Problems with UCOP's Proposed Salary Supplements for Grants

Officials at UC and other universities have been scrambling to replace resources lost to public funding cuts.Most seem still to see extramural research funds as net positive cash flow for the institution, which they are not (one news link from our ample coverage plus one previous post).  But grants do provide funds for salaries, including partial salaries for faculty investigators, and with that in mind the Joint Senate-Administration Compensation Plan Steering Committee has hatched a plan for a new policy -- and new personnel section APM-668 --called the Negotiated Salary Program (NSP).

The basic motive is that the University needs to find funds to retain those faculty most at-risk of being recruited away by competing institutions.  The rationale is that since state funds keep shrinking, the University must look to non-state funds to fill in the gaps, meaning looking to federal as well as private grants and donations.  The model is the Health Sciences Compensation Plan (HSCP), which the prosposal would extend to the campuses.

Agencies tie salary paid from a grant to research effort on that particular grants. The proposal discussion cites NSF and NIH language that forbids use of grant funds to augment a faculty member's salary (pp 4-6).  The NSP is meant to be a workaround. It would allow faculty to apply to members of their campus administration, starting with their department chair, to use some portion of extramural revenues as a salary augmentation ("negotiated salary component") for a finite period (1-2 years).

We post below a comment from Stanton A. Glantz, a faculty member in UCSF's School of Medicine. It discusses the major issues raised by the NSP proposal in the context of his knowledge of the health sciences plan itself.

The Health Sciences Compensation Plan (HSCP) programs has several origins:

• Very few faculty are supported by permanent state-funded lines.
• A substantial part of the revenues to pay faculty salaries comes from clinical revenues.
• Schools of medicine, nursing, dentistry and pharmacy, in addition to their academic mission, run major nonprofit businesses providing clinical care. (This is unique: law schools do not run large scale legal practices; business and engineering schools do not manage businesses that produce actual products.)
• As a result, health sciences schools have to provide salaries that are high enough to hold clinical service providers who could be doing the same thing out in the community.  Indeed, these plans were originally developed as part of moving from volunteer faculty to “strict full time” faculty paid by the University. Thus these comp plans require that faculty not have any outside professional income related to their professional practice; any such income has to be paid into the departmental comp plan.
• In recent years, in an effort to encourage generating more clinical revenues, the plans have moved more and more to an individualized incentive structure.
• Grant income has not generally been part of that structure.  Indeed, in some highly compensated clinical departments (like surgery and anesthesia), I have heard of cases where faculty were threatened with salary cuts because they got grants that did not pay for the clinical revenue lost because the faculty member was obligated to do the research.  (NIH has a salary cap, currently about $199,000.)

At the same time, there has been more and more pressure to get grants as a way of bringing more money into the University and thus bringing in more indirect costs.  This has been enshrined in policies in some departments (such as the UCSF Department of Medicine) requiring a certain type of grant (and NIH R01) as a condition for promotion to associate professor, where most faculty are brought in as adjunct faculty until they get an NIH R01.

There are several problems with this:

• Since the federal indirect cost rate is below actual indirect costs (by design, since the federal government requires cost sharing by the university), the more grant money that comes in, the greater the financial shortfall for the department (or school or campus) as a whole. The indirect cost rate on nonfederal grants is even lower. (The University keeps talking about increasing the indirect cost recovery, but the probability that they will ever break even, much less turn a profit, on indirect costs is zero.)
• In the past, these shortfalls have been made up with surplus clinical revenue.  This is becoming more and more difficult as reimbursement is squeezed as part of health care cost containment.
• On a general campus, which does not have this source of money, the shortfall will have to be made up with cuts elsewhere, most likely teaching and non-extramurally supported research programs.  (This is likely happening even at UCSF.)
• There are no meaningful controls on growth. The tradition at UCSF (and lots of other places) is that anyone who can get a grant (what NIH calls a K award, a career development award for junior faculty) that the department likes can join the faculty. There is little or no attention to larger programmatic issues and, when these grants run out, there are often crises in supporting these people.  This was not so much an issue in past years when the NIH budget was growing, but there are now huge problems because the NIH budget is stabilizing or shrinking in real terms.  (In many ways, this situation is like the subprime crisis: Everything is dandy during rapid growth, but there is a reverse multiplier effect when the growth slows or stops.)
• It is of questionable legality. It is my understanding that the federal government and other agencies pay a fraction of salaries based on what the salaries for comparable position and actual effort devoted to the project are.  A system that effectively pays a “commission” for getting extramural grants would violate this principle.
• The department (or school or campus) effectively turns over control over its future to extramural funding agencies, chasing whatever their priorities are for the moment.
• There are serious academic freedom issues.  If getting a grant from an extramural agency is a condition of employment, promotion, or even salary, people with other interests suffer discrimination.  The first question becomes not, “is this an important idea,” but “who will buy it?”

