Tag Archives: indirect costs

IS MORE MONEY FOR SCIENCE REALLY NEEDED? PART II.

 

What research gets federal support? Many other recipients are not shown here, and slices of this pie chart do not total 100%! (http://dr-monsrs.net)
What research gets federal support? Many other recipients are not shown here, and slices of this pie chart do not total 100%! (http://dr-monsrs.net)

Every year there is a storm of activity in Congress and the public media about how much money should be appropriated for federal support of science. These activities result in a never-ending upward spiral demanding more and more dollars for research grants. My opinion is that there already is plenty of money for science, and additional funding is not needed!

Since almost nobody except all the taxpayers will agree with my position, this essay examines this critical issue. Part I considered arguments about whether increased funding is, or is not, needed (see: “Part I” ). Part II now discusses several possible changes to increase the amount of dollars available for research support without needing to mandate any increased taxes. Yes, that is feasible! Throughout both parts of this essay I am referring specifically to faculty scientists researching in universities. Background can be found at “Introduction to Money in Modern Scientific Research”, and “Money Now is Everything in Scientific Research at Universities”.

Introduction!

It is a simple fact that there is not sufficient money today to fund research by all the science faculty members at universities. Taxpayers should not be asked to pay higher taxes since they already are paying too much! The only solutions considered for this annual financial problem always are centered on increasing the dollars available for research grants. No-one seems to be examining any alternative and unconventional ways to generate more dollars for scientific research! This article examines 2 direct and effective ways to do that.

The amount of money available to support research can be increased by (1) greatly reducing waste in research grants, and (2) progressively reducing the number of new scientists!

Wastage of research grant awards now is solidly built into both the current research grant system and the universities receiving grants. On the surface, all expenses for any grant-supported project are officially scored as fully justified; in practice, many expenditures either are not spent for actually doing research, or are duplicated, excessive, and unnecessary (see: “Wastage of Research Grant Money in Modern University Science” ).

Another large waste of research grant funds is found in the indirect costs. These expenses are very necessary to pay for cleaning, garbage service, painting, etc., but somehow can be more than 100% of the direct costs for buying test-tubes and running experiments.  Indirect costs are uniquely paid by science faculty with research grant awards; non-science faculty in the same universities usually are not asked to pay for the indirect costs of doing their scholarly work. Thus, my view is that payment for indirect costs by research grants to university scientists is not warranted and wastes grant funds. Nevertheless, the federal granting agencies and universities both approve of this! This peculiar arrangement arouses suspicion that its real purpose is not research support, and must be some hidden objective (see: “Research Grants: What is Going on With the Indirect Costs of Doing Research?” ).

Although everyone can see that there are too many university scientists to be supported with the funds now available,  the production of yet more new science PhD’s every year  directly increases the number of applicants for research grants! In my view, this is crazy, and there now are too many faculty scientists (see: “Does the USA Really Need so Many New Science Ph.D.’s?” )! The number of grant applications submitted is further increased by the hyper-competition for research grant awards, causing many faculty scientists to try to acquire 2 or more grants (see: “All About Today’s Hyper-competition for Research Grants” ). Both these increases make the shortage of research money worsen each year!

My position about wastage of grant money is let’s stop this nonsense so the many dollars freed from being wasted can be used to support the direct costs of worthy research. My position about producing more doctoral scientists is let’s decrease the number of new PhD’s, so the supply/demand imbalance between number of applicants and the amount of dollars available is removed; this reduction will later decrease the total number of faculty scientists.

Discussion and conclusions!  

The policies of both the research grant system and the universities create and encourage the present mess!  Instead of crying out for even more money for science, I sincerely believe it would be much better to increase support funds firstly by stopping the very large wastage of funds awarded by research grants, and secondly by decreasing the number of university scientists applying for research grants.  Both these changes can be accomplished now without disruptions! They will directly remedy the seemingly unsolvable Malthusian problem with needing more and more money for research grants every year.

