The document, published by the Council on Governmental Relations (COGR) in March 2008, provides a detailed analysis of the finances of research universities in the United States, focusing on the main sources of revenue, expenditure patterns, balance sheet structures, and the complexities of funding sponsored research. Research universities, as defined in the report, are institutions committed to the intertwined missions of instruction, research, and public service, often accompanied by economic development and, in some cases, medical services. The financial landscapes of public and private research universities differ significantly, primarily due to varying reliance on state appropriations, tuition, and private gifts or endowments. Over recent years, public universities have experienced substantial declines in state funding, leading to shifts toward revenue models more comparable to their private counterparts, with increased dependence on tuition and federal research grants.
The paper also delves into the challenges of funding federally-sponsored research, highlighting issues related to the reimbursement of both direct and indirect (Facilities and Administrative, or F&A) costs. Research universities often face under-recovery of legitimate research expenditures because of caps on F&A rates, statutory restrictions by funding agencies, and increased compliance costs, necessitating significant institutional subsidies. The report draws attention to the growing burden on universities to fund research infrastructure and compliance activities, estimating annual subsidies of over $2.3 billion in unreimbursed F&A costs alone. Moreover, the financial equilibrium of research universities is threatened by volatility in state appropriations, endowment performance, and broader economic downturns, all of which place upward pressure on tuition and may ultimately jeopardize the nation’s capacity for advanced research and innovation. The document concludes by emphasizing the critical importance of maintaining a balanced federal-university research partnership to secure the sustainability and global competitiveness of American research universities.
