14 July 2003
An academic's view of cost recovery

We academics are suddenly hearing a lot about "cost recovery"; through Senate we have also heard recently that faculties are to be expected to raise up to R25-million in extra income over the next three years to fund the various development projects envisaged in the present budget planning. The preamble to that budget plan states that the University is subsidising research at UCT, and that this is an untenable position, which must be remedied by cost recovery schemes.

Given that I personally, and I am sure the bulk of my colleagues also, have no quibble with this principle, there are a number of us who remain concerned by some of the assumptions in the various planning documents, and also by what has either remained unsaid, or is not explicitly acknowledged.

For example, there appears to be an assumption that there is a clear distinction between "contract" research, and research that does not require a contract. The reality, as far as many of us are concerned, is that the distinctions are so blurred as to be meaningless. In fact, nearly all research agreements now involve some form of contract between the researcher, the granting agency and the University, including those from bodies like the Medical Research Council and National Research Foundation.

Rather, there should be a clear distinction made between research work that adds to scholarship, work that funds research activities that enhance student training, and work that benefits individuals and their contractors only.

The assumption is also explicit that "the University subsidises research", whereas the converse - that research subsidises the University - is nowhere explicitly admitted. For a university that professes to the aspiration of becoming a research-led institution, with a large postgraduate student body, UCT does not do a great deal to further this aim! In the science and health sciences faculties, and I am sure also in other faculties, the vast majority of postgraduate student monetary support comes from individual researcher grants. A recent exercise in the Science Faculty, for example, showed that the bulk of the cost of educating an honours student in laboratory-based disciplines was borne by individual researchers. When one considers MSc and PhD students, in nearly all cases all of the personal bursaries and direct research costs will have been borne out of research grants. Moreover, the bulk of usable equipment in most of the lab-based teaching departments will have been bought out of research grants given to individuals and consortia, and not from university funds derived from fee or subsidy income.

Additionally, many research groups have provided considerable human infrastructure in the form of clerical and especially research staff, whose activities considerably benefit the teaching and routine maintenance of the departments in which they are based. Thus, researchers not only fund all the direct costs of student training and of research, they also provide much of the physical and often the human infrastructure that allows the activities - and these subsidisations of one of the University's core activities are not well recognised.

Incidentally, I note that measurable research activity is taken as being one of the most important criteria in academic advancement at UCT: thus, research must be deemed one of the two core activities of any academic, and therefore central to the University's mission. I find it curious, then, that the University should object to subsidising it!

Of late we have often been reminded that things we as researchers take for granted - like the provision of space, water, electricity and IT and library support - all come with real costs attached. While certain of us remain perplexed with some of the assumptions behind certain charges, and with the scale of charges that are levied on faculties, there is no basic argument with this fact. However, those of us with postgraduate students and active publication regimes could be excused for looking askance at the University authorities for continually reminding us of this when we know that the students attract considerable state subsidy, and that every publication in a recognised journal does the same - yet we are never directly credited with any of this. We are told that the University devolves that income down to the faculties that generated it. However, there is no benefit to the individuals that generated it, or even to their departments. Explicit recognition of what is quite substantial income could be a potent motivating force in galvanising a research-led culture!

I must stress again that I have no problem with the concept of cost recovery - I simply want the people drawing up the policies which will be put in place, to be aware of some serious concerns held by some of us from whom costs will be recovered. It would also be premature for the University budgeting team to place too much reliance on significantly increasing the University's income from cost recovery from contract research.

Professor Ed Rybicki
Molecular and Cell Biology

Reply from Professor Martin Hall, Deputy Vice-Chancellor with responsibility for planning and budgeting:

I welcome Professor Rybicki's support for the concept of cost recovery, which has been actively discussed at UCT since 1999. I also agree with his view that the distinction between different forms of research is often blurred, although in other cases the distinctions are quite clear. Our proposals recognise this in allowing for both costing and pricing, and placing the decision for costing and pricing decisions at the faculty level - with the academic community.

Control over pricing will allow the faculty to recognise significant contributions to teaching by research groups through pricing recoveries below measured cost. Conversely, activities for which the benefits are overwhelmingly financial can be priced at a premium. All income from cost recovery will go to faculty budgets in the short to medium term (while we are meeting the substantial financing costs for proposed salary revisions and the re-capitalisation of our information technology infrastructure).

We have proposed to Council that, once we have an annual operating surplus, part of the income from cost recovery should be used for research development via the Library and the University Research Committee.

I do not agree with Professor Rybicki's contention that our planning and budgeting proposals leave key assumptions "unsaid". To the contrary, our proposals are quite explicit about the challenges we face. Our research activities have expanded enormously over the past decade. We need to provide a sound financial basis for their further expansion. Overall, we currently recover the costs of these activities at less than 6% of income, and we cannot sustain this. We are not proposing taxes, levies or the central accumulation of funds. We are rather requiring that we ensure that we can pay for what we undertake, and that decisions regarding equitable ways of achieving this are made at the faculty level, by academics themselves.

We need to continue to push for improvements in service levels, and for the replacement of general overhead provisions by performance indicators and service level agreements that allow us to see, as a university community, how the costs of core activities of teaching, research and community responsiveness are met.

Our planning and budgeting proposals address these issues explicitly, and are designed to achieve the objectives that Professor Rybicki adumbrates.

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