While not precisely the same issue, the UCSF Senate has been trying to deal with related issues of faculty ending up in the wrong series as a result of similar problems (e.g., this report)

See also Warren Gold's astute comments on the topic:

As we discussed before, the problem with the medical school process of X, Y , and Z components is that it does lead to inequity, not equity. X is the base salary that applies throughout the department, e.g., medicine, of which I am a member. But the other components are negotiable with the Chair. And such negotiations lead to a situation in which new young hot shots, who had to be lured from other campuses may be earning as much or more than senior members of the division or department because it takes more money to secure the new hire, or prevent the older department member from being recruited elsewhere. When the process has been running for a few years, you end up with very different salaries within the same division or within the same department regardless of the actual professorial grade or step. When you add in the fact that the majority of our faculty are not ladder rank, but may be in clinical, ladder or other series and their salaries may depend on clinical income and/or grants, the situation becomes even more complex and unequal

There has been an effort for last few years to try to return the salaries to some relation to the actual professorial rank, but I do not think it has been very successful so far.

I think this approach in the general campuses would be a disaster for all the reasons we have discussed including decreasing state support, increasing private support, and increasing inequity.

UCSD and the Crisis in Public University Research Funding

Reports surfaced today in the San Diego daily newspaper that three core members of UCSD's Center for Theoretical Biological Physics are moving to Rice University, and bringing much of their collaborative infrastructure with them. The story illustrates one of this blog's perennial themes, which is the damage being done right now by the ridiculous cuts in public funding, and by our leaders' foolish acceptance of each current massive cut as the new normal.

But the story also illustrates the vexed and subterranean relations between public universities and big science.  Nothing here amounts to a comment on the research or the individual scientists involved: the story is a structural one of high-cost research and public subsidies that must be thought through if public higher ed is going to make it to the other side.

The story is this:

The three scientists [José Onuchic, Herbert Levine and Peter Wolynes] are transferring their labs to the Rice's BioScience Research Collaborative (BRC), a new center that specializes in the study of cancer in association with other Texas Medical Center institutions. The BRC arose from the $3 billion bond package that Texas voters approved in 2007 to study and treat cancer. The initiative specifically calls for the recruitment of prominent scientists. Rice says it was able to recruit Onuchic and Levine was the aide of $10 million in state money provided to the university.

Star scientists move a lot, though not so often as a team. Making this situation unusual is that one of them, Herbert Levine, explicitly named public funding cuts as a "secondary reason" for leaving:

"The major reason is that Rice has made a remarkably generous offer to my colleagues and me, both in personal terms but mainly as it concerns collective research support.


"For our biophysics center, they have offered prime space (to be built to our specs), ongoing administrative support, and facilitated access to foundations such as CPRIT (Cancer Prevention and Research Institute of Texas), all of which will enable us to greatly broaden the scope of our efforts and begin to study medical applicants of physical science theory.

"The current budget at UC makes it clear that this type of support is just not going to be possible here. The fact that private university funds have recovered from their 2008 lows long before state budgets are even close to balanced, has led to a "support gap" all across the country (not just California). So, I don't think that budget cuts specifically "drove us out", they are indeed a factor in our overall assessment that we will be able to do significantly more at Rice than at UCSD, over the next 5-10 years"

Unfortunately. this statement is quite accurate.  Public universities are falling woefully behind their private counterparts in the resources for their core missions of instruction and research.  Harvard president Drew Gilpin Faust was challenged by eleven public university presidents when she even hinted about this problem in a quite interesting 2007 Business Week story called 'The Dangerous Wealth of the Ivy League," Now muttered fears about declining resources for public university research have become everyday reality.

