UH misses out on millions
By Jennifer Hiller
Advertiser Education Writer
The University of Hawai'i loses out on millions of dollars each year in federal financing because of the way the government calculates the costs of doing research.
But with a new medical school planned for the Kaka'ako waterfront and the release of some state money for overdue repairs and maintenance across the 10-campus system, that could change, UH officials say.
The new spending at UH could translate into more federal spending on the system, too.
The university brings in $216 million each year in federal grants and training contracts.
On top of that, the school receives about $40 million in something called indirect cost recovery, a supplemental award from federal agencies that can be used for anything related to research — from paying electric bills or buying new lab equipment to helping a young faculty member start a new research venture.
The federal government does an audit every few years to negotiate the rate UH receives. Essentially, the federal money is based on how much state money UH spends on its research. And after years of economic crisis in the Hawai'i, the state has been able to send little extra money in UH's direction.
The maximum amount UH can receive is 36 percent, although because some federal agencies have a 10 percent cap on how much they will spend, UH averages just below 20 percent overall.
But most research universities have a maximum rate in the range of 40 percent or 50 percent. The difference is tens of millions of dollars.
UH has one of the lowest rates in the nation for research universities, said Ed Laws, interim vice chancellor for research and graduate studies at UH-Manoa.
"It reflects the rate at which the state is investing in research," Laws said.
The school's indirect cost rate started slipping about a decade ago in the early 1990s when the state's economy began to fail. The UH percentage of the state budget dwindled from around 13 or 14 percent a year to 9 percent in 2001. The system now receives about $35 million less than it did in the early 1990s.
Barry Raleigh, dean of the School of Ocean and Earth Science Technology, which brings in more than $42 million a year in research money, said UH's indirect cost rate slid as soon as the UH administration dealt with the financial crisis by reining in spending on everything from repairs and maintenance to new library purchases.
Those are two of the major things considered when the federal government calculates how much of the state's money UH has invested — in buildings and lab space — on research.
"It's directly linked to the state's investment in the university," Raleigh said. "If you follow that logic, then if you want us to continue to grow, you have to give us more money. You can't make one commitment without the other."
Although providing extra research space and money for new hires pays for itself within a few years, Raleigh said it can be a tough choice because the benefits are delayed.
"There are economic stresses weighing on the Legislature. It's one thing to build a building, because that's a one-time commitment. If you hire a hundred faculty, you've got to pay them indefinitely. It's a heck of an investment, but it's a hard decision for them to make," he said.
At the same time, because of the dwindling state money, UH has become more dependent on that extra federal money, which comes without strings. It's been one source of money for the school that has allowed UH to finance special projects, bring in talented faculty and reward those who win the research dollars in the first place.
"It has been used to pay for essential items," Raleigh said. "It's money that's needed."
The university has asked the Legislature for $150 million to build a new medical school and biotechnology park in Kaka'ako. The medical school has been in its Manoa building since the 1970s, and school officials say they need a more modern place for research. The Cancer Research Center and the Pacific Biomedical Research Center would also be located in Kaka'ako.
UH will have to match the state with $150 million in privately raised money.
The Legislature also approved $100 million for public school and university repair and maintenance projects.
Raleigh said the state's investment in Kaka'ako and the money for repairs and maintenance could help raise the indirect cost rate for the school.
Laws also said the federal rate could rise — but said it will only do so if the state keeps spending more money at UH.
"We're only getting compensated for what we pay," Laws said. "It's a wash. The university gets this money and reinvests that in research and training. It's more of a reflection of what the university has been investing its dollars in. I think it's more of a philosophical thing, that the university should be doing high-level research."
Traditionally, research has been pushed to the side somewhat in favor of the teaching mission of UH, Laws said.
"When push comes to shove, I think education takes precedence over research," Laws said. "We're not going to throw out the teaching and only do research. When the budget cut came along, we spared education as much as we could at the expense of research."
Reach Jennifer Hiller at jhiller@honoluluadvertiser.com or 525-8084.
