A few thoughts on the "overhead" political crisis

Mar 30 2017 Published by under Uncategorized

I'm sure lots of folks have lots to say about this, but I've been up to my ears in data, so I've not had time to read all the worthies on twitter and in the blogosphere on this subject. So, just my thoughts:

Reducing overhead, by fiat, by negotiation, by reluctant blood letting, will not necessarily have the end result that The Government wants. Overhead is a major component of research/academic budgets. Yes, they keep the lights on, the air con in the summer, and the animal facilities happy. They help provide seed money to get new faculty going. In the end, something or somebody will have to pay for this stuff.

Will any university, big or small, MRU or almost-MRU or SLAC give up overhead? Not willingly. Reduce overhead? Watch fringe rates go up substantially (fringe rates are allowable in salary/direct costs). Watch pressures on faculty to bring in even more money go up. At places I have been, clinical faculty must bring in their entire salary, either through seeing patients, grants, or explicit teaching. Overhead makes it possible to bring in young clinical faculty, and protect some of their time (in which they better damn well be writing K-awards to cover 75% of their salary).

Money is fungible, as our brothers, sisters and non-binary sibs in economics say. That means while there are things overhead/F&A/IDC can't be used for, if they are applied to things that are allowable, it may free up other money, from other sources to be used for those other things. For example, renovation of space is pretty regulated. So say a University has general funds for renovation but not quite enough for both projects A and B. The PI for project B gets a grant, it has F&A/overhead, and that covers project B, freeing up more money for project A. So universities will likely move funds around in new  and creative ways to support what the admin wants.

For example, from the NIH webpage on policy & compliance (my emphasis):

Office equipment (copiers, laptops, desktop computers, personal handheld computers, fax machines, scanners, etc.) that is used for general office purposes (rather than justified as a specific research purpose) are not allowable as direct costs; they are allowable as an F&A cost.

Where do you think that money for you new computer comes from? You want a new computer, make it come out of directs or do without.

One of the things I have seen kicked around for decades  is the idea that faculty should be sorted into tracks, more so than now. This is not just a flavor of adjuncts. In medical schools where there are small, intense bouts of teaching, this means basic science folks would be "teachers" or "researchers". Teachers (and we have one at almost-MRU) teach not just one subject, but in our department, in nearly every first year course: anatomy, neuro, histology, biochemistry, physiology, cell biology. Twelve months a year of teaching. There is no research expectation, except possible pedagogical research. The admin here would like people to either teach that much (you'd need far fewer) or be bringing in 90% of their salary. That's very different from the scholar/teacher model that is true of most faculty. Reducing overhead would be a push in this direction.

Will changing overhead push research into the middle of America, where things are cheaper? Who are you kidding? What it will do is make Universities tighten their belts a bit, pressure the faculty more, and in general, one more time, increase the selection gradient on younger people, as this money was part of what a Uni could do to get the new ones started. Positions in basic science departments may disappear, clinical departments will become even more polarized into clinical service/research.

Will it save the government money? Well, yes, because it won't be giving this money to NIH. But the end result? Less research. Done by fewer people. Smaller universities. Fewer young people going into research. Will this work shift to corporations? Unlikely. We all know the logic there.

The only small thing that might be a saving moment in this is that the F&A on training grants (F & K awards) is usually much less, often just 8%, across the board. F&A/indirect on R-awards are negotiated university by university, and often hover in the 60-80% range. That means if NIH reduces the number of awards to make them bigger to pick up the difference, training awards may less impacted.

In any case, I hope that the academic big dogs are lining up their big guns to go to congress about this. We little dogs can do our bit, and make noise. But I remember the importance of political activity from an incident, probably well over 20 years ago. There was another recession. There was more belt tightening suggested. One of the things that, in a spurt of pseudo-patriotism, the Governor and State Legislature decided was that the Engineering College at Big-Midwestern-Public-University should stop giving teaching fellowships/assistantships to people who were not American citizens. This would save money! They would support True! Pure Blooded Americans! Of course, they said "we'll just knock that much money out of your budget". It would have been, needless to say, a disaster, since about 80% of the TA's for undergraduate training were foreign. The President of the Uni, as well as the CEO of the Local Big Manufacturing Corporation that hired a significant portion of the grads of the College of Engineering went to the governor and said "are you out of your mind?". And the problem disappeared. Maybe that governor was smarter (doubt it). Maybe he saw the light. Maybe the CEO threatened to move out of state. But this solution just disappeared. It was never mentioned again. And it never came back.




9 responses so far

  • David says:

    This whole thing seems like semantics. On a grant, I'm paying a world class researching (PhD, 40 years experience, etc.) $132 an hour (I checked). As a consultant, for a for-profit firm, they would easily bill his time at $500+ an hour (he wouldn't get that, maybe $200/hr). In the first case, there is overhead (call it 50%), in the second there isn't. By the way, the government will allow a for-profit company to add a line item for profit and leaves it up to the company to decide how much (with 5%-12% being easily seen as "reasonable"). So you can pay the professor a low salary, pay his benefits, and a large overhead, or pay a huge salary. In the end, it costs a certain amount to have a facility and pay people to do the work.

