The Accounting Games Universities Play

Slowly but surely penetrating the black box of higher-ed accounting

I have received correspondence from a professor, who prefers to remain unnamed and is employed at a Virginia university s/he prefers not to identify, regarding how colleges and universities account for the funding sources for research. Thinking that his/her observations would shed light on yesterday’s blog posts on the same subject, I publish them here.

At [University X], and most other institutions, the “source” of [research] funding is mostly a matter of labeling.

Faculty member Y is paid $100,000. At [University X], the “standard” teaching load is 12 semester hours per semester. Hardly any tenured or tenure-line faculty member actually teaches 12 hours, however. If I teach only 9 hours, then I am considered to have one-quarter of my time assigned to research and scholarly productivity. Hence, tote up $25,000 of my salary for research support. I suspect, but don’t know, that much of Virginia Tech’s huge institutional contribution comes from this sleight of hand. Wherever this occurs, if you do it for 1,000 faculty members, then the numbers add up.

Why play this game?  To make the research numbers look larger when [the National Science Foundation] and similar organizations report research rankings. Prestige. It’s analogous to reporting SAT scores, but leaving out a segment of the freshmen class (which several institutions in Virginia regularly find innovative ways to do).  The end result is that the data don’t really say what casual readers think they say.

There is partial legitimacy to this potential legerdemain if faculty actually are doing reputable things and one can see firm output. The practice breaks down, however, when one is dealing with a professor who really isn’t doing much of consequence, but is protected by colleagues who aver that he is working on something of long-range importance that eventually, surely will bear fruit, or they exaggerate the importance of this professor’s occasional contributions, or they protect him by including him as a co-author on a piece every now and then.  “He” obviously also could be “she” in these examples.

There is the additional ticklish issue of whether another article on Milton’s Paradise Lost really should be considered to have the same significance as pieces dealing with, say, cybersecurity, cancer, or drones. Should such disparate contributions really be equated by placing their released time dollar values in the same financial column?

More questions. Let us recall that Virginia Tech reported $219 million in research from “institutional” sources of funding in fiscal 2016. Where did those institutional funds come from? I speculated that they might originate from tuition, state support, or endowments. But my professorial friend from University X suggests that the funds really reflect the contribution of professors’ labor spent on research.

That raises a new set of questions. In just six years, Virginia Tech saw a $123 million surge in such “funding,” an increase of nearly 130%. Was the increase real or an accounting fiction? If it was real, it suggests a massive shift in the time that professors spent teaching to time spent “researching.” It also calls into question the seemingly impressive increase in R&D, which was coincidentally almost exactly the same amount: $124 million. Was Virginia Tech research activity truly booming over those six years, or did it flat-line? I suspect that Tech board members would like to know the answer to both questions.

One more point: My correspondent’s insight explains the mechanism by which undergraduate tuition and state support subsidizes research. Tuition and state support pay professors’ salaries and fringe benefits. A percentage of that compensation, reflecting professors’ time, is shifted from instruction to research. Over the years, it appears, an increasing share of faculty time is dedicated to less to instruction of the people paying the bills and more to research.

As I have said on many occasions, we cannot begin to understand the affordability crisis in higher education without deciphering higher-ed accounting and tracking the right metrics. Faculty productivity and the allocation of faculty time, we now know, is one of those metrics.