University Research — Your Tuition Dollars at Work?

Bacon’s Rebellion

reader “Izzo” pointed us to a National Science Foundation database that breaks down the R&D funding sources for U.S. universities. I have extracted the numbers for Virginia’s three leading research institutions — Virginia Tech, the University of Virginia, and Virginia Commonwealth University — and converted them to pie charts. The yellow segments show the percentage of university research dollars that comes from each institution’s own resources.

Funding university research.
Funding university research. Data source: National Science Foundation Academic Institution Profiles database.

In raw dollars, here’s how much money we’re talking about:

Virginia Tech — $219 million
UVa — $123 million
VCU — $52 million

While some of those institutionally originated R&D dollars may come from endowments, Izzo contends that much of it is supported by tuition revenue.

“Where does tuition money go?” he asks. “I think it is an open secret in academic circles that a lot of it goes to fund research and graduate studies. For instance, one might think all research comes from external sources, but that is certainly not the case. … For UVA, $123M of research was institutionally funded in 2015, or $5,600 per student per year. … The majority likely comes from tuition and fees, and specifically undergraduate tuition and fees. When students and families are paying tuition and going into debt to do it (and this debt is subsidized and guaranteed by the government), this is where a lot of it is going, and they don’t even know it.”

I don’t know who Izzo is, and I don’t know with what authority he (assuming Izzo is a he) speaks. But his statement that most institutional funding comes from tuition and fees, if true, warrants much closer examination. While students and their families surely would like to see state universities conduct more R&D, they might well rise in insurrection if they thought that they were personally subsidizing that R&D, without their knowledge and consent, to the tune of $5,000 a year.

I don’t know how one would go about ascertaining the level of R&D subsidy embedded in the tuition. I seriously doubt that the universities themselves know the number or have the analytical capacity to calculate it. But Izzo has raised a fundamental issue here.

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7 responses to “University Research — Your Tuition Dollars at Work?”

  1. Reed Fawell 3rd Avatar
    Reed Fawell 3rd

    The problem with charts like these is that the tell you next to nothing. As such the are highly misleading. And quite frankly in most case they are meant to be. That is the way that most of our institutions of higher learning operate. I have no doubt that Izzo knows very well what he is talking about. As he says its “well known secret in academic circles.” And is referred to in all most all books on the subject readily available, despite the fact that institutions have long ago learned how to disguise “sensitive” payment and cost sources by cleverly moving them around within silos and boxes, holding and conduit accounting devices. Surely we should all know this plainly by now. Witness the 2.4 billion Strategic (Research) Investment Fund that so suddenly appeared in public.

    And witness what everyone knows is going on but rarely talks about (including in the Faculty Deployment Report) – that is how underpaid non tenured faculty instructors are flooding into the teaching of undergraduate courses in record numbers. Why? So as to shift vast sums over from undergraduate teaching to pay for high priced research professors who all too often teach undergraduates and even graduate students very little, if anything at all. Where are these shifts of funds (and cost to education) shown on the above pie charts? Or otherwise factored into the other cost reports?

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      It is important here to note in this and earlier posts and comments that the Research Problem confronting Universities (and colleges) today infect the humanities and sciences at both the graduate and undergraduate levels. The enormous bloat here is rampant across all disciplines although today’s rampant politics, markets, and fads now heavily favor post graduate science and technology. The report “Faculty Deployment in Research Universities plainly represent today’s bias, as do observable facts.

      Unfortunately, much of the harm done and going on today to the Humanities was and is self-inflicted, although the need for good teaching and research in the humanities is today more vitally needed than ever. The excesses now are also growing like Topsy within the sciences and in the faux undergraduate courses that now invade like weeds the corrupted humanities. All this needs to be addressed before the ship can right itself. But it will over time. Undergraduate arts and sciences will never go out of style, they are the central drivers of our civilization, although they can be and are now being driven underground, perhaps of generations. Or perhaps not.