Why aren’t alternative possibilities being evaluated and discussed? The answer to this unasked question is very easy: the universities and the research grant system both love all their current policies and practices, even though these are very destructive for university science. University scientists are silent and afraid to protest because they will do anything to get their research grant(s) renewed. The research grant officials at federal agencies are silent because they are afraid to challenge and try to change the status quo. This financial situation now is locked in place (see: “Three Money Cycles Support Scientific Research” ).

Two effective models to support scientific research without needing external research grants are available. The ongoing success of self-funding of industrial research works well, does not depend on external research grants, and might have some usable practices that would help the financial problems for university science. Whether further commercialization of science at universities would help improve their financial operations remains to be seen. The very successful internal funding system supporting basic and applied research projects at the Stowers Institute for Medical Research (Kansas City, MO.) provides another good alternative model for escaping from the current malaise (see: “Part II: The Stowers Institute is a Terrific New Model for Funding Scientific Research!” ). Yet other systems for funding scientific research at universities also are of interest here, but are not being actively considered.

My conclusions for Part II are that: (1) the present conditions for federal support of scientific research at universities are very destructive and not sustainable without killing science (see: “Could Science and Research Now be Dying?” ), and, (2) alternative and unconventional means for providing the large pool of dollars needed to pay for scientific research should be more closely examined and discussed.

 

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THREE MONEY CYCLES SUPPORT SCIENTIFIC RESEARCH

 The Research Grant Cycle at Universities   (http://dr-monsrs.net)

The Research Grant Cycle at Modern Universities   (http://dr-monsrs.net)


            Modern research with laboratory experiments is very costly for universities, research institutes, and industrial centers (see my earlier article in the Basic Introductions category on “Introduction to Money in Modern Scientific Research”).  Without financial support, research investigations are either impossible or severely limited.  Most funding for scientific research in the USA comes from commercial companies and the taxpaying public (via grants from several agencies of the national government).  If one steps back and looks at the overall processes whereby funds to support scientific research activities are generated, several different money cycles become apparent.
                    (1) The Business Profit Cycle provides funds for research and development (R&D) in industrial settings.                                                                                                                                             (2) The Soft Money Cycle supplies funds to support experimental studies at research institutes, and, some large universities and hospitals.
                    (3) The Research Grant Cycle generates funds for laboratory investigations at modern universities. 

             All 3 money cycles have the general features that a relatively small input of money starts and maintains the cycle, which later produces an output of research findings (i.e., science) and additional money (i.e., profits).  The scientists function in these cycles as a catalyst to make this conversion from input into output.  An amazing ability of these 3 cycles is that all grow with time and become self-supporting.  I now will briefly describe and explain how each of these 3 cycles operates, so that both the general public and employed scientists will have a greater understanding about how modern laboratory research is being funded.

The Business Profit Cycle

            Large industries must develop new and improved products through research and engineering efforts, so as to increase their financial profits.  A portion of their total annual profits is designated for R&D work by scientists and engineers, and is used to pay for the needed personnel, instrumentation, and supplies.  Marketing of the new or improved commercial products then generates increased sales and additional profits; this output enables both rewards for the private or public owners, and an enlarged pool of money to pay for an increased amount of future R&D.  Thus, for a successful company, the profits and the number of investigations both grow bigger with time, and their Business Profit Cycle becomes self-supporting.  History clearly shows that money from this ongoing cyclic operation is very successful for enabling industrial R&D activities. 

 The Soft-Money Cycle

            Research institutes, large universities, and some hospital centers have full-time staff scientists who receive a salary exclusively from their research grant(s).  This is termed a soft-money salary, and differs from the hard-money salary of most university science faculty (i.e., their salary is guaranteed by some source, such as a state government).  Typically, staff scientists with soft-money positions are not eligible to receive academic tenure, and do not have teaching obligations.  In general, these scientists work in a circumscribed research area (i.e., as part of a focused group effort), have very specific job duties (e.g., operation of a complex special research instrument that provides data used by other researchers), or are successfully investigating some very hot topic.  The input for The Soft Money Cycle is research grant money, and the main output is science (i.e., published research results).  Scientists function to convert the input into the output via their research activities.  This soft-money cycle works quite well for supporting scientific research activities at some prominent research institutions. 

