Grants mean money for an institution, so I certainly understood when I saw administrators happy when some faculty member (or even I) managed to land a grant. But their joy always struck me as a little too happy, really happy, far more than made sense to my ignorant self.

See, when I got a grant, it was for a certain amount of money. Every dollar has to be accounted for, spent for education and research, as per the grant. Yes, I spent the money on things of interest to administrators, like hiring student workers and buying equipment and paying a small part of my salary…but none of it was a direct benefit to administration, or so I thought. As always when it came to my trusting in legitimacy, I thought wrong, and no administrator was ever going to let me in on how the scam works; I once again thank Benjamin Ginsberg and The Fall of the Faculty for filling in the details that I never saw by direct observation.

The trick involves overhead costs, which are tacked onto the actual grant. The actual amount varies, but for Federal grants, it can be 60% or more. So, if I get a grant for $100,000, the institution gets a bonus $60,000 for the administrators to spend as they wish. Imagine how much more money would be available for the purpose of institutions (i.e., education and research) without this incredible drag. What’s really interesting about this is the administrators might refuse to accept a grant if their bribe overhead bonus is too low—even if the grant was for “giving food to the poor,” administration can refuse it if they don’t get a large enough taste of the food for themselves.

It gets even more interesting than that. Every institution has an office, eg, “The Office of Institutional Research” (a somewhat deceptive name) to make sure the grant recipient doesn’t misuse his funds, tracking every nickel to make sure the faculty isn’t wasting the money. I certainly didn’t have a problem with that; it wasn’t my money, although I hated that so much of it went to administrative costs, watching me spend it, but let them be sure I’m honest all the same. Administration, of course, sees no need to have an office that watches the overhead costs of administrators, spending their bonus grant money on whatever they want. I know, such a huge potential for corruption makes things just a little too easy, but my real work’s been busy lately.

Larger institutions get a bigger cut; Harvard, for example gets 69% bonus loot whenever a faculty manages to get a grant. Overall, about $10 billion a year gets skimmed this way to pay for massive administrative salaries, though the average (weighted towards the poorer schools) bonus loot is more like 49% It’s interesting that rich, old schools get a higher bonus slab of pork than poor schools—the rich get richer even in institutions of higher learning. Back when this scam started around WW2, the initial overhead reimbursement rate was a mere 8% (it wasn’t until 1965 that institutions could negotiate their rate). Don’t get me wrong, the institutions do have a point, when I get a grant, it costs extra overhead to hire administrators to watch me and make sure I spend the money properly...a low number like 8% seems like more than enough to pay for that.

Stanford was noted in the 90s for abuse of these overhead costs, which again, only attracted attention after years of egregious expenditures. Federal auditors finally got around to checking to see what all that slush money was going to, and discovered quite a few surprises. The president’s house was a major recipient, as the overhead funds paid for an antique toilet, cedar lined closets, and daily flower deliveries; the university yacht (wow!) was also a major overhead expense. Goodness, no wonder administrators are happy when a faculty member gets a research grant, it can lead to admin getting a yacht! I digress, but an auditor estimated that Stanford probably billed the government for some $185 million in excess “overhead” expenses.

As a result of the audit, Stanford gave back $3.4 million (chrissake, if anyone wants to give me $185 million, I’ll HAPPILY return $3.4 million of it. Any takers?); other institutions have given back some $100 million dollars based on Federal audits, with more coming back every year. The institutions, of course, deny any wrongdoing, but give the money back anyway…it’s so weird to be told there’s no money, but institutions can write checks like this “just because.” As the checks are begrudgingly written, administrators complain that they’ll just have to cut back on the education and research funded by grants. Granted, if faculty were writing the checks, they’d probably complain that they’d just have to cut back on administrators. I know, I’m a bit biased here, but administrators are the ones spending the money…

Once again, there’s a hidden message here, because it really exposes the administrative point of view. When I get a grant, I’m happy, because I can use that money for the purposes of an institution of higher learning: education and research. An administrator is also happy when I get the grant, but not for me, or for education. He’s happy because now I’ve just indirectly paid for him to get flowers delivered daily. Administration honestly feels that the institution exists to support administration.

Back when the slush money was 8%, plenty of research got done. By the time of the Stanford debacle, the slush rate was around 90%. Now that auditors are cutting into the abuses, the rate is going down, with little influence on research being done.

Should administrators get free money every time a faculty member gets money for education and research? If 8% was enough to cover overhead at some point, why is 50% considered a hardship now? Could it be that administration thinks education and research are merely footnotes to the purpose of an institution of higher learning?

Think about it.

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