Report: Decline in State Funds Threatens Research Universities

College costs continue to increase. But don’t be so quick to put all the blame on the higher education facilities, according to the National Science Board.

It looks specifically at public research universities and the potential impact of the reduced financial resources in a recent report. The State Science & Technology Institute shares some of the findings and its analysis.

Between 2002 and 2010, state support for public research universities fell by 20 percent, according to the National Science Board’s (NSB) companion report to the biennial Science and Engineering Indicators publication. During that same period, enrollment at these institutions grew by 17 percent, leading to steep tuition hikes, diminished resources for science and engineering programs and tightening R&D budgets. NSB suggests that diminished state support could damage U.S. competitiveness because of the outsized role public research universities play in the country’s high-tech economy.

NSB is the governing board of the National Science Foundation (NSF) and the group that develops the biennial Indicators report to help guide federal policy related to U.S. science and technology. In Diminished Funding and Rising Expectations: Trends and Challenges for Public Research Universities, the board examines the critical role played by public research universities.

Public research universities comprise less than 10 percent of all four-year institutions, but enroll about a third of U.S. first-time, full-time undergraduate students. The student body of these institutions is disproportionately drawn from minority populations and from lower socio-economic backgrounds. Because of their diversity, public research universities play a prominent role in promoting social mobility and involvement of underrepresented groups in science and engineering (S&E). Recently, the share of all U.S. post-secondary students enrolled at these schools has declined as two-year colleges and private for-profit institutions have grown in popularity. Public research universities, however, continue to play a unique role in providing opportunities for S&E education, while maintaining lower tuitions than private counterparts.

These institutions also play a pivotal role in U.S. basic and applied research. Public research universities received more than 60 percent of the federal government’s FY09 spending on academic R&D. The federal government, however, is just one funding source for universities. On average, the second largest funding source for academic R&D is funds from the institution itself. In FY08, the average public research university devoted about 16 percent of its total expenditures to R&D, according to the report.

NSB notes that while the overall share of university support for R&D has remained steady for 20 years, the actual cost to institutions has tripled. Compliance costs, which are often covered by the university, have increased dramatically in recent years. Institutional funds also are used for federally mandated cost sharing and for the unreimbursed costs of federally funded research resulting from limitations on what federal dollars can cover.

After the federal government and institutional funds, the third most important provider of academic R&D funding is state and local governments (followed by nonprofit organizations, businesses and other sources). Because of restrictions on the use of federal funds and the obligations of institutional funds, state and local funding plays a vital role in supporting university research. During the period between 1992 and 2010, state appropriations as a share of public research universities’ total revenue fell by 15 points, according to the report. State funding per student has plummeted, as enrollment has increased at many institutions and state contributions have declined.

The shrinking state and local government contribution endangers U.S. competitiveness by reducing its capacity to prepare students for S&E careers and to perform innovative research. One possible effect noted in the report is that reductions in the revenue of public research universities and growing salary gaps between public and private institutions could lead to an outflow of talent and research from some regions. If faculty and innovative research migrate to private institutions, many states and regions could lose key resources in their local innovation economy.