    • A Salty Scientist says:

      It would be semantics if budget categories were being shifted around instead of being cut. Cutting indirects without increasing directs by the same amount will have negative consequences, because as you say, these things have fixed costs.

  • potnia theron says:

    Salty hits it on the head.

    And it's not semantics to university leadership. It's bread and butter.

    David.. It may be a shell game to govt, but not to uni. Finally, less science is partly what they want.

    • David says:

      I guess I'm assuming that if indirects get cut, the directs will get increased. I can't see universities agreeing to one without the other.

      If the government wants less science, there's 47 ways to achieve that (this being one of them). But if they are just hoping to cut costs, while receiving the same amount of science, there will likely be a harsh reality check forthcoming.

      One thing I will note, I do not believe most people know what indirects are for. I will admit that I didn't know before hanging out on this platform. It is easy to look at the budget and think that that ~50% indirect is unrelated to the project under review.

      • A Salty Scientist says:

        The current administration does not want the same amount of science. The proposed cuts to every scientific funding agency assure this. Universities have no more say in this than they had a say in the dramatic withdrawal of state funding support for higher education.

        As to your point about people not knowing what indirects are for, I think that is probably true, even for scientists. My public Flyover U is not very transparent in their budget, so while I can guess where indirects are going, I do not have a firm idea. This is a separate issue--budget transparency--and while I feel that it is important, I fear that certain politicians use the issue as an excuse to label scientific research spending as waste.

        • David says:

          A problem I see is that bureaucrats (i.e. career gov't folks) are not on the side of the universities because they don't understand how indirects support their programs. It appears to be unnecessary and therefore the gov't folks will not raise any opposition to cutting it. The thought being, I can get more science for less money if I don't have to pay for indirects. Why would I argue against that. [By the way, someone mentioned exactly that in a grant training class two weeks ago]

  • Jaws says:

    accountant (defn): a man (almost always a male) who knows the cost of everything and the value (including return on equity) of nothing.

    This controversy is a feedback loop from the evolution of "governance" starting in the mid-1970s. It would shock y'all to inquire into what the actual legislative and personal priority of Sen Proximire were... and who benefitted from the Golden Fleece awards and the fallout therefrom. In short, the entire argument is a post hoc rationalization for changing pie-slice size under a constant-and-easily-measured-sized-pie assumption.

  • Ola says:

    "Where do you think that money for you new computer comes from?"
    I buy computers out of my own pocket, or build them from scratch. That way I don't have to deal with enforced bloat-ware and incompetent IT support. Once the laptops wear out every 5-6 years, they get put to service in the lab for data analysis or provided to grad students who can't afford to buy their own. I've probably spent $8-10k of my own money on laptops over the years, but it's worth it for the degree of control I have over my own computing. It always amazes me to walk into colleague's offices and see the latest shiny big-screen multi-$k Mac sitting on a desk.

    Computing semantics aside, I disagree with SaltyScientist that F&As are fixed costs. I see a lot of waste around at the various Universites I visit, as well as at my own place. There's a lot of savings that could be made, without impacting the actual conduct of science. Some examples...

    - Basic science department, used to have >20 faculty and an office staff of 7. Now the faculty is closer to 11-12, but office staff still at 7. Alleged excuse is "more regulations and compliance stuff to deal with". That excuse only goes so far.

    - Benefits packages for faculty are, by most standards, pretty damn generous. Matching funds for 403b are good, but some of the other stuff is just "fluff". Group life insurance? Full tuition benefit for dependents? There are surely savings to be made here that would cut the fringe rates.

    - Facilities provision is unionized labor at ridiculous hourly rates, with cartel-like enforcement for anyone who so much as changes a light bulb without permission. I have had to pay multiple thousands of dollars for simple electrical work in the lab, all out of non-grant discretionary funds (aka leftover startup).

    - Lots of favoritism in terms of what core facilities and other things are provided to support certain individuals within a department or program. For example only one lab uses the ultracentrifuge 90% of the time, but cost for service is paid from Department budget. At various times I've seen faculty have their "indispensible" lab techs supported by Dept. funds when they fell on hard times (while those bringing in grant money have to pay their own techs).

    - Honoraria for outside speakers, seminar programs etc. Yeah it's nice to get a small check when you go give a lecture, to cover shit like airport food and parking, but $500-1000 for a 1 day visit is taking the piss. Throw in dinner for half a dozen faculty at a restaurant nobody could afford to go to if they were paying out of pocket, plus air fare and hotel. Boom there goes 50k a year for a once a month seminar program.

    - Does the conference room really need that posh new hardwood lectern, with 15 different cables and a dolby sound system and a bunch of switches and other AV crap, and a dedicated tech' who has to be called every time because the speaker can't get the laptop to recognize the projector?

    - Does the Department really need two leased color printer/copier devices that get replaced every couple of years? Is nobody capable of using PDFs or printing b/w on their own laser printer?

    - Does University IT really need to invest in third-party private cloud storage solutions when most people just use free DropBox anyway? Same for email/Gmail. I even know some (asshole) faculty who have managed to get their monthly cellphone bill reimbursed as a legitimate research expense.

    I'm not saying all this is coming from indirects, but clearly there are places where money is being spent, in a manner that administrators feel happy writing-off as "research support", when clearly it's nothing of the sort.

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