 Hello, everyone. Welcome to our recorded CNI session. I'm Roger Schoenfeld and I'm joined by my colleague Jane Radicke, and we will be talking today about academic research budgets and some of the risks that we believe exist for research support and enablement services. We'd like to thank Clifford and Diane from CNI for including us in the program, as well as our colleagues at Springer Nature that supported some of the research that went into this project. So I'd like to share a little bit about some of the background for what we'll be talking about. So in the next slide I'll be, I want to tell you a little bit about why we think this topic area matters. So if we can have the next slide. So there's really three key takeaways that we want to share with you today. So the first one is that is that is that research support and enablement is vital. It's not vital only to individual projects, but it's also vital for sustaining the competitive edge and the health of the university's research enterprise. So we're talking here about everything from research data to the academic library to animal care to a whole lot of things that support and enable research. These things are vital. Second thing that we're going to be talking about today is funding models for support and enablement which vary widely, and we'll be sharing a little bit about some of the key variances there. The other way that we want you to take away from our presentation is that even if the revenues to the research enterprise remains steady or even grow. There still may be some risks to research support and enablement activities because of these budget models. And Jane will talk about the first two of these areas and then I'll come back to talk about the third. But let me tell you just a little bit about the project that we did and some of the other work that we've been doing on the research enterprise. So, in the next slide, you'll see the, you'll see the paper that Jane and I published just a just a little while ago, which is available from our website. So please take a look, feel free to download it. We're also drawing on a lot of other work that the two of us but also our colleagues, Oya Rieger, Christine Wolf Eisenberg, Jennifer Frederick have been doing, looking at a variety of different impacts on the research enterprise of the pandemic of the disruptions of the last year. And so we'll be drawing from all of those things to some degree in the presentation today. So, Jane, let me turn things over to you to go forward. Great. Thanks so much, Roger. So, we know that the research enterprise is vital like Roger just said, but what exactly is the research enterprise. And you're going to hear us mention the term research enterprise multiple times during this session. So, before we dive in, we thought it would be prudent to briefly explain what we mean when we say the research enterprise, what this entails and give a brief background on some elements in the research enterprise. So the working definition of the research enterprise that we use is systems services technologies policies data and staff required to generate knowledge. This mostly entails scientific engineering and medical fields with with some efforts to be more interdisciplinary and attend to underfunded fields. So here in this session, we are addressing the scientific research enterprise. One thing that is important to understand is that the US academic research enterprise is not only an important national asset, but it is a vital one. In a 2011 report by the AU that found while US universities perform just 13% of total national R&D they perform 31% of the nation's total research both basic and applied and 56% of the nation's basic research. However, as we all know, many traditional research activities were suspended in the spring and summer of 2020. And while there were several federal flexibilities that were put in place to deal with the suspension of research, and the financial intricacies that caused the suspension, all of these flexibilities have been terminated leading to universities pushing to open up research once again in the spring of 2020. But this was not done without academic budgets being plagued by considerable budget cuts to do COVID and causing universities to lose billions. So, along with understanding some of the background information about the research enterprise. It's really important to take a look at university revenue streams and universities dependencies on certain types of revenue. As these revenue streams play a role in research and in research support services. As you will notice from this chart there, there really are only a few main sources of operating revenue in US higher education. As many of us know, majority of these sources have been negatively affected by the pandemic revenue from hospitals took a significant hit enrollments for the fall of 2020 semester dropped and thereby so did tuition. Finally, there were large refunds of auxiliary fees, which are things such as room and board meal plans and so on. So, it is clear that many different revenue sources declined. But what we really want to point to is that externally funded research, which is this grants box outlined in green on the pie chart, remained a strong revenue source and thus far throughout the duration of the pandemic has been the most resilient major revenue source. However, as we talk about later, even though research has remained relatively stable all else equal research support and enablement activities may be at risk. So in order to better understand research support and the services that encompass this work. It's best to first have a basic understanding of research funding. At the highest level, the federal government is the largest funder of academic research, and they provided around 42 billion of the 79 billion worth of research conducted on all US campuses in 2018. And in fact, 53% of all of the research revenue in the grants slice of the pie chart on the previous slide came from federal funding. Well, we do expect federal research funding to continue for the foreseeable future. It is currently less clear if federal research funding will grow or not. So in terms of research funding. It's also extremely important to have an understanding of the components that go into research funding. And one of those components is indirect costs. Basically, every couple of years the federal government