The Fleecing of America by Biomedical Research Administration

Arthur E. Sowers arthures at access5.digex.net
Sat Mar 23 00:00:35 EST 1996


Although I am in only partial agreement with Bert Gold's viewpoint, 
Leonard Paplauskas spiel is an example of an administrative "party line" 
mindset attempting to place itself on a moral high ground. I have heard 
this "party line" before and as far as I am concerned it represents a 
position by which institutional administrative levels justify being
highway robbers. I have seen cases, and can document in the literature, 
where institutions go on a spending spree, then they show appropriate 
auditors what it "costs" them to do research and even though they may not 
get full reimbursement, they do, in the end, get a large part of their 
excessive extravagence paid for. More below.

On 21 Mar 1996, Leonard P. Paplauskas wrote:

> Bert Gold <bgold at itsa.ucsf.edu> wrote:
> >
> [snip]
> >Now, scientific research has reached the same dizzying quagmire.
> >HUGE proportions of my tax dollars intended to be used for research
> >are being siphoned by ADMINISTRATORS; and when rules outlawing this
> >unconscionable, unethical behavior are debated, these ADMINSTRATORS
> >are forcefully arguing against their implementation.
> >
> >NO WONDER THE REPUBLICANS ARE SUGGESTING THAT GOVERNMENT NO LONGER
> >HAS A ROLE IN RESEARCH; CORRUPTION HAS REACHED SUCH STAGGERING LEVELS
> >THAT THEY MAY INDEED BE CORRECT!
> 
> 
> 
> One of the unappreciated realities of university conducted, government 
> funded, biomedical research, is that the government has enacted numerous 
> regulatory requirements associated with the performance and 
> administration of that research. 

This tends to deflect one's attention and blame to regulatory costs. This 
is only a small part of overall costs. Other functions, expenditures, 
library, and computer costs, and salaries, all enter formulas that help 
lead to IDC rate calculations.

> At present, there are well over 200 
> (and counting) different federal regulations with which academic research 
> community MUST comply.  There is a reason why universities have large 
> purchasing departments (competitive bidding regulations), large 
> accounting departments (cost accountability regulations), research safety 
> departments (nuclear and hazardous waste/emission regulations), animal 
> care facilities (animal welfare regulations), etc.  Because they are 
> MANDATED by the government agencies which support the research, they must 
> be complied with.

Overhead, on direct costs, goes into paying for a very large fraction of 
all of those salaries and costs. I've never heard of any institution that 
does not like to see their total grant income figures go up, no matter 
how many "support people" it involves. As long as growth is there, all 
those departments (support rather than academic) represent employees and 
help justify expansion of administration buildings (rather than faculty 
space). 

> Frankly, when the day comes that the federal government no longer funds 
> research, and it is funded only by private sources, then many of the 
> regulations which cost so much in indirect costs (overhead) will be gone 
> (and so, probably, will I).

This is as unlikely to occur as the sun not coming up tommorrow. Also, 
faculty are much more likely to become "gone" than administrators.
 
> It is true that the amount of federal research funds used to pay for 
> these indirect expenses is significant, and that ANY organization can 
> benefit by looking at its administrative systems to be sure that they are 
> as lean as possible;

I know of several institutions where the rate of expansion of the 
administrators was much greater than the faculty/staff. And paid much 
better salaries, especially considering the lower level of 
responsibilities that they have.

> but what is not generally appreciated is that the 
> federal government NEVER pays the complete amount of those expenses.  

This is misleading considering that medical schools and health science 
centers are really among the most leveraged institutions in existence. In 
fact, for the most part, they basically get their faculty absolutely for free
(the institutions get 100% of the benefits and the faculty get most if 
not 100% of the risk). In the case of one institution I am intimately 
familiar with, the total "hard money" componet of the overall budget just 
about covers the salaries of the administrators, and the grant/contract 
and clinical income are the two components of the "soft money" that goes 
into and essentially covers the salaries of the faculty and the support 
staff. When you consider that the institutions also uniformly declare 
100% ownership of all patents that come out of work funded either by 
the government or private industry (unless some other arrangement is 
made), then its a pure windfall for the institutions. Don't give me this 
stuff about how institutions are hobbling and groveling around with your 
"crying poor" story.

> Recently publicized cases of extravagances in calculating IDC rates not 
> withstanding,

I'm glad you acknowledged the raft of padding that went on a couple of 
years ago (isn't it funny that the "errors" were never in favor of the 
government) and the faculty were never involved in these decisions.

> the majority of institutions negotiate federal IDC rates 
> that recover only a FRACTION of the indirect costs associated with 
> regulatory compliance.  The balance, necessarily, comes from other 
> sources of revenue available to universities.

I have seen cases where "sources of revenue" are created out of direct 
costs. Its a simple matter to make an administrative decision to move 
costs out of overhead and charge them to direct costs and that is 
pilfering out of the funds directly available to the faculty (as PI) for 
that persons research. Isn't it curious that in my department, the 
administrative people have better computers, are on a LAN, and fiberoptic 
with the rest of the campus, but the faculty are not? Typical!

>  Draw your own conclusions 
> on this one, but if the government were more forthcoming with IDC funds 
> to pay for unfunded regulatory mandates, then universities would have 
> more funds available to pay for other needs, like faculty salary 
> increases!

This, I predict (based on what I have actually seen at two institutions) 
would never happen. Any extra money would go into the dean's pocket or 
inot pockets of administrative levels above the dean. I repeat, I have 
seen in the past additional money become available and it does NOT 
"trickle down". It may go into new programs, the programs of the 
administrators "favorites" (as in favoritism), or to even hire more 
administrators, or more staff for the administrators.

