Dean Dad provides a thoughtful perspective on college costs

Parents Forum
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Actually, I don't think that outside research funding covers the cost of building and equipment. It covers salaries (at least partially) and research fellowships for students, and the cost of research itself, but not the cost of building the space or acquiring the equipment.

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<p>Government research grants do cover purchase of dedicated equipment and supplies, travel, and dedicated space rented for specific projects, as well as salaries of the professor, the postdocs, and the grad students. </p>

<p>In addition, grants have a huge markup for "overhead," which goes to the central university administration to cover a variety of costs (e.g., administration, accounting, etc.) The "overhead" line item can be as much as 60% of the grant or even more, depending on the funding agency. </p>

<p>Overhead money from grants sometimes seems to be what makes the university, if not the world, go round. It is certainly what makes my research life go round. A professor can bring in more than several hundred thousand dollars a year in overhead. That is gravy for a university, and universities naturally encourage professors to choose research topics rich in overhead.</p>

<p>Here is a professor writing in Chronicle of Higher Education about the huge importance of "overhead money" from grants in balancing university budgets.</p>

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Overhead money from grants sometimes seems to be what makes the university, if not the world, go round. It is certainly what makes my research life go round. A professor can bring in more than several hundred thousand dollars a year in overhead. That is gravy for a university, and universities naturally encourage professors to choose research topics rich in overhead.</p>

<p>I believe that the dependence on overhead is not going to change, at least for professors like me who can get research grants that pay the university overhead equal to 60 percent -- sometimes even more -- of the grant's total budget. Still, I wish I could study subjects for which I couldn't get such generous grants..

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<p><a href="http://chronicle.com/errors.dir/noauthorization.php3?page=/weekly/v52/i03/03b02401.htm%5B/url%5D"&gt;http://chronicle.com/errors.dir/noauthorization.php3?page=/weekly/v52/i03/03b02401.htm&lt;/a&gt;&lt;/p>

<p>In many major research universities, natural scientists and social scientists are routinely hired with the expectation that they will generate big chunks of overhead money through grants, far more than their salaries.</p>

<p>Overhead money is basically a slush fund that university administrators rely on to balance budgets.</p>

<p>EDIT: Here is Harvard's chart of accounts for outside sponsored research. As you can see, grants charge for EVERYTHING--including the kitchen sink!--plus overhead too.</p>

<p><a href="http://able.harvard.edu/coa/qr/pg302q/%5B/url%5D"&gt;http://able.harvard.edu/coa/qr/pg302q/&lt;/a&gt;&lt;/p>

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<p>Hmmm that's one view. In fact, overheads can be as high as 75%, not 60%. But I don't think that they do much to balance budgets. They certainly contribute to the salaries of the staff of development offices, but if it were not for this outside funding, most of their jobs would disappear. The actual cost of a project is not limited only to the people and services directly involved in the project. There's clerical staff; there's heating costs and janitorial services, and others. I doubt these are included in project budgets. I don't think that universities are profiting hugely from research funding. What they are profiting from is fuding for graduate students. In the social sciences and humanities, graduate students are funded by the university. In the natural sciences, they are often funded by outside grants.
From today's Crimson: Harvard's Faculty of Arts and Sciences is in the red. Contributing to the red ink is building costs overruns. One building is for international studies, another is a science building.</p>

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In fact, overheads can be as high as 75%, not 60%. But I don't think that they do much to balance budgets.

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<p>Overheads vary--they are determined by agreements between funding agencies and institutions, and they undergo periodic review. There has been downward pressure over the years from the funding agencies.</p>

<p>And it is routine for professors in sciences (and in some social sciences in some places too, particularly economics) to be told to generate some multiple of their salary in grants--and the reason is that the university is depending on that overhead money big time. Overhead is a HUGE chunk of the operating money for a large research university--they simply couldn't balance their books without it.</p>

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he actual cost of a project is not limited only to the people and services directly involved in the project. There's clerical staff; there's heating costs and janitorial services, and others.

