Research as a fiscal strategyWinter Symposium – February 23th, 2010

Kevin Reynolds

Bill Feyerherm

Roy Koch

Long Term Institutional Fiscal Strategies (LTIFS) Committee Clustered Recommendations

• Curricular efficiency and effectiveness as a fiscal strategy

• Research as a fiscal strategy• Enrollment management as a fiscal strategy

(March 11, 3-5pm SMSU Browsing Lounge)

• Administrative organization and operation as a fiscal strategy

• Partnerships as a fiscal strategy• Athletics

Forum Outline• LTIFS thought process and recommendations (Kevin Reynolds)

• Discussion (Roy Koch)

• The research goal and challenges (Kevin Reynolds)

• Sponsored research income and expenditures: successes to date (Bill Feyerherm)

• Comparator Institutions who have doubled sponsored research from $50-$100 million (Bill Feyerherm)

• Discussion and conclusions (Roy Koch)

LTIFS approach to sponsored research

• Growth in research funding has concomitant increase in financial obligations (space, salaries, equipment). Cannot be viewed as directly as revenue enhancement.

• Committee charges-recommendations about current practices.

• Role of sponsored research growth to overall robust and financially sustainable base of funding for our Institution?

Committee ChargeConsider - organizational or structural issues that impact our

efficiency and/or effectiveness. Consider - operational approaches that could lead to more

efficient and effective use of institutional resources. Identify -alternatives for revenue enhancement that provide a

more robust and financially sustainable base of funding Consider - University-wide approaches, in addition to

incremental reductions within the academic and administrative units, which could be used in dealing with the budget deficits for the 2009-11 biennium.

Suggest - approaches and criteria to be used in academic and administrative program consolidation or reorganization.

Long Term Institutional Fiscal Strategies Committee (LTIFS)

Research: Savings & Revenue Enhancement

Operational approaches that could lead to more efficient and effective use of institutional resources. SPACE

Identify -alternatives for revenue enhancement that provide a more robust and financially sustainable base of funding. MAXIMIZING INDIRECT COST RECOVERY

Space: Broader Context

• $2.5 million/year in PSU space lease costs

• LTIFS - Decrease costs by more efficient use of space.

• One approach - Different economic model in which dedicated space and shared space utilization is charged to units (teaching, office, research). Unit budgets would need to be based upon income (SCH, indirect dollars, gifts)

Space: Research As sponsored research grows at PSU so will the pressure to find research space. Currently spend $700,000 F&A costs on space lease

Generally most expensive to build and maintain and highly specialized.

Ideas: • Link research space (cost) to income (indirect dollars).

Pressure to be efficient.• New space or renovated space should be designed for

sharing, with maximum flexibility and least cost for repurposing.

Maximizing Indirect Cost Recovery

LTIFS “Review and revise indirect cost policy; more specifically, establish formal policies for waiving or reducing indirect costs (as well as for strategic expenditure and investment of indirect cost recoveries)”

• Balance: Lost income versus lost research opportunity

• A Greater Calling: Let Knowledge Serve the City

(and beyond)

• Fiscal Cost: Space, faculty time, other resources (Still a modest pool of indirect $)

Research Growth: LTIFS Report

“The University has established a goal of $100 million in research funding by 2017. PSU should engage in strategic planning to determine how to achieve this goal in a realistic and fiscally responsible manner. A core value to be considered in this strategic planning is the balance struck between the faculty’s roles of teaching and research.”

Is Research Growth a fiscal strategy?

• From indirect dollars? These can only be used to support costs associated with research. Data suggests that indirect dollars do not fully cover these costs.

• Research growth as a fiscal strategy which arises from reputation, discoveries, partnerships and constituencies

The hype: Universities have Blockbuster Discoveries from

Intellectual Property • Florida State University - license for Taxol production -

cumulative revenue $200 million (1996)

• University of Minnesota - received $290 million in royalties (1999-2008) from for GlaxoSmithKline for Ziagen (anti-AIDs drug).

• OHSU - $100 million gift from Phil Knight to create OHSU-Knight Cancer Institute. Director Dr. Brian Druker pivotal role in development of Gleevec (Novartis cancer treatment for chronic myleoid leukemia).

Blockbuster Discoveries and $$$$ - almost infamous, “model” extremely rare

(but it could happen at PSU)

“Technology transfer will not make your university rich. A successful program will make a small profit but will not support the university. It will, however, provide many other benefits to the institution and the community.

