The Corner

Ultimate Academic Scandal?

What’s the biggest higher education scandal of them all? Ward Churchill? Deconstructionist nonsense? Ideologically biased women’s studies programs? Actually, the biggest higher ed scandal of them all just may be a clever university tactic for tricking the taxpayers into subsidizing all of these abuses. I’m talking about the way colleges and universities collect multi-millions of dollars from the federal government in overhead costs every time they receive money for scientific research. On average, colleges charge the federal government for research overhead at a rate of 52 percent. That means a university can bill the federal government an average of 52 additional cents for every dollar it receives in direct research funding. At private universities, the government is charged an average of 57 percent for overhead.

Now maybe this money really is needed to cover overhead costs. But there are some important signs that the numbers are being inflated, and that university research overhead may in fact amount to a hidden way of getting taxpayers to subsidize ideological women’s studies programs–and every other aspect of university spending–under the guise of supporting valuable scientific research.

Can anything be done about this? Yes. Remember back in 1991, when the government cracked down on Stanford University for billing an expensive “antique commode” and depreciation on a yacht as “administrative overhead” on a federal research grant? The resulting scandal forced Stanford to accept $3.4 million instead of the $185 million it was asking for in overhead reimbursements from the Navy. Since then, the federal government has imposed caps on overhead. But the caps are very high, and some categories, like facilities, aren’t capped at all. To stop abuse, congress can lower these caps, and create caps in uncapped categories.

There’s already been a major move to do so. The Chronicle of Higher Education reports (subscriber restricted) today that the House Appropriations Committee has just approved a Defense spending bill with a 20 percent cap on overhead costs for competitively awarded grants. Although the Appropriations Committee received testimony that research overhead had “grown to unwarranted levels,” the higher education lobby was not anticipating this move. Expect them to stop at nothing to have the 20 percent cap provision removed.

Colleges claim that federal regulations force them to pay big money in overhead, yet they are hard pressed to show exactly how these requirements justify such a high rate of reimbursement (CHE subscriber restricted). According to the higher education lobby, capped overhead costs actually force colleges to subsidize federal research, ultimately cutting down student services or forcing tuition increases. I find this hard to believe. Again, colleges are notoriously bad at backing up these claims with real examples. Moreover, many of the key studies of this issue are produced by the Council on Government Relations, which is itself an association of research universities.

The regulations that cover research overhead are complex, so it’s easy for the public and congress to hand the eye-glazing details over to the universities themselves. And while the higher education lobby is immense and extremely well funded, there is no public watchdog organization to call them to account. We need a conservative-leaning group to present an alternative view to Congress on issues related to higher education–and to conduct studies of questionable practices like the high university overhead charges for government funded scientific research (and like Saudi-funded outreach programs).

Without such an organization and without such studies, we can’t know the full extent to which colleges and universities might be abusing overhead costs to fund the Ward Churchill’s and deconstuctionists of the world–and to generally reduce all of their costs. But signs certainly seem to suggest that this is what is happening. I’d say we need to support congress in its effort to cap defense research overhead costs at 20 percent. And let’s look into the idea of adding 20 percent overhead caps to non-defense research as well.

Stanley Kurtz — Stanley Kurtz is a senior fellow at the Ethics and Public Policy Center.

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