            In all cases, scientists with soft-money salaries enter their job with full knowledge that their continued employment directly depends upon their success in obtaining research grant renewals.  Due to the present hyper-competition for research grant awards (see my earlier article in the Scientists category on “Why Would any Scientist ever Cheat?”), a certain number of soft-money researchers each year must terminate their employment as a scientist.  Not everything in this situation is bad, since soft-money salaries more frequently are not so restricted as hard-money salaries, and even can include some bonuses.  The soft-money scientists that continue to produce good research results and high quality publications actually do have some job security without needing to be tenured. 

The Research Grant Cycle

            Modern universities mostly now have become just another business (see my earlier article in the Big Problems category on “What is the Very Biggest Problem for Science Today?”).  University profits are cold hard cash, and traditionally are obtained from several quite different sources: donations by alumni and corporations, income from endowments, ever-increasing tuition fees obtained from enrolled undergraduate and graduate students, and, portions of research grant money brought in by their science faculty.  For The Research Grant Cycle, the input is research grant money, and the output is science (i.e., published research reports) plus university profits (i.e., awarded grant money that has not been spent).  The Research Grant Cycle is successful because it both supports research by the science faculty and provides universities with profits. 

             The greater the number and size of research grant awards acquired, the larger are a university’s profits.  To fully understand this statement, it is necessary that readers comprehend what is meant here by “profits”.  University profits include the total funds entering a university,  which are not fully needed and used to pay for salaries and expenses of some designated group of employees (e.g., administrators, housekeeping staff, librarians, police department, secretaries, teachers, etc.), or for some specific activities (e.g., advertising and publicity, bookkeeping, painting, receiving deliveries of new purchases, safety office, etc.).  In other words, if total income exceeds actual expenses, then there is a net positive profit. 

            University profits in any single year include the following typical examples. 
                        (1) The sum of all tuition fees minus the actual expenditures for classroom maintenance, course handouts, faculty instructors, heating and air-conditioning, printing of course examinations, teaching assistants, etc.  Any net positive balance here is a profit. 
                        (2) Income from investments of endowed resources, minus all the costs for administration, bookkeeping, brokerage services, financial consultants, money transfers, etc.  Any net positive balance here is a profit. 
                       (3) Total research grant awards, minus actual payments for approved expenses with direct and indirect costs, financial bookkeeping, grant administration, purchases, salaries, travel, etc.  Any net positive balance here is a profit. 
All these profits initially are transferred into some special institutional budgets (e.g., Dean’s slush fund, fund for new building construction, fund for special programs, institutional emergency fund, reserve fund for future usage, unencumbered funds, etc.).  

 Can the Profit Level of The Research Grant Cycle be Increased? 

             Operation of the Research Grant Cycle at universities is diagrammed in the figure shown just under the title of this article.  This now has been expanded by the incorporation of certain features described above for The Soft Money Cycle.  By hiring some science faculty as soft-money appointments instead of into the usual hard-money positions, universities save very much money because they no longer need to provide salaries.   The reduced expenses readily enable the generation of greater net profits by The Research Grant Cycle. 