“Building a robust technology transfer program takes sustained financial investment. Investments are required to develop a patent portfolio, attract expert talent, and train office professionals.

“It will likely take eight to ten years before your program stops losing money—and it may never make your institution any substantial amount. It takes time to build an IP portfolio, establish contacts, and develop skills in technology transfer. Following the set up, the TTO may begin to make money.

“It may take two decades or more before a university technology transfer program (including entrepreneurial spinouts) substantially affects the local economy. Impact in regional economic development takes 20 to 30 years. Expecting substantial returns in a few years leads to underinvestment and disappointment.

“The ultimate impact may be very large—both economically and culturally—for the university, its graduates, and the community.”

Source: ipHandbook of best practices

PSU’s approach to Intellectual Property Management

While blockbusters are possible, PSU focuses on expanding access to and impact of intellectual property developed at PSU. Examples:• Source code release of online adult learning platform,

but controlled use of PSU name requires PSU get credit when others use it

• License to new environmental sensor technology to local company, boosting local economy & PSU “green” reputation

• License requiring low cost malaria drugs distribution, helping PSU serve the world

Benefits of PSU’s approach to intellectual property

management• Serve all parts of the campus & community, instead of

focusing on science and technology• Boost the university’s reputation in ways such that other

opportunities for grants become more likely• Begin returning significant revenue to units on campus in

about 10 year

Other Discoveries - Reputation

Teaching Research

Excellence&

Reputation

Gifts

Greater public support & recognition increased state/ city support

Leading to

Increased tuition (non-resident students)

Partnerships

PSU Tuition Versus State Support Per FTE Student Count (in 2006 Dollars)

$5,143

$5,382

$5,511

$5,792

$5,946

$5,176

$3,049

$2,134

$2,324

$2,452

$3,986

$3,926

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000

1995

2002

2003

2004

2005

2006

Acad

emic

Yea

r

Net Student Tuition State Support

Does research reputation affect overall income per student FTE?

Total dollars per FTE student at PSU have decreased ($764) and the State contribution continues to decline

Source: The Delta Project on Postsecondary Education Costs, Productivity, and Accountability. www.deltacostproject.org

U of O Tuition Vs. State Support Per FTE Student Count (in 2006 Dollars)

$6,616

$6,777

$7,177

$7,983

$8,614

$8,948

$3,531

$3,251

$2,750

$2,525

$1,709

$2,076

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000

1995

2002

2003

2004

2005

2006

Acad

emic

Yea

r

Net Student Tuition State Support

Total dollars per student FTE at U of O are higher ($11024), and have increased ($877)

State support per FTE student has decreased and is less than that of PSU.

Source: The Delta Project on Postsecondary Education Costs, Productivity, and Accountability. www.deltacostproject.org

Comments?

• Value of sponsored research activities to our institution both now, and looking forwards

• Goal to raise levels of sponsored research to $100 million.

Research Growth at PSU -last 10 years (a great

start)

OUS Fact book: Sponsored Research and Other Support Fiscal Years 1997-98 and 2004-05 through

2007-08

Institution 1997-1998 2004-2005 2005-2006 2006-2007 2007-2008 2008-09

Eastern Oregon University

$2,210,520 $3,185,878 $3,551,012 $2,503,375 $2,573,790

Oregon Institute of Technology

1,190,312 3,711,888 4,836,973 4,608,918 4,751,762

Oregon State University 98,106,773 141,474,529 157,167,218 157,866,034 160,964,551

Portland State University

17,603,907 33,639,469 36,160,646 34,372,631 36,368,262 $53M

Southern Oregon University

2,164,054 4,123,431 3,917,161 4,843,775 5,100,206

University of Oregon 47,262,942 80,852,792 97,980,143 100,962,182 105,018,505

Western Oregon University

4,578,421 9,224,633 10,121,037 9,994,567 10,439,636

A long way to go….

Ranked Instructional Faculty by Full-Time/Part-Time Status (2007 -2008)

0

200400

600

800

10001200

1400

OSU 698183

PSU 628557

UO 726271

Institution

No

of

full

tim

e f

ac

ult

y

part time

full time

Do we have less faculty…

Are we less productive from a sponsored research perspective..….

