5 ms·

I wonder how the university gets to the 53% overhead figure. Do they have a fully costed internal accounting of things like "rent" for lab space and share of ad

I wonder how the university gets to the 53% overhead figure. Do they have a fully costed internal accounting of things like "rent" for lab space and share of administrators' time/salary?

AmazThrowAway 5y ago
They have a shockingly detailed model that they negotiate with the federal government ! https://cfo.berkeley.edu/sites/default/files/facilities_and_administrative_costs_overview_mar2016.pdf https://cfo.berkeley.edu/sites/default/files/facilities_and_...
- monkeybutton 5y ago
  Wow! Shockingly detailed is not an overstatement.
- wanderer_ 5y ago
  It seems theirs is even higher (57%).
ordersofmag 5y ago
Yes. Cost of space, cost of power, cost of business office staff to process the paychecks, cost of a bunch of CPA and auditors to make sure you're following all the federal regulations about how the money can be spend, cost of IT to provide WiFi and network jacks and bandwidth, cost of water in the water fountain, etc, etc.... At institutions where a large fraction of the work going on is grant funded if you didn't do it this way you can't really make your institutional budget balance. And 53% is actually pretty low compared to many institutions. Source: I've been 100% grant funded the last 20 years of my career and have been involved in writing 100's of federal research grants.
- yazaddaruvala 5y ago
  > Cost of space, cost of power, cost of IT to provide WiFi and network jacks and bandwidth, cost of water in the water fountain Time to move to a WeWork? WeWork All Access - $3600/year. Or at home for "free" if no real lab is needed. > cost of business office staff to process the paychecks Time to move to Direct Deposit? For a grand total of $0! > cost of a bunch of CPA and auditors to make sure you're following all the federal regulations about how the money can be spend Let them spend it however for free? or hire a CPA for a couple days. No need for $173k worth of CPA time per grant. > At institutions where a large fraction of the work going on is grant funded if you didn't do it this way you can't really make your institutional budget balance. Based on the math, they either need to invest into automation or it seems like a dying industry.
  - edmundsauto 5y ago
    I think it’s your expectations that are out of whack. There is sticker shock, but pretty much everywhere else is higher. Also, do you know what a clusterfuck it is if someone screws up accounting, payroll, or legal? Those systems are Byzantine and you really do need an expert to navigate them legally. Institutions don’t take the risk that an individual might take.
  - Fomite 5y ago
    My institution employs about 7000 people. I'm interested if there's a single company that employs that many people you can point to that pays $0 to handle payroll.
- derbOac 5y ago
  It's an open secret that the indirect costs are budgeted to make profit for a university. That is, the stated costs exceed actual costs. This has been publicly discussed by former federal division heads in major outlets. The problem with this is the universities rely on this funding to stay afloat, so there's a tail wagging the dog problem. Basically the evaluation of scientific merit then derives from a decision as to whether or not it can procure money from the federal government. That in turn is driven by all sorts of factors: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0133061 https://journals.plos.org/plosone/article?id=10.1371/journal... I don't want to argue that grants are bad but I do think the system is broken. Everyone passes the buck to the federal government in this kind of shell game, and then the federal grant system becomes the [near] monopoly over scientific decision making. The analogy I tend to use in my head is that it's like if your state gave out grants to fund plumbing projects, and people realized that these grants paid more than the actual costs for the project. You have a plumbing project, get the plumber to get a grant for you, and pocket the difference. So people stop hiring plumbers on the basis of the work they do per se, and instead hire them on the basis of their ability to procure state grants. That's kind of what the system works like now. Do industry grants have larger overhead? It doesn't matter one way or another. That's a different issue. Two wrongs don't make a right either.

I wonder how the university gets to the 53% overhead figure. Do they have a fully costed internal accounting of things like "rent" for lab space and share of administrators' time/salary?

AmazThrowAway 5y ago

They have a shockingly detailed model that they negotiate with the federal government ! https://cfo.berkeley.edu/sites/default/files/facilities_and_administrative_costs_overview_mar2016.pdf https://cfo.berkeley.edu/sites/default/files/facilities_and_...

monkeybutton 5y ago
Wow! Shockingly detailed is not an overstatement.
wanderer_ 5y ago
It seems theirs is even higher (57%).

ordersofmag 5y ago

Yes. Cost of space, cost of power, cost of business office staff to process the paychecks, cost of a bunch of CPA and auditors to make sure you're following all the federal regulations about how the money can be spend, cost of IT to provide WiFi and network jacks and bandwidth, cost of water in the water fountain, etc, etc.... At institutions where a large fraction of the work going on is grant funded if you didn't do it this way you can't really make your institutional budget balance. And 53% is actually pretty low compared to many institutions. Source: I've been 100% grant funded the last 20 years of my career and have been involved in writing 100's of federal research grants.

yazaddaruvala 5y ago
> Cost of space, cost of power, cost of IT to provide WiFi and network jacks and bandwidth, cost of water in the water fountain Time to move to a WeWork? WeWork All Access - $3600/year. Or at home for "free" if no real lab is needed. > cost of business office staff to process the paychecks Time to move to Direct Deposit? For a grand total of $0! > cost of a bunch of CPA and auditors to make sure you're following all the federal regulations about how the money can be spend Let them spend it however for free? or hire a CPA for a couple days. No need for $173k worth of CPA time per grant. > At institutions where a large fraction of the work going on is grant funded if you didn't do it this way you can't really make your institutional budget balance. Based on the math, they either need to invest into automation or it seems like a dying industry.
- edmundsauto 5y ago
  I think it’s your expectations that are out of whack. There is sticker shock, but pretty much everywhere else is higher. Also, do you know what a clusterfuck it is if someone screws up accounting, payroll, or legal? Those systems are Byzantine and you really do need an expert to navigate them legally. Institutions don’t take the risk that an individual might take.
- Fomite 5y ago
  My institution employs about 7000 people. I'm interested if there's a single company that employs that many people you can point to that pays $0 to handle payroll.
derbOac 5y ago
It's an open secret that the indirect costs are budgeted to make profit for a university. That is, the stated costs exceed actual costs. This has been publicly discussed by former federal division heads in major outlets. The problem with this is the universities rely on this funding to stay afloat, so there's a tail wagging the dog problem. Basically the evaluation of scientific merit then derives from a decision as to whether or not it can procure money from the federal government. That in turn is driven by all sorts of factors: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0133061 https://journals.plos.org/plosone/article?id=10.1371/journal... I don't want to argue that grants are bad but I do think the system is broken. Everyone passes the buck to the federal government in this kind of shell game, and then the federal grant system becomes the [near] monopoly over scientific decision making. The analogy I tend to use in my head is that it's like if your state gave out grants to fund plumbing projects, and people realized that these grants paid more than the actual costs for the project. You have a plumbing project, get the plumber to get a grant for you, and pocket the difference. So people stop hiring plumbers on the basis of the work they do per se, and instead hire them on the basis of their ability to procure state grants. That's kind of what the system works like now. Do industry grants have larger overhead? It doesn't matter one way or another. That's a different issue. Two wrongs don't make a right either.