Thursday, April 15, 2010

We are not going to grow out of the financial mess

at the University of Minnesota

by increasing Federal Grants...

Dirty Little Secret Finally Acknowledged
Research Funding From Outside Federal Grants
Requires Additional Subsidy

I've been harping on this point for, literally, years. See for example:

If You Build It, Grants Will Come? Or, Could Someone at BigU Please Be Honest and Responsible About Expansion of Biomedical Research?

Trees Do Not Grow to The Sky or, Why the State Legislature Should Not Write a Blank Check to BigU for Biomedical Research Buildings

Who's Dismantling the Ivory Tower?

Honesty on the matter is going to be required from the Morrill Hall Gang if we are ever to dig ourselves out of the current mess. 

University of Minnesota Vice-President for Research, Tim Mulcahy, confirms the fact that grants from the federal government - and a lot of other places, actually - require subsidization by the University of Minnesota. The obvious question is: From where do such funds come?

Clearly, bragging about our increased federal funding, is inappropriate without acknowledging that accepting such funding means further commitment of University resources which are increasingly scarce.

Leadership and foresight in the past on this important matter has been lacking.

Senate Research Committee
Monday, March 22, 2010

Dr. Mulcahy recalled that about 18 months ago the President appointed a working group to address financing the future of the University; the group issued a report that was subject to considerable discussion.

One question the report asked is whether there are revenue streams that might be enhanced. One suggestion was to increase the volume of sponsored research and thereby collect additional indirect-cost funds.

Many [moi...], however, recognized the fallacy in that suggestion: The University does not recover the full cost of research, so increasing the volume of sponsored research would mean greater cost and that the University would have to increase its subsidization of research.
Many do not understand F&A costs, so he had a session with the President's executive team to introduce the idea that the University should introduce changes in its policies and practices.

Sad, indeed, that Dr. Mulcahy had to explain this to the President's executive team. That they did not know this already is part of the reason we are in the current mess.

Leadership matters. Let's not make the same mistake twice.



madradprof said...

Bill, I knew this would get your attention! Would also like to know how much of the additional state revenues from 2005-8 were spent in hopes of securing these grants. My sense is that the strategic positioning plan has favored areas of the u that can secure these big grants. Such short-sighted planning.

Anonymous said...

I know I'm way late on this, I just found your blog yesterday, but ... Would it be too difficult to explain this question of the U not covering their costs on research grants? I know that private companies get federal research contracts, cover their costs, AND make a healthy profit. I believe that the rules may be different for the U, maybe because it's a state organization, or is it because it's non-profit? Perhaps there's a difference between a "grant" and a "contract" but a company I know of has both and profits.

Does the U bid a lot of in-kind contributions to keep bids low? I know of at least one recent grant that included 3 PI's with part of their salaries counted as in-kind. What a mess that is.

Mr. B. said...

It is complicated, but briefly the problem is the assignment of overhead by the granting agency. Crudely speaking, about 50% of the cost of a grant is given to the university for expenses that are incurred by grantees, such as heat, light, libraries, etc. According to VP Mulcahy - and I believe this - this leaves approximately 25% of the indirect expenses of the grant uncovered so that the money has to come from some place else. It should be noted that the overhead for private universities is approximately 100%! One might ask why this is...

According to today's Wall Street Journal, the U of M's stimulus funding incurred additional uncovered expenses of sixty [sic] million dollars. So to pretend that we are somehow going to grow ourselves out of financial problems by getting more grants is absurd.

We really need to get some sort of agreement with the state that these excess costs will be covered. Otherwise, we may have to actully CUT back on grant seeking?

As to "in kind" it is as you rightly point out another can of worms.