong temptation to make do with equipment paid for by sponsored research projects, a practice that federal agencies frown upon. It also leads to the widespread perception among the rank-and-file science faculty that the extramural grants they obtain are subsidizing other operations of the university.
The multiple streams of cross-subsidization occurring in the typical public research university make it difficult to assess where revenue is gained and lost and whether gains and losses are in areas central or peripheral to the mission of the university. Another problem is that complicated funding arrangements stimulate the growth of top-heavy administration to manage it all. These factors partly account for the fact that extramurally funded research is a net cost to public universities. In contrast, some private nonuniversity research organizations do survive on 100 percent extramural funding and have an indirect-cost rate lower than my institution’s. Such organizations are characterized by mutual interdependence among members, focus on “small” science, flat organizational structure, and high accountability of management to the principal investigators. Needless to say, these features are not typically found at public research universities.
The rapid growth of higher administration over the past two decades has consumed much of the shrinking pool of state funds. This year the number of senior managers surpassed the number of tenure-track faculty members in my university system. Salaries for higher administrators briskly rise while faculty and staff salaries lag behind those at peer institutions. While it is true that regulatory demands have swelled, no comparable inflation of management exists in private organizations. The vast expansion of multilayered, expensive administration exerts a heavy drag on public universities. Without it, indirect-cost rates would be lower, thus increasing the overall amount of extramural funding available.
If extramural funding is generally carried out at a net loss, why is its growth pursued so vigorously? At the individual level, investigators and departments do not benefit from greater selectivity in the sponsored projects they undertake, since institutional support and indirect-cost recovery returned to the unit is disconnected from the actual expenses generated. On a short-term basis, indirect-cost recovery provides unrestricted funds to plug budget holes, though on a long-term basis failure to reinvest in research infrastructure will diminish future extramural funding. On the broadest level, greater amounts of extramural funding appear to be associated with more prestige (so suggest university press releases), and more prestige translates to greater willingness of students and parents to pay higher tuition and larger salaries for senior administrators.
Declining proposal success rates and rising tuition are both symptoms of the privatization of the public research university. As states withdraw their support for the broad education of their citizens that is provided by close contact with active scholars, higher education and research will become accessible to only a smaller and more elite part of American society. The federal science budget and private foundations are not large enough to replace state funding of faculty salaries and research facilities, nor are there enough families that can afford the tuition needed to replace former state contributions.
We are faced with two options. The first is to return to the state university model that delivered great scientific and educational returns in the postwar decades. The second is to continue the trend toward bloated administration and fiscal impoverishment that is forcing the majority of public research universities to abandon their historic mission, with the remaining few becoming private in all but name.
Joel Norris is professor of climate and atmospheric sciences at Scripps Institution of Oceanography at the University of California, San Diego. His e-mail address is firstname.lastname@example.org.