An additional important detail is that the story notes that Rice, a wealthy private university with the country's fourteenth largest endowment per student, just ahead of Cal Tech's, got pivotal support funds from the state of Texas. The article notes that states have taken to stealing each others' scientists with bond packages, and that California has also done this to Texas. The deeper point is that public funding and plenty of it is essential to the the successful pursuit of advanced, socially-useful research.  The universities that are in the best position to leverage this public money are, increasingly, private universities. This doesn't change the fact that high-cost research does not make money, but requires major subsidies from the public sector.

The support gap is likely to grow wider.  This is because a large number of public university leaders have either given up on restoring the levels of public funding that made the American public university system the best in the world, or act like people who have given up, or haven't given up but are afraid to state the situation plainly, in a way politicians can understand: "either restore public funding or kill public universities as we know them, period."  At the same time, these leaders will not state the level to which tuition needs to rise to replace the lost public funding, as this blog has been forced to document on many occasions.  Research is supported both by direct funding from the extramural sponsor and by the host university, who must fill in for underpayments for overhead to the tune of an average of well above 25 cents on the dollar, or in UC's case, a net research loss of $720 million on $3.5 billion in gross revenues earned by UC's very accomplished faculty.  This research should be done, but it costs money and does not earn money.  Either we restore public funding to correct levels, or UC's research mission will decline at the same rate as undergraduate access to small-scale courses. 

The move for the UCSD professors no doubt makes intellectual sense.  It's interesting that Rice tried to build collaboration into the architecture of the facility.  But nothing will change the science's negative economics.  Rice built the BioSciences facility in the mist of a building boom within the multi-institutional Texas Medical Center that created a glut of space.  The 477,000 square foot facility opened in mid-2009 with only one tenant, and colleagues at Rice tell me that the facility continues to have problems covering costs. It appears now to have four extramural tenants.  Basic construction costs are listed as $144 million, and Rice's public financial statements report that the value of assets under construction in fiscal year 2009 was 50% of total existing assets (page 15).  This suggests an enormous financial burden even for a wealthy university.  Hence the benefit of the $10 million in Texas taxpayer money as a sweetener for prospective tenants.  It is also certain that annual public funding will be needed in the future. The research is being done for science, but also for an industry, biotechnology, in which only 13 percent of its companies are profitable, and which arguably has, as an overall industry, yet to turn a profit.

There is the further issue of sacrificial relations among disciplines within a university, as the very high costs of some squeeze out even low-cost fields elsewhere.  In 2010, Rice closed its French studies PhD, meaning that the state of Texas has only one French PhD program left, at UT-Austin.  Rice also closed its university press, which had already been on entirely digital footing, for an annual savings of $150,000-$200,000. (University presses publish books as well as journals, and books are still the primary repository of work in the human sciences.)  Rice also sold one of the campus's major cultural institutions, the student radio station KTRU (91.7), which functioned as a unique outlet for regional and innovative music.  The selling price was $9.9 million.   Of course no one took money from French and gave it to the BioSciences construction company.  That doesn't change the fact that relatively low-cost programs in the humanities and social sciences have a tendency to fall ill in the proximity of big science kryptonite.


In the Hooverized economy Gov. Jerry Schwarzenegger is helping to sustain, we have three choices.

1. Continue to conceal and distort big science research costs as though this research raised money for universities.  This will increase internal tensions and damage or even eliminate the disciplines that are essential to solving the world's terrible social and cultural problems. 
2. Disclose those true research costs to ourselves and the public.  Come together to convince the public and its politicians that they must correctly fund expensive research as a public necessity.
3. Move the humanities and social sciences into separate institutions, so they can retain the funds their enrollments generate that are now in part spent on costly infrastructure of little benefit to their research or their students.

I vote for door number 2.  But if we are offered only door number 1, an increasing number of human sciences faculty will be tempted by door number 3.