             I suspect that another new source of additional profits involves that portion of research grants awarded to pay for indirect costs (i.e., expenses for cleaning, heating and air conditioning, painting, safety, etc.).  For the necessary background, please see my recent article in the Money & Grants category on “What is Going on With the Indirect Costs of Doing Research?”.  Any profits coming from unused indirect cost awards can be used to enlarge the standard operation of The Research Grant Cycle, and/or diverted to pay for other university activities.  If I am correct about the use and misuse of indirect cost awards, the amount of extra profits could be quite large.  Universities undoubtedly have several responses always ready to counter any inquiries or allegations about whether their actual expenses are much less than the costs in their approved budget: (1) black and white documents giving work schedules and listing the activities performed, (2) entries in official accounting documents showing that all indirect cost funds were spent completely and exactly as planned, and (3) a signed agreement with the funding agencies about approved costs, coming from the earlier negotiations establishing a university’s indirect cost rate.  However, a paper document does not necessarily mean that listed work actually was done, or that the actual service activities described really do cost as much as their stated values.  Based upon my personal experiences, I simply say “bunk” to such “proofs” for their stated indirect expenses! 

How do the Money Cycles Actually Function? 

             All 3 different money cycles produce profits that support scientific research activities.  The 2 money cycles at research institutes and universities can be initiated as soon as the available institutional funds become sufficient to permit hiring only one new scientist on a soft-money salary.  This faculty member then wins a new research grant and also gains his or her new salary.  After initial success, this faculty researcher then is encouraged to obtain a second grant, publish many research reports, and submit strong applications for competitive renewals.  The total profits generated from this initial employee will enlarge the pool of unrestricted university funds, thereby ultimately permitting the hiring of some additional soft-money faculty scientists.  With time, this cadre grows further and the Research Grant Cycle becomes self-supporting (i.e., research grants of the employed scientists provide enough income to give a net profit level that more than pays for all the costs of operating this cycle).  The use of soft-money salaries also means that the universities never have any worries about what to do if a research grant unexpectedly is not renewed; any time that an annual soft-money contract is completed, the employing university simply can discharge the now unfunded scientist, and then hire a replacement. 

             Once any of the 3 money cycles starts operating, they then simply go around and around while generating more and more profits.  With good administrative management, the number of people generating profits grows each and every year, and the cycle gets bigger and better!  In some cases, the speed of cyclic rotation even gets faster!  For all 3 money cycles, profits and the size of the cycle become larger and stronger with time! 

            For modern universities, a self-sustaining and growing new source of money profits has been discovered!  Once functioning, only minimal further expenses are needed to maintain this ongoing cycle!  The universities surely are overjoyed!  Since universities have become just another business, the financially productive Research Grant Cycle now is strongly embedded within modern university operations.  The success of The Research Grant Cycle in generating profits explains why medical schools often are the very largest unit at modern large universities; this condition has little directly to do with diseases, new therapeutic treatments, public health, or clinical research, and everything to do with obtaining larger profits. 

Does The Research Grant Cycle Actually Operate at Modern Universities? 

             What is the evidence that this cyclic profit-generating system really exists in universities?  Although there are several pieces of suggestive evidence, definitive proof remains lacking because so much is kept hidden and/or is off the record.  Recent conditions suggesting this operation at universities include: (1) the number of soft-money science faculty holding positions as non-tenure-track employees in universities is increasing, (2) at any time, there now are quite a few individual doctoral scientists available for hire in the USA as soft-money employees, (3) new very large programs (e.g., clinical genomics research initiatives, participation in extra-terrestrial space science studies, nanoscience research institutes, etc.) now have been developed in universities, and many have received substantial funding support with very large research grant awards, and, (4) even though every year there always seems to be only limited funds available for federal support of science, new government-mandated projects and mission-based research efforts continue to be announced along with special funding programs to support them.  Any new initiatives and funding programs all engage The Research Grant Cycle fully, and actually stimulate its functioning. 

 Concluding Remarks

            All 3 of the money cycles do provide the financial support needed for modern scientific investigations in the different employing institutions.  The Research Grant Cycle certainly is considered to be totally good by the many parties benefitting from it.  After the recent period with declining income due to economic downturns, universities must be especially delighted to have found a new very fruitful profit-generating mechanism to fund their many activities and services.  