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<p>Heating and janitorial services are expected to be included in the space rental line item on a budget proposal. </p>

<p>The big cost that has to be covered from overhead is administrative oversight of the grant--all the accounting and paperwork, the safety and human subjects committee oversight, personnel department costs in hiring and firing personnel, etc.</p>

<p>Also covered in overhead is support the university provides to its researchers in writing proposals, reviewing them, etc.</p>

<p>It's also common for universities to hire junior scientists and give them some internal grant money funding as "seed money" in their early years, so that down the road they'll be competitive in competing for external grants. That also has to come out of overhead.</p>

<p>But, believe me, when money is tight, the deans and vice presidents start leaning hard on science faculty to bring in more external grant money, because the overhead money is indeed the "gravy" that can sop up budget deficits. It's not just about supporting grad students and release time for faculty.</p>

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<p>Wisteria:</p>

<p>Okay, thanks. I've seen budgets for humanities and social sciences projects, and clerical and janitorial services, maintenance, heating, etc... were not included in the overheads. But I've never seen a science funding proposal. I also know that some foundations refuse to subsidize overheads.</p>

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<p>The basic deal on the way sponsored research is supposed to work (according to the major science funding agencies) is that IF a cost can be clearly attributed to a specific activity (e.g., there is a lab or office space dedicated entirely to a particular project), then you would charge directly on a line item for the space rental in your grant. </p>

<p>However, if there is space for which you can't easily break down the costs (e.g., a common library used by many faculty and students for many projects, some externally sponsored and some not), then that then your project's proportional use of that space would not get a dedicated line in your grant proposal. Instead, the cost of that space would belong in overhead.</p>

<p>Humanities research is pretty scarce, so I can see why the funders would want to stretch their dollars as far as possible.</p>

<p>Some social science research (e.g., economics) is funded by NSF, which also funds the natural sciences, and their overhead policies are likely to be similar to those for the sciences.</p>

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MIT is to be congratulated for showing the way. But even the brick and mortar class is a very small part of the college experience.

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<p>I agree! But the choice may not be between being on campus and learning a subject via some virtual route. The choice may be between learning via the virtual route and not learning it at all. Half a cake is better than none.</p>

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<p>Marite,</p>

<p>In your post #12 you talk about the cost of the technology, i.e. Selectric vs. Computer Word Processor. Perhaps you did not realize savings in paper but you should have realized savings in time. Where time is money the savings could be tremendous. I would suspect that the paper you wrote and rewrote on the selectrix would be prodiced more quickly today.</p>

<p>Additionally, the basic cost of computer systems is going down, not up. In 1985 you needed to buy a computer, a green monitor, a dot-matrix printer, a WordStar word processor and learn both a cryptic operating system, MS-DOS, and the arcane commands of WordStar. For this capability you got to pay between $5000 and $10,000 in 1985 dollars. Today you get all of those things for under $1000 in today's dollars, easier use, color, better printing . . . let alone digitizing your music. Additionally, your ability to write a paper has improved if you use the tools that are available, i.e. spell-checker, Thesaurus, online research.</p>

<p>The issue is that we and the schools have moved on to different problems created by the efficiency the technology enables. If you just look at the "content creation" enabled by computers and associated software we now have a different problem . . . more things to analyze efficiently, i.e. the number of applications an admissions office receives. How do we find what we need (Google, Yahoo) and how dow we sort through it?</p>

<p>Many of the schools are receiving an all time record number of applications. This is not just because of the echo-boom, it is because submitting an application is more efficient. Similar to getting money from the bank, it is much more efficient today than when we had to go stand in line and write a check for cash let alone deliver a deposit. The issue now is can I keep track of the increased number of transactions that I now have against my checking account.</p>