Institution 1997-1998 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Eastern Oregon University $32,508 $35,796 $37,379 $25,287 $25,998

Oregon Institute of Technology $11,903 $31,192 $38,389 $34,654 $38,632

Oregon State University $131,687 $211,156 $228,109 $223,923 $230,608

Portland State University $37,777 $61,724 $62,239 $54,821 $57,911 $70k estimated

Southern Oregon University $12,805 $22,289 $20,726 $25,360 $27,569

University of Oregon $72,601 $117,861 $137,806 $145,061 $144,654

Western Oregon University $28,977 $56,248 $57,834 $61,695 $59,316

Sponsored Research and Other Support (ROS) per Full-Time Faculty: Fiscal Years 1997-98 and 2004-05 through 2007-08

Data provide a perspective on the $100 million sponsored research

goal• More full-time faculty (Ed Ray OSU State of the University

Address “increase the number of tenured and tenure track faculty from 783 to between 1,300 and 1,500 in the next 15 years and we must begin now”)

• Increased levels of Sponsored Research and Other Support for existing full time faculty/faculty lines

• Example 800 full time faculty with an average of $125,000 ROS will achieve the $100 million goal

Challenge• Funding (federal or industry) is highly competitive and will

become more so. What is the competitive edge (versus disadvantage for PSU faculty)?

• Many disciplines which are an essential and integral component of our Institution do not have access to significant sources of external support. How do we balance new faculty lines and replacement hires between areas and achieve a goal of $125,000 ROS average.

The PSU advantage (1)

City of Portland and

the Pacific Northwest

Tenure and tenure-track faculty recruitment and retention

Research staff and graduate student recruitment

Issues

• Faculty salaries

• Start up support

• Perceptions of PSU as a research university

• Research space

• Support infrastructure

• Equipment

• Benefit costs for research staff

The PSU advantage (2)

Partnerships“Let knowledge serve the city”

Research and Development

(Private/Non Profits)

Intel

FEI

Sharp Labs

Tek-tronix

VestasOHSU

PGE

Solar-world

Prov-idencePAM

Education

VA-Hospital

PCC K-12

Government

Hospitals

USGS PNNL

ODOTTriMet City Portland

Metro

SRCs

BEST OTRADI

ONAMI

PSU Guiding Themes

• Provide Civic Leadership

• Improve Student Success

• Achieve Global Excellence

• Enhance Educational Opportunity

• Expand Resources and Improve Effectiveness

$100M How to get there?

• Where we are now.

• What Strategies have worked?

• What are the fiscal implications of doing Research – Indirect Costs

• How are Indirect Cost Rates Calculated

• How is Indirect return spent?

• How have other Universities moved up?

What have been the successes to date and what strategies led

us there ?

Growth From 1999 - 2009

Selected Growth Areas

Strategies

1. State / Regional Partnerships (ONAMI, OTREC, etc.)

2. Focused areas, investments

3. Attention to new personnel – 35% of 2009 $ generated by staff at PSU less than 5 years

4. Interdisciplinary Programs

Paying For Research – Indirect CostsThe principle of total cost recovery for extramurally funded

research, including recovery of indirect costs, is essential to the successful operation of American research universities.

Each university charges indirect costs to the funding agency to cover the expenses of research administration and the depreciation, maintenance, and operation of buildings and major equipment.

Because these costs cannot be attributed to individual research grants, the government recognizes the need to account for these costs in the aggregate and distribute them by formula to all extramural funds.

Source: UCSB Primer on IDC

Indirect Cost Rate Elements1) Buildings and Improvements (prorated based

on research usage)a) Building Depreciation b) Lease or Rental Costs c) Improvements

2) Interest - (prorated based on space usage)3) Equipment – non-federal purchases –

depreciation amount (prorated based on space usage of equipment location)

Indirect Cost Rate Elements4) Operations and Maintenance Costs (pro-rated

based on space survey)5) Library (prorated based on library users)6) General Administration (prorated based on

salaries and wages)7) Departmental Administration (prorated based

on departmental salaries and wages)8) Sponsored Projects Administration

PSU Rates (FY 2009)

Buildings 3.3%Interest 1.0%Equipment 4.8%Operations and Maintenance 10.1%Library 1.3%General Administration 8.2%Departmental Administration 17.7%Sponsored Projects Administration 5.4%Total Allowed: (out of 51.8) 46.5%