> Having said all this, I am unaware that "THE REPUBLICANS ARE SUGGESTING 
> THAT GOVERNMENT NO LONGER HAS A ROLE IN RESEARCH".  The Republican 
> dominated Congress has recently approved an FY96 budget for NIH (thank 
> you Congressman Porter), which is larger than expected and only one of a 
> handful of federal agencies with fully approved budgets for this FY.  

The NIH budget increase is virtually nothing considering: i) inflation, 
ii) the inflation in costs are realy worse because of the multiplier 
effect due to fringe benefits and overhead, and iii) a number of campuses 
are in the middle of large expansion programs. The funding situation has 
been continually getting worse, in real terms, over the last ten years.
But I have seen absolutely no evidence that administrators are 
recognizing the bad effects on funding success rates and faculty morale.

> Furthermore, there have been efforts on the part of the Republican 
> Congress to engage in some degree of regulatory reform which COULD result 
> in lower research related overhead in the future.  Republicans (I am 
> informed by certain radio personalities) are also very supportive of the 
> free market, and the free market allows private industry to compete for 
> federal research dollars.  Private industry's IDC rates are generally 
> more aggressively negotiated than those by academic organizations. 

You know why? Because private industry is "for profit" and has to pay 
taxes that academic organizations don't have to pay. There are other 
reasons that they can "more aggressively negotiate[d]," too.

> So, 
> will the Republicans allow the demise of the federally supported research 
> enterprise in this country?  I doubt it!

You don't give credit to the possibility that some other political group 
might also have a role in this.

> It appears to me that Dr. Gold has a very narrow, and uninformed 
> perspective on the nature of the biomedical research enterprise in this 
> country, and how that enterprise is financed.  Perhaps his colleages at 
> UCSF would be able to provide him with the information he needs to make a 
> more convincing argument that research overhead is "unconscionable" or 
> "unethical".  

I would like an administrator, anywhere, anytime, to completely open up 
the books on budgets and justifications. But they wont do that. It would 
reveal questionable decisions, some fraction of bad justifications, 
favoritism, and maybe misappropriation and mismanagement. Indeed the 
Stanford fiasco (and a number of other institutions, too, were involved) 
showed it, and it caused Kennedy to resign when it came out into the press.

> From my chair, I can confirm that:
> 
> RESEARCH OVERHEAD IS NEEDED TO PAY FOR THE COST OF COMPLIANCE WITH 
> RESEARCH REGULATIONS!

This is only part of the story and universities, particularly medical 
schools and health science centers (not to mention pure academic 
campuses), really get a free ride. And faculty often have to pay for 
virtually everything they use except reading at the library out of direct 
costs. In almost all cases the university gets total ownership of ANY 
equipment, instrumentation, etc., for free, and even these institutions 
use this free equipment to set up "fees" for other "users" thus 
effectively "hiding" additional overhead under a different accounting "term".
At my institution, I pay $1,000 per year to park my car. They are getting 
the faculty to buy the parking garage for them. 

> RESEARCH OVERHEAD REIMBURSEMENT IS NOT GENERALLY ENOUGH TO PAY FOR THE 
> COST OF RUNNING A UNIVERSITY RESEARCH PROGRAM!

This is an old hack. This guy eventually not only wants to have 100% of 
the faculty have 100% of their direct costs paid for by someone else (the 
government, or whomever they can find to charge costs to), but 100% of 
the overhead, and someday, probably even a profit with bonuses to the 
administrators. What is totally overlooked here is that a very major part 
of the growth of the research universities was done on the backs of 
faculty and with the taxpayer dollar. Many of the big campuses have 
enormous endowments to supply a good part of their hard money, some 
tuition income, substantial clinical income if its a health science 
center, and often big fundraising drives for more hard money and 
increased endowments. Administrators in such environnments are also much 
better compensated and on hard money than faculty who often may have 
50-80 and often 100% of their salary linked absolutely to their grants. 
This means that if the faculty member loses his grant, he will likely get 
sacked, but this will have no effect on the administrators jobs. If there 
is a little shortfall, they will sack a secretary or janitor or some 
other temporaries that are kept on just to justify a budget in case they 
have to fire someone and not because they need extra help.

> REGULATIONS AFFECTING THE CONDUCT OF ACADEMIC SCIENCE NEED TO BE 
> REFORMED!

Readers need to understand that above the level of the faculty is a layer 
of infrastructure which is no more altruistic than the management at 
General Motors.

> WITHOUT THE CONTINUED SUPPORT OF CONGRESS, AMERICAN RESEARCH PRE-EMINENCE 
> IS LIKELY TO FADE!

Its going to take more than "continued support."

Readers need to understand, in an organization, the concepts of "cost 
centers" and "profit centers" to understand how unfairly bad it is for 
the faculty, who have to go out and get their own money to fund 
themselves and their labs (including salaries of techs, students, and 
postdocs) while the support staff and administrators have solid incomes 
and are insulated from the probability of a loss in grant support (these 
people are "cost centers" which are parasites on the "profit centers").

The reform I would like to see is that: i) all incomes be pooled and all 
salaries draw from the pool, ii) the people who are actually involved in 
bringing in the money get a chance to vote on how it is spent, and iii) 
kick the asses of the administrators down to Washington DC and have some 
big part of their salaries linked absolutely to how much budget increase 
they get for NIH (etc). That might actually help everyone. As it stands, 
LPP is just arguing for that part of the costs (IDCs) that he cares about. 
 
> 
> Leonard P. Paplauskas
> Assistant Vice President for Research 
> University of Connecticut Health Center 
> Farmington, CT   06030-5355 
> 203-679-3173                         
> FAX 679-2670                                            
>                                                                 
> paplauskas at adp.uchc.edu

Arthur E. Sowers, Ph.D.
Research Professor




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