The Chronicle: 8/15/2003: Who Pays for the Growing Cost of Science?

By RONALD G. EHRENBERG

Scientific research has become increasingly important to many American universities as scientists and engineers make advances of great significance to our society. For example, the decoding of the human genome promises major improvements in health care in the years ahead. Any university worth its salt wants to be a leader in scientific fields so that it can attract top faculty members and undergraduate and graduate students, as well as more money for its faculty members' research.

The growing importance of science has been accompanied by a growing flow of money for academic research from federal and state governments, corporations, and foundations. My colleagues at the Cornell Higher Education Research Institute and I have been investigating whether the flow of external money has been keeping up with the rising costs of scientific research -- and if it hasn't been, where the additional funds are coming from within the universities' budgets (for details about our research, see CheriWorking Papers 27, 33, and 35, available online at http://www.ilr.cornell.edu/cheri).

We found that, controlling for inflation, the average research-and-development expenditure per faculty member across 228 major research universities more than doubled between the academic years 1970-71 and 1999-2000, paralleling the increases in general expenditures per faculty member that took place at those institutions. However, in spite of the generous external support that universities have received for research, during the same period the average institutional expenditure on research per faculty member more than tripled. As a result, the portion of the average university's research paid for with institutional funds rose from about 11 percent to almost 21 percent. Academic institutions are bearing an increasing share of the costs of their faculty members' research.

A number of forces are responsible: Theoretical scientists, who in previous generations required only pencils and paper, now often need to use supercomputers. Experimental scientists rely on sophisticated laboratory facilities that are increasingly expensive to build and operate. Research administration now includes stricter monitoring of financial records and environmental-safety regulations, as well as more-detailed review and monitoring of research involving human subjects.

In addition, the increasing financial support by external sources for the direct costs of research has not been accompanied by a proportionate increase in support for research administration and infrastructure costs. For example, we found that the average indirect-cost rate (the markup on the direct costs of research to cover administration and infrastructure) that the federal government allowed at private research and doctoral universities fell from about 60 percent in 1983 to about 55 percent during the last half of the 1990s. Put another way, with each $20-million in direct support of faculty research that the government gave a typical private research university, the university received $12-million for research administration and infrastructure support in 1983, but only $11-million in the late 1990s. In recent years, the government has also placed increasing pressure on universities to provide matching institutional funds for any research grants that their faculty members receive.

Furthermore, as scientists' equipment became more expensive and competition for top-quality scientists intensified, the amount of start-up money that universities needed to attract new junior and senior faculty members in those fields rose. In the main, that money came out of institutional funds.

Given that universities are spending more out of their own pockets on research, where is the money coming from? If a greater proportion of state appropriations, annual giving, and endowment income, say, has to support scientific research, universities may raise undergraduate tuition by more than they otherwise would have, to make up the difference. Or they may reduce expenditures in other areas. Because faculty salaries are a large component of a university's budget, the growing costs of science may be distributed throughout the university in the form of fewer faculty members and thus increases in student-faculty ratios above the levels that would otherwise have prevailed.

My colleagues at Cheri and I analyzed student-faculty ratios and undergraduate tuition at the same 228 universities between 1976-77 and 1998-99. We found that, holding other factors constant, the universities that expanded their institutional-research expenditures the fastest saw their student-faculty ratios rise higher than the ratios at other universities; they also tended to substitute lecturers for tenured and tenure-track faculty members more often than other universities did. In addition, the private universities that increased their institutional-research expenditures the fastest also raised their tuition more rapidly than other private universities did. Hence the increasing institutional costs of scientific research at universities appear to be at least partially borne by undergraduate students in the form of fewer faculty members, a decline in the share of faculty members who are tenured or tenure track, and -- in the case of private universities -- by higher tuition.

However, the magnitudes of those effects appear to be surprisingly small. We estimated that if universities had not increased their institutional expenditures (in real terms) per faculty member on research during the last 30 years, their student-faculty ratios would at most be 0.5 to 1 lower than they actually were (which was 20.4 to 1 at the private research universities and 24 to 1 at the public ones).

Similarly, we estimated that in terms of 1998 dollars, tuition levels at the private research universities would at most be $500 lower in 1999-2000 than their actual average of $17,450, a decrease of less than 3 percent. That impact on undergraduate tuition at private institutions pales next to the impact of recent reductions in state appropriations on tuition at public institutions.

Why do the effects seem so insignificant? One reason is that the increases in the student-faculty ratio that we observed may understate the impact of universities' increased emphasis on scientific research, if the faculty members involved in scientific research are now teaching fewer courses per year. In that case, the average class size (which we do not have data on) will have increased by more than the student-faculty ratio.

A second reason is that scientific research at least partially pays for itself because it leads to greater individual, foundation, and corporate giving to universities. Some universities have also earned considerable sums by putting their faculty members' research findings to commercial use. However, most institutions earn only small amounts of money in that way, and many actually lose money on efforts to generate revenues from research.

A third reason may be that universities are paying for the rising costs of scientific research by cutting back in ways that scholars have yet to investigate. For example, it is possible that universities are spending less money on graduate programs in the humanities and social sciences, or reducing travel money and other perks for faculty members in those disciplines.

As science continues to grow in importance to American academe, the ripple effects throughout universities from their increasing institutional support for research will also grow. Undergraduates will continue to bear some of the costs; on the other hand, undergraduates benefit from being exposed to scientists who are at the cutting edge of their disciplines. So far, few attempts have been made to estimate the magnitude of all the costs and the benefits to everyone involved. Universities need to do a better job of measuring the effects of supporting research as they decide what share of their resources to devote to science.

Ronald G. Ehrenberg is a professor of industrial and labor relations and economics at Cornell University, and the director of the Cornell Higher Education Research Institute. He is the editor of Governing Academia: Who Is in Charge at the Modern University?, to be published early next year by Cornell University Press.

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Volume 49, Issue 49, Page B24

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