Scandal in The Laboratories

Inquiries at Stanford turn a harsh light on how university research is funded

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Washington also shoulders some blame for creating the impossible tangle of rules that govern overhead reimbursements. "It's important to remember that the same people who produced the tax law produced this horrible cost-recovery system," says Robert Zemsky, director of the Higher Education Research Program at the University of Pennsylvania. Even those schools that are determined to redeem allowable expenses say it is too complicated and time consuming to try to reclaim the full cost of doing research.

Administrators point out that private industry charges overhead rates well over 100%, making university-based projects a relative bargain. "We're not looking at a situation where people are getting rich," says former M.I.T. Provost John Deutch. "This is not like Michael Milken." Despite an overhead ^ rate of 77%, for example, Harvard Medical School in 1989 still had to finance 17% of research-related indirect costs out of its own pocket. The rate has since soared to 88%, and Harvard Medical is now asking government negotiators to agree to an even more mind-boggling figure: 104%.

Lurking behind the debate about out-of-sight overhead rates and suspicious- sounding bills for flowers and bedsheets is a deeper issue: the high cost of modern research. During the Sputnik era, Washington launched an ambitious university building program, which it abruptly abandoned in the late 1960s. Since then, private universities have had to raise their own construction and renovation funds. At the same time, they have had to grapple with unrealistic government regulations that require them to write off building costs on a 50- year timetable, despite the fact that most scientific facilities outlive their usefulness in just two decades.

In order to recoup some of the skyrocketing costs of erecting new labs and technical libraries, schools have become increasingly aggressive about billing Washington for overhead. It is no accident that Stanford's indirect-cost rate jumped 16% from 1982 to 1990, a period that coincided with a building boom on the campus. At some schools, reimbursements for overhead have come to account for alarming chunks of the budget. In fiscal 1990, Stanford relied on federal overhead to make up 22% of its operating funds. "They're hooked," says Middlebury's Light. "They've become dependent on the research money for regular functions."

The government, meanwhile, faces a budget crunch that makes it less willing than ever to help universities expand or update their scientific infrastructure. "The National Science Foundation and others are saying, 'If we've got to set priorities, we'd better do the substance,' " says Joseph Gilmour, vice president for strategic planning at Georgia Tech.

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