What should we do about research?

Originally posted on Review on June 8, 2021.

Public research universities spend a lot of their own money to support research. Often, this money cones from state appropriations and tuition. What should we do about it? We should tax and spend and the feds should direct money to public research universities directly.

Research is good

This is the time of year world rankings come out. So do other metrics like journal impact factors. Don’t worry. I’m not going to write about either of those things. I have been thinking about them a bit, which got me thinking about research in general. Which got me thinking about research universities. Which is the topic of this post.

I know research universities are out of fashion with the higher education policy/wonk / Twitter crowd. It’s all undergraduate outcomes all the time. Ok, I exaggerate a little bit, but not much. I remain a research university Stan (is Stan capitalized? Autocorrect thinks so).

I like research and research universities. Yes, I like doing research (sometimes) and I work at a research university. But this is not just about my personal preferences. I think research is good. As in, research is a public good. Research also benefits individuals and communities. This is not to say researchers and their research haven’t ever done bad things. On balance, however, the more research in the world, the better. That’s my view.

Why is research good?

• Research universities anchor communities. They are generally billion+ a year organizations that employ thousands of people and support local businesses, housing markets, etc. I have never understood why jobs that result from higher education but are not in higher education are considered better than jobs in higher education that come from higher education. Maybe you can explain it to me sometimes.

• It is not the 1990s. It is not the early 2000s when we were innovation mad. But, it’s true that science leads to innovation. Or at least to the development/improvement/advancement of other domains. Science papers are taken up by industry, the government, and the media. Science is a public good.

• Academic research addresses some of our most pressing problems. Like COVID-19. For example, U.S. and Chinese scientists mobilized to produce a ton of pandemic research. Check it out, from my friend, sometimes collaborator, and mentor Jenny Lee. Also, remember, it’s the Oxford AstraZeneca vaccine.

• I am about to get a bit sappy. Research, or inquiry anyway, makes us human. I remember waxing lyrical to a reporter once about how we have to keep peering into the telescope to ask the biggest questions and that’s why we need research universities. And then I worried I sounded like I was actively using Michigan’s legal pot and felt embarrassed.

Research is good. That’s how this issue is starting. But, as with all things, with the good comes some mess.

Research is expensive

So, how much does it cost? In 2019, NSF data shows that U.S. higher education spent about $83.6 billion on research, up from $61.3 billion in 2010 (in nominal, or that year, dollars). If we put that into constant dollars, we are talking $63.8 billion in 2010 and $74.5 billion in 2019. An actual increase of about 16.8%. (The U.S. is the biggest academic research spender in the world, though China is close behind.)

The federal government is the big research sponsor. Federal money makes up more than half of all academic research expenditures in the U.S. This money is allocated in lots of ways, but much of it comes through grants awarded by agencies like Health and Human Services (NIH), the Department of Defense, the Department of Energy, the NSF, etc. The federal government is the big sponsor. It has been since the middle of the 20th century and will continue to be for the foreseeable future. But the role of the federal government has decreased a bit recently.

In the decade between 2010 and 2019, almost all of the real growth in R&D expenditures came from what NSF HERD survey category “institutional funds.” Federal funding was flat, and so was research funding from the states. Business funding was up a bit, as was nonprofit (philanthropy and charity) funding. But institutional funding was up almost 52%!!! That means for every buck colleges and universities spent on research using their own money in 2010, they spent about $1.50 in 2019. Institutional funds grew as a portion of total academic research expenditures, while federal funds declined in relative terms. In 2010, federal funds made up about 64% of all academic research expenditures, but federal sources were down to 53% of the total in 2019. Meanwhile, college funds accounted for 22% of all academic research spending in 2019, up from about 17% in 2010. If you squint, you can see this trend in the figure below, which was generated by a neat NSF tool. It rendered too small on the newsletter, but this is a shit-post with data, so I’m not going to go to the trouble to make it look better. Now, back to our narrative: Colleges and universities spend a lot more of their own cash on research. Why?

All higher Education R&D spending, 2010 - 2019

Whoa, before we get ahead of ourselves, let’s think about where all these institutional funds come from. For sure, some of it comes from endowment income. Research universities, and private research universities, in particular, tend to have large endowments that, among other things, support research. Some of it comes from current gifts, donations spent more or less when they come in rather than investing in an endowment. Some of it comes from hospital and health system revenue (sorry, something close to none of it comes from sports revenue, because there mostly isn’t any). For public universities, some of it comes from the appropriations state governments make. But let’s face it, a crap-load of it comes from tuition. How much is a crap load? Come on, I’m not doing precise accounting here! NSF data don’t show where the institutional funds come from (other than the institution). Few published university budgets provide the detail necessary (at least that I know of) to trace the web of revenue and expenses that you’d need to know where it comes from. Besides, money is fungible (that’s something you can say when you don’t know the answer to a financial question). If you do know, please drop me a line. If you’ve ever taken a course with me, you sometimes have to put your head down and wait for the tangent to end before we get back to the actual class content.

Back to why they are spending so much.