             With all those positive features of The Research Grant Cycle, why then do I have a negative opinion about it?  There are 3 main reasons for my viewpoint.
                    (1)  First, my biggest reason is that this type of profit-driven money cycle subverts scientific research by making getting research grant money the chief goal of the science faculty, rather than producing new knowledge and new concepts from their experimental investigations.  The money is made to be more important than the science.  This shift in values directly stimulates the current abominable hyper-competition for research grant awards. 
                    (2)  Second, it forces scientists to become business entities, rather than professional researchers and scholars trying to better the world through their investigations.  Basic research especially is affected negatively, since it initially has no obvious commercial importance. 
                    (3)  Third, it amplifies the increasing commercialization of university science (see my earlier article in the Big Problems category on “What is the Very Biggest Problem for Science Today?”).  The Research Grant Cycle reinforces the new identity of universities as businesses, rather than as centers for academic scholarship, scientific research, teaching, innovation, and public service.  That new identity in turn encourages corruption and downgrades the traditional role of universities in society. 

 

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RESEARCH GRANTS: WHAT IS GOING ON WITH THE INDIRECT COSTS OF DOING RESEARCH?

Costs for University Science Research (http://dr-monsrs.net)
Costs for University Science Research    (http://dr-monsrs.net)

            Money is of key importance for conducting scientific research (see my earlier post in the Basic Introductions category on “Introduction to Money in Modern Scientific Research”).  The tax-paying public is familiar with the use of research grant money to pay for the acquisition of chemicals, conduction of assays and measurements, procurement of research samples, purchase and repair of laboratory instruments, purchase of test-tubes and other research supplies, publication of research reports in journals, etc.  All these expenses are for the direct costs of doing research.  Most people are completely unaware that there is a second and very different type of expense in conducting a research study.

            Research grants to universities, technology institutes, and medical schools also pay for the indirect costs of doing research.  These include all the adjunctive expenses necessary to support using an active research laboratory to perform experiments (e.g., daily maintenance, distribution of regulated electricity, garbage collection and disposal, heating and cooling, painting, routine administration, safety activities and facilities, water provision and drainage, etc.).  There can be no question that these indirect expenses are totally needed for the conduct of experiments in university research laboratories; corresponding expenses also occur for scientists working at industrial research and development labs.

Indirect vs. Direct Costs in Typical Research Grants

            The amount of support used for indirect expenses is determined by periodic negotiations between each institution receiving research grant awards and the granting agencies.  These negotiations are held behind closed doors, and the Principal Investigators composing and submitting applications for a research grant have no input into this process.  The total indirect costs awarded by federal granting agencies are calculated as some agreed percentage of the total direct costs awarded by a research grant (e.g., 35-75%).

            The public also is not very aware that the direct costs awarded in support of any research project can be  less than half of the total dollars provided by a research grant.  For some large very well-respected educational institutions in the USA, the official indirect cost rate is over 100%.  In such cases, the total funds awarded to those institutions by any research grant actually is over double the commonly stated figure for the total direct costs.  For example, with an approved indirect cost rate of 125%, a grant awarding $500,000 for total direct costs also gives another $625,000 for indirect costs, meaning the total award is $1,125,000.  Hence, indirect cost awards can be a very substantial amount of money!

How do Science Faculty View Indirect Costs in Research Grant Awards?

             I personally know that many funded faculty research scientists at universities have large doubts about realities in the current system for paying the indirect expenses of their lab research.  One area of doubt is the official percentage figure for their institution, which often seems to be much too high.  A second common doubt concerns the actual provision of the specified important activities listed in justifications for the approved percentage figure for indirect costs.  Usually, funded faculty scientists choose to keep quiet about their misgivings, since these “involve something beyond my influence and control”.  A few individual faculty members do occasionally complain about deficiencies in routine services provided by their employing institution (e.g., “My trash has not been picked up for 3 days now!”), but they never go on to ponder the various probable causes and possible misuses of their research grant funds designated for indirect expenses  (e.g., diversion into other university accounts)

            These common doubt
s lead to suspicions amongst university science faculty that the provision of research grant funds for indirect expenses is peculiar and really must have some additional unspoken function(s) beyond paying for the adjunct costs of doing laboratory research.  This suspicion almost never is openly discussed, since most faculty scientists are much more personally concerned with their own research projects, and not with what their employer might be “receiving on the side”.  In forthcoming posts, I will discuss some theoretical possibilities which could explain what might be happening.