and individual universities negotiate an indirect cost rate. This rate is then paid by all government agencies and entities that award research grants to a university. But what is significant about these indirect costs is that they are intended to help fund and cover the cost of common or joint activities that take place. These indirect costs help fund needed research compliance measures proposal development administrative costs and so on. Although many have argued that these rates are actually insufficient to cover all of the associated costs of research, which then in turn leads to cross subsidization from other university revenue streams to support the research mission. But one of the issues with insufficient indirect costs is that it can impair a university's ability to more strategically plan for and invest in the future of the research enterprise. Unfortunately, as the share of federal funding seems to kind of be decreasing and non federal sources of funding are seeing some increases. We are seeing in some instances the effective indirect cost rate on the overall research enterprise decline. This fact actually placed universities on less stable ground well before the pandemic occurred and devastated other revenue sources, such as tuition and healthcare and state appropriations. So in order to understand why the pandemic had such a profound effect on research funding. It is important to understand what happens to research funding once it's awarded. The research funding that is awarded to universities is typically only recognized as revenue when corresponding expenses are incurred. Basically, what this means is that, for example, if a researcher at a university won a multi year grant, the funder might award say $2 million in the first year. But stipulations of the grant and the way the budget works may require the funds to be spent over the course of say the full four year grant. So even when the full cash amount for the award ends up in the university's bank account relatively immediately, the method of accrual accounting actually mandates that said example university cannot recognize the full amount awarded from the grant in their bank account as revenue. Instead, what happens is that the expenses must be incurred in order for revenue to be recognized. This rather ordinary accounting principle that is used on university budgets and finances had some pretty profound implications when the majority of the US research enterprise was interrupted and shut down in the spring of 2020. With no direct expenditures or project specific expenses to actually code to the grants when the research enterprise shut down, universities were in a difficult situation where revenue could not be recognized. This meant that even though the grant funds were actually securely located in the university's bank accounts, institutions would unfortunately not be able to access this revenue despite the fact that they were incurring other costs during the shutdown such as researchers salaries and benefits. Although universities have all restarted their research enterprises after unprecedented shutdowns last year. Many are concerned about the larger implications of research funding reimbursement through indirect costs and revenue recognition. So when it comes to research support and enablement services which include things like library proposal development compliance research data services and research administration, which are vital not only to the current research enterprise but also its future aspirations. There are a few different funding models to be aware of. First, these services can be supported through the university general fund, which is many times made up of by tuition, state appropriations, clinical and healthcare services, various ancillary services and so on. However, since these research support services are being derived from the university general fund, whenever there is financial pressure on the general fund, like there has been during the pandemic, financing for research support services as at risk and institutions could potentially see across the board cuts. Funding for services through endowments is interesting, especially in the case of the library. This funding might be at risk when US public markets experience volatility as they did during the beginning months of the pandemic, but these funds are useful because they can follow a different course than the money coming from the general fund. What is important here is this type of endowment funding that is used for the library is not present in other areas of the research enterprise. And it brings up a real question if universities should be raising endowment funds for other forms of research support. Similarly, some universities not a very large percentage budget a substantial portion of their research support and enablement services, and what can be thought of as a restricted basis. This model allows them to allocate a fixed share of indirect costs, which as you remember are derived from research grants to fund these services. This is a fixed share through this model of the budget for research support services can then grow if the grant funded research enterprise grows, but on the other hand, it will shrink if grant funding shrinks. So funding for research cores and centers which really go far beyond the capability of a single researcher and have a profound impact of the research enterprise as a whole are for the most part funded through a cost recovery model. Cost recovery funding is a completely different model than everything that was on the previous slide. All of the examples that I just spoke about on the previous slide tend to try and see your resources more centrally to support research, but research cores and centers, on the other hand, are funded through a recovery basis and therefore they don't typically see funding in the same way. So, while a majority of research cores and centers are funded on a cost recovery or kind of through indirect costs. One of the downsides is that research cores and centers do require a significant amount of capital investment and always have ongoing operational expenses. This funding model faces risks when the indirect cost rate lowers, but also mainly it faces risks when research core facilities are not being used. So, for example, when research shut down in 2020 research cores were unable to operate there by bringing in