  2. LarrytheG Avatar

    I think if you COMPARED some non-R&D Universities tuition costs and could show some kind of correlation -you might be on to something besides pure conjecture.

    I note that in the footnotes – NSF did state that Medical services could well be the “institutional” source of R&D..

    does anyone else think it a bit odd that NSF is providing the data that the Universities apparently do not show in their own budget info?

    Is this another example of how Govt funding requires more disclosure as a condition of funding than the Institution would willingly disclose openly in it’s own data?

    But again – I have no idea if R&D Universities charge higher tuition than non-R&D Universities.. so that data would be interesting and perhaps convincing.

  3. LarrytheG Avatar

    Here’s the footnote that was alluded to:

    [11] Institutionally financed research includes both organized research projects fully supported with internal funding and all other separately accounted-for funds for research. This category does not include funds spent on research that are not separately accounted for, such as estimates of faculty time budgeted for instruction that is spent on research. Funds for institutionally financed R&D may also derive from general-purpose state or local government appropriations; general-purpose awards from industry, foundations, or other outside sources; endowment income; and gifts. Universities may also use income from patents and licenses or revenue from patient care to support R&D. (See this chapter’s section “Commercialization of U.S. Academic Patents” for a discussion of patent and licensing income.)

    Apparently Universities like UVA, VaTech and VCU have hundreds of patents that they derive income from …. that they recycle to fund further R&D.

  4. It took me a bit to realize this was in response to one of my posts. As for my background, I am not UVA President Terry Sullivan anonymously posting on this blog. I was exposed to the way universities do accounting while doing consulting work and I took an interest in this subject. Not surprisingly, the way universities do accounting is quite different to the activity-based cost accounting businesses might use.

    If you think back to Jim’s recent posts, none of this should sound too surprising. As you may recall, the more professors make, the less they tend to teach and the more time they devote to research. Some of that research is funded by external grants. Some of it is not. Much of what is not external is called “departmental research” and it is funded by the institution. Departmental research is counted, according to standard university accounting practices, as being part of the cost of undergraduate instruction. Tuition and state funding flow into an account that is used to pay for instruction (faculty salaries), including when they are doing departmental research.

    This is how Steven Pearlstein put it in a piece in the Washington Post:

    “Few students or parents realize that tuition doesn’t just pay for faculty members to teach. It also pays for their research. I’m not talking about research supported by grants. I’m referring to the research by tenure-track faculty members that is made possible because they teach only two courses per semester, rather than the three or more that was once the norm.”

    This may sound innocuous enough, but it amounts to $15B or so per year.

    Here is another description from an Emeritus Professor at UC Berkeley:

    For a more involved description from a former Provost of the University of Southern California, read this:

    A report edited by UVA President Terry Sullivan for the National Academies titled “Improving Measurement of Productivity in Higher Education” looked at departmental research and recommended excluding some (but not all) of it from instructional costs in university accounting. I guess it is too much to expect for administrators to restrict themselves, but perhaps it is a start.

    1. Izzo, Thanks for nudging me up the learning curve. I was unaware of the difference between external research and “departmental” research. Accustomed as I am to governmental and business accounting, I know nothing about university accounting. Without that knowledge, it may be impossible to really understand where the money comes from and where it goes.

  5. “I don’t know how one would go about ascertaining the level of R&D subsidy embedded in the tuition. I seriously doubt that the universities themselves know the number or have the analytical capacity to calculate it.”

    They would probably do something like activity based costing, which is really just keeping track of the time faculty (observers, time charts, etc.) spend on different activities and the cost that drives.

    The University of California did this a while back and came up with about 50% spent on research, 25% on undergraduates, and 25% on graduates for tenure track faculty.

    It wouldn’t surprise me if the universities have something along these lines, but it isn’t going to be something they’d like to publicize.

    The NACUBO guidelines universities follow allow them to roll up departmental research to instruction, so there isn’t much a forcing factor today to make them account differently or provide more information.

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