By Carol J. Cantrell
Shrinking endowments and state budget shortfalls are forcing
public and private universities to make hard decisions about their financial
priorities. While revenues are going down, universities are looking for
ways to keep the doors open, the lights on, the faculty in, the auditors
out, and the rankings up. Most importantly, universities are striving
to retain and enhance the excellence in teaching and research achieved
during better times.
Academics generally do not like to refer to university administration
as running a business. But administrators may have to re-evaluate
their financial situation using business concepts such as product enhancement,
quality assurance, performance-based funding, and risk management in
American universities produce an excellent product/service
that competes well in a global economy. Students, the workforce of
are often viewed as the main product. But from a market standpoint,
it is the knowledge and output of the faculty that are indeed the products to
be marketed and sold. Administrators must focus on the importance of
the faculty when making critical business decisions.
To maintain faculty excellence, colleges of engineering
must provide a quality research environment. A recipe for good research
resource allocation that places faculty first includes
- (1) funds for efficient
and effective research administration, compliance, and infrastructure
- (2) support of required specialized research services,
- (3) incentive
funds for successful researchers and departments, and
- (4) program
Research administration is mandatory to retaining the
right of the institution to perform research. Budgets should be allocated
that employees may perform necessary tasks and any desired additional
services in an appropriate way. Research administrators, in concert
the auditors, should work on developing plans to generate savings
by increasing risksbut only up to an acceptable level of compliance.
Specialized research services include technical services
that require special equipment and staff, which are expensive to acquire
and maintain. Colleges should review these operations for demand, net
benefit to the research program, and the potential savings from outsourcing.
Performance-based funding provides money for operations,
graduate students, interim support, and leverage for external funds.
incentive programs are often based on a sufficient and formulized
allocation provided to researchers and their departments upon the achievement
certain goals. When a stream of income is provided, the researcher
has an expectation of income that assists in future forecasting and
Faculty members can devote more time to conducting research rather
than asking for institutional assistance for each and every need. Performance-based
funding makes sound business sense because it is market-driven, tied
the federal research agenda, and low risk due to the researcher's
proven track record.
Program-development funds support people and programs that
have solid potential but no identified source of revenue. Start-up packages
for new faculty, seeding new centers and/or interdisciplinary efforts,
mandatory cost sharing for large grant funding, and investment in space
and facilities are generally good uses of those funds. Less cost-effective
uses include internally funded proposal competitions. Universities should
defer high-risk investments such as voluntary cost sharing and recurring
subsidies to less productive centers until better financial times.
The faculty is the focus of the university and college
of engineering at Texas A&M. Its leadership has gained the trust and
confidence of faculty and staff to meet tomorrow's financial challenges.
Carol J. Cantrell is assistant vice chancellor for engineering
for the Texas A&M University System, associate agency director and
chief financial officer
of the Texas Engineering Experiment Station, and
assistant dean of engineering at Texas A&M University.