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.

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4 responses to “The Accounting Games Universities Play

  1. The import of this post of Jim Bacon’s is something we knew all along, and also something we did not know, but now know, something new that doubles the fraud I have long suspected.

    I have long assumed that the 50% of the typical tenured or tenure track professors “research” time, falsely called “instruction”, came out of his salary, and also that the 25% of his time devoted to “Administrating” came out of his salary too And that his salary came primarily, if not exclusively, out of student tuition. And that much of this research and administration had nothing to do with teaching the students who were paying for it through tuition. That is FRAUD NUMBER ONE. I’ll supplement fraud number one later today with a I comment I made a week or two ago on this very subject.

    FRAUD NUMBER TWO is a surprise to me. Namely that this kind of research and administration paid through tuition is reported as serious independent Research costs expended by the university for the purpose on pumping up the institutions rankings. How much of it is built into the $18 Billion annual research expenses reported by the National Science Foundation for 2018? I am not sure. What I am sure of is that here is yet more proof that the claims made by these public research institutions of higher education are to a surprising degree built on illusions built on a series of outright lies, thus frauds.

    I am also even more convinced that ever that likely less that 5% of our public research university’s energy and money go into teaching students. And the other 95% of the money and energy goes to sustaining a system that is build primarily to line the pockets of those people in power who run these places.

    I had a conversation today with a health care professional. In her early thirties she has a masters degree in her profession from Penn State. She had just read my article published yesterday. It reminded her of a tenured professor of hers who introduced himself to her first class of a semester long course on Kinesiology, saying “This classroom is the last place I want to be. I was hired and I am paid to do research, but I have to teach this class to meet a minimum amount of time pretending to do something I dislike, teaching.”

    This about sums up in a nutshell the mindset of today’s public research university in America.

  2. I think anonymous probably got a good bit of truth in the issue.

    Not everyone is a world class teacher or researcher… but they end up “on staff” and occupy slots that need to be filled..maybe more than are needed.

    but what is going on now is that people are challenging higher ed on costs – on the things can cause costs to go up – higher than inflation and higher ed is not about to allow outsiders and cretins to intrude into their “business”.

    The main irony here is that many of the disaffected – also don’t care much for govt – but they are wanting govt to intervene and force higher ed to become more “transparent”.. so the objectors can then use that data as ammunition against higher ed…

    I’m not sure they are ever going to get real satisfaction and people do have options.. other than go into debt up to their eyeballs for a grossly inflated product..that may not be even really relevant to the 21 st century economy.

  3. Send your anonymous friend my congratulations …

    “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.”


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