Whoa, before we get ahead of ourselves, let’s think about where all these institutional funds come from. For sure, some of it comes from endowment income. Research universities, and private research universities, in particular, tend to have large endowments that, among other things, support research. Some of it comes from current gifts, donations spent more or less when they come in rather than investing in an endowment. Some of it comes from hospital and health system revenue (sorry, something close to none of it comes from sports revenue, because there mostly isn’t any). For public universities, some of it comes from the appropriations state governments make. But let’s face it, a crap-load of it comes from tuition. How much is a crap-load? Come on, I’m not doing precise accounting here! NSF data don’t show where the institutional funds come from (other than the institution). Few published university budgets provide the detail necessary (at least that I know of) to trace the web of revenue and expenses that you’d need to know where it comes from. Besides, money is fungible (that’s something you can say when you don’t know the answer to a financial question). If you do know, please drop me a line. If you’ve ever taken a course with me, you sometimes have to put your head down and wait for the tangent to end before we get back to the actual class content.
Back to why they are spending so much.
Welp, one reason is that Obama’s second term and Trump’s first (you see what I did there? Ok, breathe …) were not super years for federal research funding growth. The Biden administration has plans to spend big on research
, which might change things if it happens. The cost of research increases over time. Because it is skilled labor-intensive, it is hard to control costs. We are always learning more, so there is always more elaborate and intensive work to be done. If the money wasn’t coming from the feds, it had to come from somewhere, and it came from the (mostly) universities themselves.
Research is also a competitive enterprise. Universities are competing with each other for faculty, students, grants, and acclaim. To get a competitive edge, universities will spend their own money on research. Starting up a new faculty lab in chemistry, for example, can cost six or even seven figures. This completion happens between universities in the U.S. and internationally. The National Science Board’s The State of U.S. Science and Engineering 2020
report put it this way:
The changing global landscape affects the position of the United States relative to the other major global players. For example, the United States has seen its relative share of global S&T activity remain unchanged or shrink, even as its absolute activity levels have continued to rise.
Increasingly, the United States is seen globally as an important leader rather than the uncontested leader.
The public - private divide
No university wants to fall behind the global competition. But much of the competitive pressure, I speculate, is within the country. Public universities struggle to keep up with their private rivals. Private research universities tend to have a significant advantage over public research universities. It’s not that private research universities do more research. It’s that they are more research-intensive. What do I mean? Think about it this way. Research isn’t done by universities. It’s done by researchers. (NPR, stop telling us about a Harvard study. No such thing exists.) And researchers congregate in universities with different configurations and resource levels.
Compare the University of Minnesota, Twin-Cities, with the California Institute of Technology (Cal Tech). They ranked 18th and 19th respectively on the list of top research performances
. They each spent just over $1 billion on research in 2019, and they each got just under half of their research funds from the feds. But that’s where the similarities end. A quick lookup using Department of Education data
shows considerable differences between the two.
In 2019, Minnesota enrolled over 51,000 students, and the vast majority (68%) were undergraduates. Minnesota has about 5,500 full-time faculty members. Cal Tech had just 2,237 students - the size of a high school - and undergraduates made up only 42% of the total. Most students at Cal Tech are Ph.D. students. And Cal Tech has just under 1,000 full-time faculty members. At Cal Tech, there is one faculty member for every two students. Hard to hide from the professors in those classes! Minnesota has almost 25 times the number of students as Cal Tech does, but just over 5 times the number of faculty. UM spent something like $181,000 on research per faculty member, which is a pretty big number. But Cal Tech spent about $1,00,000 (ONE MILLION DOLLARS) on research per faculty member. Even though both Minnesota and Cal Tech are big-time research universities that seem like they do similar amounts of research, they are not comparable. Most faculty members at Minnesota will spend much less time on research than their Cal Tech colleges, and when they conduct research, they have fewer resources to get it done. How can Minnesota keep up with Cal Tech?
Cal Tech is an extreme example. It’s super-wealthy, super research-intensive, and has very few students, even compared to other major private research universities. And Minnesota is both larger and does more research than many public research universities. But the comparison is illustrative of the differences between major public and private research universities in the United States.
Public universities must balance the research mission with other missions, including providing underrated education at scale. Private universities can limit undergraduate enrollment - sometimes severely - to focus on research. Recall, public research universities are competing with private ones for faculty and graduate students. Overall, they don’t win those competitions. But to try to keep up, public or try to keep up as best, they can.
Taking advantage of the scale that public research universities have, including large amounts of cash sloshing around, can be directed to research. For every dollar of federal funding that comes into public institutions, they spend 55 cents of their own money. Some leading public universities spend a hire ratio of their own money relative to federal funds. Minnesota spent 66 cents in institutional funds for every federal research dollar. Let’s not pick on Minnesota too much. The University of Florida also spent 66 cents of their own money on research for every federal dollar. Arizona State spent 88 cents of ASU cash for every federal dollar.
Institutional funds can buy stuff. What kind of stuff? This kind: new labs and faculty start-up packages, internal grants to seed projects that will attract grants, and pay for worthy research that doesn’t have an external sponsor.
Let’s not get too moralistic. Using institutional funds for research is not evil or immoral or anything. Research is good. Also, it’s not like private research universities don’t do it too. NSF data indicate that private institutions spent 36 cents of their own cash for every federal research dollar. And institutional spending on research by private institutions increased quite a bit over the past decade, probably because federal funds have been flat. Of course, all that does is increase the cycle of competition.