PSU – Actual IDC Recoveries

Fiscal Year Indirect Direct IDC recovery1999-00 $ 2,840,485 $ 22,978,894 12.4%2000-01 $ 3,259,930 $ 25,356,503 12.9%2001-02 $ 3,446,842 $ 24,809,508 13.9%2002-03 $ 4,033,828 $ 27,475,201 14.7%2003-04 $ 4,422,274 $ 28,438,870 15.6%2004-05 $ 5,225,188 $ 31,968,566 16.3%2005-06 $ 5,981,868 $ 34,054,017 17.6%2006-07 $ 5,685,517 $ 31,844,150 17.9%2007-08 $ 6,172,789 $ 34,131,180 18.1%2008-09 $ 7,528,035 $ 45,511,889 16.5%

Why the Difference??

1. Cost-Sharing of IDC

2. Favorable Treatment of Local Entities

3. Foundation Policies to restrict IDC

4. Some Agency restrictions (8% on ED training)

5. IDC is based on Modified Total Direct Costs – excludes equipment, tuition and the portion of subcontracts exceeding $25K

Uses of IDC Funds1) University wide requirements

a) Disallowance Fundb) University Centers and Institutesc) Research Space – Lease and Rental / Space Improvementsd) Strategic Investments, major equipment, startup, major cost-

sharing 2) Academic Unit support

a) Research administrationb) Local maintenance issues, bridge funding, investigator support

3) Central Research Administrationa) Research Accountingb) Office of Research and Sponsored Projectsc) Innovation and Industry Alliances (Technology Transfer)

How have other Universities moved up ??

Other public, urban, non- medical institutions that started at 40-50 M and then doubled:

• University of Delaware

• Florida International University

• University of Houston

R&D Expenditures Summary Note: scales are different

Florida International University

University of HoustonUniversity of Delaware

Portland State University

Faculty and Instructional Staff Summary

Florida International

University

Portland State University

University of Delaware

University of Houston

Faculty Category

2007 Count

6 Year Change

2007 Count

6 Year Change

2007 Count

6 Year Change

2007 Count

6 Year Change

Professors214 + 8.1 % 198 - 5.7 % 378 + 1.3 % 370 + 19.4 %

Associate Professors

279 - 3.8 % 167 + 26.5 % 322 + 5.6 % 298 - 1.0 %

Assistant Professors

201 + 16.2 % 176 + 6 % 298 + 16.4 % 172 + 18.6 %

Total Ranked Faculty

694 + 5.0 % 541 + 6.5 % 998 + 6.9 % 840 + 11.1 %

Other Full – Time

134 + 2.3 % 188 + 41.4 % 119 + 3.5 % 196 - 2.5 %

Part - Time Instructors

689 + 5.2 % 750 + 49.1 % 32 + 23.1 % 196 + 46.3 %

Total Instructional

Staff1517 + 4.8 % 1479 + 29.3 % 1149 + 6.9 % 1232 + 12.9 %

Publications Summary Note: scales are different

Florida International University

University of HoustonUniversity of Delaware

Portland State University

Number of Grants Summary Note: scales are different

Florida International University

University of HoustonUniversity of Delaware

Portland State University

Our observations• Science research is larger in peer institutions

than currently at PSU

• Engineering is a larger proportion of our peer universities research expenditures

• Social science funded research is proportionately much larger at PSU than at peer institutions

Faculty Characteristics• PSU: Largest growth in associate professor;

smallest growth in assistant professor

• Most similar in make-up of part time vs full time to Florida International

• Largest growth in all staff, primarily in the non-tenure lines (fixed term full & part time)

Ph. D Programs and publications• PSU has less variety regarding fields in which

PhDs are granted

• PSU has more PhDs in education & social science than the peer institutions

• Rate of publication at PSU is markedly lower

Award size and duration• Award size & award duration are pretty similar to

peers.

• Biggest difference is in number of grants (where PSU has fewer grants total)

• Awards from Department of Energy and NIH show biggest lag

Round table discussions800 full time faculty with an average of $125,000 ROS

will achieve the $100 million goal.

• Strategic hires

• Other investments

• Partnerships

• Increased level of Research and Other Support per faculty member (teaching loads, faculty compensation, regulations/paperwork, allocation of institutional resources in support of research infrastructure)

Round table conclusion