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RESERACH: Faculty First Financing

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 their decision making.

American universities produce an excellent product/service that competes well in a global economy. Students, the workforce of tomorrow, 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 support,
  • (2) support of required specialized research services,
  • (3) incentive funds for successful researchers and departments, and
  • (4) program development funds.

Research administration is mandatory to retaining the right of the institution to perform research. Budgets should be allocated so that employees may perform necessary tasks and any desired additional services in an appropriate way. Research administrators, in concert with the auditors, should work on developing plans to generate savings by increasing risks—but 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. Successful incentive programs are often based on a sufficient and formulized allocation provided to researchers and their departments upon the achievement of certain goals. When a stream of income is provided, the researcher has an expectation of income that assists in future forecasting and planning. 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 to 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.

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