            The approved rates for indirect cost awards vary considerably between different institutions, as a function of their location, size, labor costs, number of faculty and other employees,  type of construction, etc.  As a blatant example of the very large variations in indirect expenses between different academic institutions, I once went to work with a faculty collaborator at a large academic institution in Philadelphia on 2 consecutive days.  I saw with my own eyes that his laboratory rooms had a daily damp-mopping of the floors.  I was totally astounded to see that happening because at my own institution the lab floors were never damp-mopped, and were wet-mopped only a few times each year.  The indirect cost rates at these 2 universities certainly differed, but not by such a huge amount!

Who Pays and Who Does Not Pay for the Indirect Costs of Scholarship and Research at Universities?

            Usually. only faculty scientists having a research laboratory are required to pay for indirect expenses via their research grants.  Faculty members researching in other areas of scholarly endeavor mostly are not required to pay for the indirect costs of their investigations.  Those others include nearly all faculty working in art and music, classics, computer science, history, library science, linguistics, literature, and statistics.  This also can include some scholars working in astronomy, economics, engineering, environmental science, mathematics, psychology, or social science.  In all such cases, their indirect expenses must be paid by some other institutional funds, and presumably are seen as simply representing the routine costs of university business.  One should note here that smaller non-federal granting agencies often do not provide any payments for indirect expenses, yet most universities still are happy to receive those awards; the indirect costs for these smaller grant-supported investigations certainly still exist, but are being paid by some other budget.

            Indirect expenses for faculty offices, teaching activities in lecture and laboratory classrooms, and small conferences held in a campus room, normally are paid by the university as a normal operating expense.  It is only faculty scientists conducting research in laboratories who are required to pay for the indirect costs of their experimental investigations.  Senior science faculty members studying  education in their science courses are not charged for the indirect costs of these investigations.

Concluding Remarks

          Several conclusions now can be drawn: (1) research grants are used to pay for indirect expenses by all science faculty researching in a laboratory, (2) many scholarly investigations by faculty not needing to work in a research laboratory have their indirect expenses paid by some internal budget at the same institutions, (3) research grant awards for indirect expenses at some institutions exceed the amount given for direct expenses, and, (4) direct experience with paying for indirect expenses leads many Principal Investigators to have questions and suspicions that some type of hidden purpose or scam might be going on with the current system for using research grant funds to pay for indirect expenses.

            With this brief background, we now must ask several very important questions!   Why are only faculty scientists doing laboratory research being asked to obtain external funding to pay for their indirect expemses?  Is this done simply because grants are available for scientific research, but funding programs supporting scholarly studies in many other disciplines are smaller and less available?   Why are the indirect expenses for scholarly studies by many non-science faculty paid by institutional funds?  Why are the indirect costs of faculty scientists doing laboratory research investigations not also being paid by the employing institutions?  Where 2 different funded faculty scientists share a large laboratory room, does each grant provide support for only 50% of the indirect costs that would be awarded if there was only one occupant, or does each award pay for 100%?  Quite frankly, the more questions one asks about this topic, the more new queries arise; true answers to these never-asked questions probably would be both very interesting and very distressing.

            I will close by stating my own sincere conviction that something just does not make sense here!  In several later essays, I will try to provide further insights and discussions about indirect costs, especially  in the context of the current shortage of funding for research grants.  These will include controversial proposals for useful changes in the present policies and practices for the payment of indirect costs.

 

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