Welp, one reason is that Obama’s second term and Trump’s first (you see what I did there? Ok, breathe …) were not super years for federal research funding growth. The Biden administration has plans to spend big on research, which might change things if it happens. The cost of research increases over time. Because it is skilled labor-intensive, it is hard to control costs. We are always learning more, so there is always more elaborate and intensive work to be done. If the money wasn’t coming from the feds, it had to come from somewhere, and it came from the (mostly) universities themselves.

Research is also a competitive enterprise. Universities are competing with each other for faculty, students, grants, and acclaim. To get a competitive edge, universities will spend their own money on research. Starting up a new faculty lab in chemistry, for example, can cost six or even seven figures. This completion happens between universities in the U.S. and internationally. The National Science Board’s The State of U.S. Science and Engineering 2020 report put it this way:

The changing global landscape affects the position of the United States relative to the other major global players. For example, the United States has seen its relative share of global S&T activity remain unchanged or shrink, even as its absolute activity levels have continued to rise.

…

Increasingly, the United States is seen globally as an important leader rather than the uncontested leader.

The public-private divide

No university wants to fall behind the global competition. But much of the competitive pressure, I speculate, is within the country. Public universities struggle to keep up with their private rivals. Private research universities tend to have a significant advantage over public research universities. It’s not that private research universities do more research. It’s that they are more research-intensive. What do I mean? Think about it this way. Research isn’t done by universities. It’s done by researchers. (NPR, stop telling us about a Harvard study. No such thing exists.) And researchers congregate in universities with different configurations and resource levels.

Compare the University of Minnesota, Twin-Cities, with the California Institute of Technology (Cal Tech). They ranked 18th and 19th respectively on the list of top research performances. They each spent just over $1 billion on research in 2019, and they each got just under half of their research funds from the feds. But that’s where the similarities end. A quick lookup using Department of Education data shows considerable differences between the two. 

In 2019, Minnesota enrolled over 51,000 students, and the vast majority (68%) were undergraduates. Minnesota has about 5,500 full-time faculty members. Cal Tech had just 2,237 students - the size of a high school - and undergraduates made up only 42% of the total. Most students at Cal Tech are Ph.D. students. And Cal Tech has just under 1,000 full-time faculty members. At Cal Tech, there is one faculty member for every two students. Hard to hide from the professors in those classes! Minnesota has almost 25 times the number of students as Cal Tech does, but just over 5 times the number of faculty. UM spent something like $181,000 on research per faculty member, which is a pretty big number. But Cal Tech spent about $1,00,000 (ONE MILLION DOLLARS) on research per faculty member. Even though both Minnesota and Cal Tech are big-time research universities that seem like they do similar amounts of research, they are not comparable. Most faculty members at Minnesota will spend much less time on research than their Cal Tech colleges, and when they conduct research, they have fewer resources to get it done. How can Minnesota keep up with Cal Tech? 

It can’t.  

Cal Tech is an extreme example. It’s super-wealthy, super research-intensive, and has very few students, even compared to other major private research universities. And Minnesota is both larger and does more research than many public research universities. But the comparison is illustrative of the differences between major public and private research universities in the United States. 

Public universities must balance the research mission with other missions, including providing underrated education at scale. Private universities can limit undergraduate enrollment - sometimes severely - to focus on research. Recall, public research universities are competing with private ones for faculty and graduate students. Overall, they don’t win those competitions. But to try to keep up, public or try to keep up as best, they can.

Taking advantage of the scale that public research universities have, including large amounts of cash sloshing around, can be directed to research. For every dollar of federal funding that comes into public institutions, they spend 55 cents of their own money. Some leading public universities spend a higher ratio of their own money relative to federal funds. Minnesota spent 66 cents in institutional funds for every federal research dollar. Let’s not pick on Minnesota too much. The University of Florida also spent 66 cents of their own money on research for every federal dollar. Arizona State spent 88 cents of ASU cash for every federal dollar.

Institutional funds can buy stuff. What kind of stuff? This kind: new labs and faculty start-up packages, internal grants to seed projects that will attract grants, and pay for worthy research that doesn’t have an external sponsor.

Let’s not get too moralistic. Using institutional funds for research is not evil or immoral or anything. Research is good. Also, it’s not like private research universities don’t do it too. NSF data indicate that private institutions spent 36 cents of their own cash for every federal research dollar. And institutional spending on research by private institutions increased quite a bit over the past decade, probably because federal funds have been flat. Of course, all that does is increase the cycle of competition.

Research can distort priorities

Getting back to the question of where do institutional funds come from. I still don’t know for sure. But I do basically know. Tuition. How do I know? Well, good of you to ask. Public universities are increasingly tuition-dependent as states no longer fund higher education on a per-student basis than in the past. Institutions that can raise tuition can actually see more overall revenue when budgets are cuts. What? Yup, that is more or less what we are learning by observing public research universes compared with other public colleges and universities.