less revenue or funding for their services, but they were still incurring costs to kind of keep the facilities operational and keep the lights on and maintain the equipment. And because of that it's it's pretty just easy to see how that would put research support services at risk. So the funding models that I just discussed all tie into the risks to research support and enablement services that we have pointed to in our most recent research that we published and that Roger is going to talk about next. And I'm going to do is I'm going to basically be a little bit more pointed about about some of these risks. So what we really want to emphasize is the following research support and enablement or the area of the research enterprise that is potentially most of all at risk. We don't see it as much of a, at least in the near term, we don't see as much risk to, you know, funding for the next round of of scientific research projects. The area that we see risk is in research support and enablement and I'm going to walk through three or four of those areas now. So the first of those areas is that declines in other revenue sources, as Jane was showing before declines in tuition or state appropriations or auxiliary funding etc declines in other revenue sources can have a negative impact on the general fund of the university. And the result of that is that universities that might choose as many of them will or have to make across the board cuts based on any decline in the general fund may may negatively affect research support and enablement. Even though that the need for that kind of support and enablement has not declined. So in other words, there may be cuts there and risks of further cuts there. Even though the research enterprise is is is at a plateau or might even still be growing. That's one source of risk. The second source of risk is that we, we saw suspensions of research in the spring and summer of 2020. Many labs were shut down a great deal of field research was shut down. The result of that was that the research cores these core facilities animal share facilities, telescope facilities microscope facilities etc saw an absence of revenue from that model that Jane was just describing of a kind of a charge back based funding model. And as a result of that universities have requested very specific federal relief to help address the gap in revenues that they've seen for research cores. That's a second form of risk. The third form of risk is is that is that sorry, the third form of risk is that is that research may not be fully back to normal. So, in the next slide, you can see that that that that we have a kind of situation where some field research, some wet labs may not have actually fully returned to normal in terms of their normal level of revenue recognition and normal level of research being conducted. And as a result revenue recognition may actually lag research budgets. This is another way in which, even though the research enterprises continue to get the same level of grant funding, I think if we can go to the next slide, even though it's, it's, it's might continue to get the same amount of grant funding. There's, there still may be an inability to recognize as much of the research revenue as desired, as would have been budgeted for or expected. So that was a that's a third really significant and important area of risk that universities are monitoring closely. So those three areas, when you combine them together, what we can see in the next slide is that is that the impacts to research support services are only really only just starting to become clear. We're seeing three major sources of potential risk. And, you know, we recognize that without the kind of reliable and stable funding that universities have historically made for research enablement support services. They may be forced to pair back some of those services, especially the one subsidized by the general fund. We're seeing cases where across the board cuts are affecting these functions, these offices. One example of an implication of that is, is, is a university that told us in a different project that they were expecting to have to slow down grant proposal development. Because they were going to have to reduce the amount of staffing of the office that's involved in proposal development. Another example is the cuts being made to academic libraries, which have been fairly widespread across the higher education sector. We recognize that a further decrease in these funding levels. So if some of these risks continue to develop if they exacerbate, there could be even further strain on research support services. Now, I think we don't know, like to, we don't yet know to what extent these cuts, these risks of further cuts may actually negatively impact the research itself. So there's probably some amount of cuts on the margin that can be made without negatively affecting the research work itself. So there is a question about whether universities that are facing further cuts, how they can handle these, these, the need to modify budgets, in a way that doesn't negatively affect that core of the research enterprise for some of these universities for whom research and research competitiveness is an essential component of their of their mission. So with that, I want to come back to our key takeaways. There are three of them. One is that, you know, as you've seen one is that research support and enablement is vital. Again, research funding models for these support and enablement services vary somewhat significantly and that there will be different levels of resulting risk as a result of them. And finally, even if research revenues are resilient, which we pointed out there may be some reasons to think that even if grants are resilient, then we revenue recognition may not be as resilient. Nevertheless, research support and enablement activities may still be at risk and so thinking about how to position those functions, if for the greatest possible resilience is, is, is certainly vital. With that, we would like to say thank you. We're sorry we can't have a live discussion about the findings, but you have contact information for both of us here, and we would be thrilled to hear from you and talk further about this whether at an upcoming conference we're on social media or directly over email. Thank you so much for participating in CNI with us this, this, this session.