<p>Look further at the cost of travel in today's dollars compared to 25 years ago. Who uses American Express Traveler's Checks anymore when my ATM card will work most anywhere? What about the cost and convenience of Telephone service today? Do they still have lines in the dorms waiting for the pay phone to call home? Cost and convenience of correspondance? Why send a letter that takes 2-3 days to get there where you need to pay $.32 when you can use email and get the message there faster . . . while enabling a bit of back and forth in the mean time?</p>

<p>I suspect the real issue is the acceleration that enables a collapsing of time . . . it can be quite exhausting. All I am really saying is that though there is a "cost" associated with technology there is also a benefit from its use and that needs to be examined more by the schools. If they are not gaining efficiency or improvement why do it?</p>

<p>It is also why I will be watching the MIT Open Courseware project for its impact on education more broadly.</p>

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<p>Eagle:</p>

<p>I never said that technology did not result in greater efficiency. But one thing it has not saved is paper. It may eventually save paper if print media go out of business (but look at the proliferation of zines--all thanks to new technology). As to me, when I want to read something that is more than a page long, I print it out. It may not contribute to saving trees, but it is easier on my eyesight.
Technology has also created demand of its own. Just the other day a whole shop opened in our city to sell printer cartridges. That's where the money is going to be: not in the printers themselves, but in the accessories--just like cameras.
Why do institutions invest in technology if it is not going to drive down costs? because of demand. Cost accounting can be difficult because different costs may be listed in different accounts. If, for example, you pass a new law criminalizing certain type of behavior, police time (and money) will be used to prosecute that behavior. But you won't necessarily know how much of an increase in costs is specifically due to passing this new law.
Some of the efficiency can be illusory; the ease of editing on the computer has led countless authors to fiddle with their texts when previously they would have made do with corrections in the margins and a couple of drafts. It can be a wonderful time-waster that manages to make you feel good about rewriting the same sentence for the umpteenth time.
I just read about a prof whose specialty is marginalia. Well, that may be a vanishing source of information as authors endlessly computer-edit their prose.</p>

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<p>Today's New York Times has a good example of yet another expensive technology expense which will have to be borne by universities (and which will not have any offsetting productivity benefits.):</p>

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The federal government, vastly extending the reach of an 11-year-old law, is requiring hundreds of universities, online communications companies and cities to overhaul their Internet computer networks to make it easier for law enforcement authorities to monitor e-mail and other online communications.</p>

<p>The action, which the government says is intended to help catch terrorists and other criminals, has unleashed protests and the threat of lawsuits from universities, which argue that it will cost them at least $7 billion while doing little to apprehend lawbreakers. Because the government would have to win court orders before undertaking surveillance, the universities are not raising civil liberties issues.

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<p><a href="http://www.nytimes.com/2005/10/23/technology/23college.html?hp&ex=1130040000&en=82e2a961640ae05b&ei=5094&partner=homepage%5B/url%5D"&gt;http://www.nytimes.com/2005/10/23/technology/23college.html?hp&ex=1130040000&en=82e2a961640ae05b&ei=5094&partner=homepage&lt;/a&gt;&lt;/p>

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<p>Governmental research grants do provide for reimbursement of indirect costs such as building depreciation, libraries, o&m of facilities and buildings, department and general admin support, etc.. The indirect costs are negiotiated annually in accordance with OMB Circular A-21, by, in our case the Department of the Navy. Salary fringe benefits are also determined in accordance with Circular A-21. Many research grants also provide for equipment purchase, consulting services procurement, etc. In addition, grants exceeding $500k are required to have a subcontracting proposal for MBE/WBE business participation.</p>

<p>Our university's indirect cost %age is currently 59% and does indeed assist the university in its general operations.</p>

<p>Other sources of revenue are patent royalties, product licensing, corporate research and consulting agreements. Sometimes universities have joint ownership of major research facilities such as the 4500 acre transportation research center which Ohio State built in the 1960's and currently manages on behalf of TRC,Inc.</p>

<p>Research generats many revenue streams which help fund and finance general operations.</p>