A new SHEEO report helps to show this dynamic. Public universities could increase tuition because student demand allowed it, and who could recruit out-of-state and international students did just this when the state funding dipped. Research by Ozan Jaquette and Katrina Salazar shows that public research universities - sometimes called flagships, but we won’t get into that - do most of their student recruiting at wealthy high schools, often overlooking students of Color and low-income students. Even though I can’t prove it here, likely, much of that money that public research universities use to fund research comes from the students they recruit to pay tuition. It comes from tuition. A lot of it does, anyway.

Critics of the research university, and there seem to be plenty of them these days, have a point. The research mission can distort other priorities. It justifies spending much more money on research universities relative to other institutional types that do a better job providing access to marginalized students. Check out this report about it in the Midwest from Bookings. Need to fund the research mission likely at least partially motivates public universities to seek students who can afford to pay. It is also likely partly behind why so many private research universities are, as Akil Bello puts it, so highly rejective.

I know many I know; we want to post #TrustScience and get mad at higher education for spending on research. We are entitled to our contradictions. Lord knows I’ve got plenty of my own. For instance, I hate leaf blowers and want them outlawed, but I also hired a lawn dude who used a leaf blower. So what can be done? I want my cake and to eat it too. 

More seriously, I think we need to do a better job perceiving the research mission of public research universities without pitting it against the universities’ other missions. Scroll down to learn the plan.

What to do? Federal infrastructure, of course!

Public research universities are infrastructure.

Public research universes serve an important role in communities and the nation. They perform large amounts of research and development that indirectly support economic growth and innovation. They are regional economic anchors as multi-billion-dollar organizations that employ thousands of people. Public universities are good for the public.

Unlike a car factory, insurance company, or tech firm, the University of Michigan, Michigan’s largest employer, cannot relocate to another state or country. Even as successful organizations, however, research universities face challenges and conditions that discourage sufficient attention and commitment to the mission of providing equitable access and opportunity.

In recent years, public research universities have been justifiably criticized for their student bodies’ limited racial and socioeconomic diversity. 

How can we support public research universities while discouraging allowing the research mission to distort other missions?

One way is to directly fund research (gasp). The United States is odd in that we don’t support the research mission directly. Yes, we spend a lot on research (more than a crap-ton, in fact), and there are lots of research grants available, but research universities tend not to get direct unrestricted funding for research. A recent Ithaka S+R issue brief noticed this and suggested that states consider directing funding to specific missions. Here is what they said:

Many states currently allocate appropriations with no specifications or restrictions on how institutions can spend those funds. The effect of this is wide variation in the amount of money colleges spend on teaching and related activities, as opposed to research and public service.34 Rather than a lump sum, states should allocate funding to institutions according to discrete expenditure categories, such as teaching, research, or non-educational expenses. For instance, appropriations allocated to teaching could cover expenses like instructional staff salaries and technology or facilities costs for classrooms. Allocating appropriations in discrete categories rather than a lump sum gives policymakers some modest control over institutional expenditures and helps ensure that public funds fulfill public missions. This modest control may satisfy lawmakers who want more institutional accountability, while also preserving institutional autonomy and financial efficiency. Of course, different institutions have different missions, and such an approach should reflect this.

I really like this idea, but worry that state legislators will never fund research. They hate research. I jest, or do I? Seriously, this is a job for the feds, I think.

So, here is my basic proposal.      

A federal program should directly fund research at 75% of the real dollar average of institutional research funding.  In other words, the federal government would give universities most of what they were spending out of their own pockets on research. Probably this needs to be limited to the general fund money they spent, and not gifts, endowment, or redirected co-pays from that MRI you got at the university hospital. 

Just give it to them (the money, that is). And because the universities would ramp up their institutional spending on research when they learned about this program, you’d need to take a multi-year average. Say something like the average over the past 7 years. Research universities, you get three-quarters of that.

One of the challenges would be to determine who counts as a research university. This is hard because we don’t have many formal designations that separate research universities from other institutional types. The Carnegie Classifications are quasi-official but not set in stone or statute. It would be a real fight to set the line for which universities are research universities and which are not. A damn mess, I admit it.

This money can’t come with no strings.

In exchange for direct federal research funding (not through competitive grants), universities commit not to spend any general fund (tuition and appropriations) money directly on research. The accounting on this will be tricky, but reasonable standards can be set.

Universities agree to restrain tuition increases to some band tied to inflation. This will be a tough pill to swallow for universities and might be seen as a limit to autonomy. But it would help to justify the federal spending, I think.

Now that universities have the extra money they were spending on research, these funds should be directly invested in expanding opportunity for undergraduate students – targeted spending to broaden access, boost graduation rates, and reduce racial and socioeconomic disparities. The Department of Education could oversee the use of funds for approved programs as a condition of the direct research funding.

I think this kind of direct funding is needed even if Biden is able to get a big boost in basic research funding that would allocate the money from grants. More money will ease some of the pressure, but not all, to spend local cash. Something more drastic is needed to change the dynamic.

What do you think of this basic plan? The devil is, of course, in the details, and lots need to be worked out. But is this a reasonable starting point? Can the federal government set tuition restraints or dictate how universities spend their money? Would Joe Manchin vote for it? Let me know.

Ok, enough.

I am on vacation this week. There will be a one-week gap to issue 5.