Minutes_9_13

Bill: There have been two meetings of space committee. The first was a charge meeting with Mark McNamee. The committee met last Wednesday for the first time. The biggest challenge is finding times when the group of 23 can meet together. The committee members were asked to set aside departmental concerns and focus on needs of Tech. We need space that if more affordable and more timely.

Brad: We get overhead by a formula that the federal government creates based on the capacity of university. Overhead rates for us range from 51-60%, though some agencies and sponsors pay little to nothing. Overhead covers items too difficult to parse out (heating, administration, depreciation on equipment, police force, etc.). We get overhead only get as the grant is spent. Hence, overhead comes to university in constant flow, and that flow is increasing. We broke records in July and then again in August, about $1M flowing into university each day from grants. The state takes 30% of overhead; 13% goes into capital account to pay for buildings; 10% goes to research division; the rest goes out to colleges. How it is distributed in the college is at discretion of the college. At the university level, it goes into a single pot. It can be used for many things; it is very flexible. It is the only fund that can carry over year to year. They are the most precious dollars on campus, beyond foundation money.

Bill: We currently have a significantly higher return to departments than our peers. Average rate of return to department here is 37%; the average for our peer institutions is around 11%. We have a decentralized system. We are all too reliant on overhead for day to day operations, unlike our peers. Some indirect cost accounts in departments come from things other than indirect costs. Some are being saved for renovations and start up packages. The charge of his committee is to learn how balances are being used and what is not being used -- is there a way to use these unused funds to build buildings without creating risk for account holder?

Question from Senate: What about decreasing federal funds?

Brad: Our ability to compete in certain areas is improving. All projections show that federal agencies won’t keep up with inflation over next several years. However, we can compete increasingly better. Awards grew 36% over last year when agencies weren’t increasing. They are growing at 20% this year. We have had remarkable success. The question is how long can we sustain this rate in closed market? More resources to help get grants will be coming on line. If we don’t compete, then we will lose resources. Space is a critical asset. There is a tremendous building boom on campuses around country. Many have built up a “war chest” during last years of reductions, but they didn’t need all of savings and so are now using them. We do well with facilities we do have, but we need additional quality space.

Question from Senate: Is our greater funding reflecting new staff coming on line?

Brad: Yes, but a lot of new staff members are just getting started. Most aren’t successful until their 3rd or 4th year. Some efforts started during budget crises are starting to pay off. Cultural shift occurred here in 2000-2005; the feeling is that we have to be more self-sufficient.

Bill: In the case of Civil Engineering, we have had great success in increasing grants, going from $2M to $11M per year. The problem is how to continue that rate of growth. NSF funds have doubled here. Faculty have increased their market share, moving from individual grants to IGERTS, etc.

Brad: Growth in extramural funding is across board on campus. All trends are upward. Overhead allowances are not shrinking. We want to increase the 26% portion of administrative costs (which is capped federally). Last year, we got $190M in funding; we really get about 22% of overhead, when averaged across all grants.

Bill: In the committee meeting, we discussed new space at CRC as a combination of transitional space and permanent facilities (because of specialty requirements in construction). It is cheaper to build in CRC (no Hokie stone) and we can build much faster there; it only takes 18 months from design to completion. There must have very clear parameters for when some group gets space and how long they remain there. We need an entity comparable to the current space committee to make these decisions. We need a broad, representative group with a rational open process.

Brad: Most campuses have some process for allocating space; we don’t really have a process at Tech.

Question from Senate: Is all space off campus?

Bill: The charge of the committee is to look at space at the CRC only; some are grandfathered in from other areas where gifts won’t support then. Fundraising for space is very, very hard and has not been successful at Tech.

Brad: Space for a college located in particulate buildings is decided within the college. Some space is communal (Torgerson for example).

Bill: That [college] process continues. Tech still has its capital plan, but that will produce shortages. This [CRC] process goes alongside state planning.

Question from Senate: Is there precedent for this new procedure?

Bill: From 1992, 13% of overhead went in central capital account to build buildings. We have never looked at whether these projects went back to the colleges that contributed the particular funds.
Brad: Outside of Tech, many institutions use overhead to build facilities.

Mark: We are in the process of moving from decentralized use of resources with centralized use of facilities to centralized resources and decentralized planning. We are not looking for indirect costs to pay for buildings on campus; we will use state funds and private grants for them.

Brad: With the new state agreement, their 30% overhead allocation should change. If we get what we want, then we get to set a dollar cap. We want to use a model of sharing resources for the greater good. Institutions build buildings, not departments or colleges, so that process should be centralized.

Bill: The answer is not found in restructuring of indirect cost equation. In addition, we need decisions about priority of use of other university funds.

Brad: There has to be a transition in overhead distribution, since departments are currently relying on overhead. We can’t just rob those accounts. Another question is what kind of transition should we have? How can departments find other sources of funding?

Question from Senate: How much of current capital campaign used for buildings?

Mark: All funds raised are for on-campus buildings; no funds are for the CRC. The total target for campaign is $800M; of that, $200M is targeted for capital projects. The rest is for professorships, scholarships, library, etc. Other universities do much better in raising money for capital projects than we do.

Question from Senate: What numbers do you actually need to meet need?

Brad: We have created several scenarios. We are not sure, but we can say that our peers think it costs departments 8-12% to administer grants. Institutions then pool the remaining dollars centrally to use for other projects (renovations, start up, etc.).

Mark: The worst-case scenario is going from 47% [about $20M] (to colleges) to 25%. We are probably going to around 30%, phased in over several years.

Bill: Scenarios don’t really work over the long term. We need to make annual decisions by committee, depending on particular needs and constraints.

Brad: The goal is to be clear about where all the money goes at all times. Our space needs will be about 400,000 sq ft, when you look at objective formulas, even when all the new planned buildings are on-line. This need is even greater when it is compared to our peers. When we ask faculty and deans (subjective measure), space is always listed as greatest need. The amount of space we could build new is much greater than what we could get by trying to update old spaces. And all these estimates assume no growth. But a 50% increase in awards means new space needs for faculty and graduate students.

Comment from Senate: It seems like $20M not enough to build space.

Brad: If you are building on campus, then you are correct, but CRC space is different: it is fast and cheap and then we can lease it from ourselves. We can’t have additional growth with no additional space. The growth creates a window not to hurt colleges or departments to pull resources to provide additional space.

Mark: The university does not have ENG dollars to do what we do. The way we have used indirect cost dollars has masked that need for years. We need to face that problem and not hide from it using indirect costs.

Brad: There are some constraints on building in CRC (no housing animals; some architectural constraints). We need a global strategy for spending all of Tech’s funds. Banks only keep 12% of their money uninvested. We currently have about $26M uninvested. The question is whether there is a way to use those funds [painlessly]. People need confidence and trust that money will be available when it is needed. Think in analogy with a health care plan: we pool resources to help one another as needs arise.

Comment from Senate: We need a better marketing plan. This discussion will de-motivate faculty because new faculty are not driven by “greater good” arguments. They are driven by the money itself.

Bill: We need to change the mindset that labs have to be next to the office. We in Civil Engineering are distributed and it works okay. We are posting write-ups of committee meetings on Provost’s website. We have subdivided the committee into financial and policy areas. These task forces will be more off the radar screen to allow space for members to speak their minds freely. We will hold general informational meetings for faculty before we provide any recommendations to Provost.

Comment from Senate: We need to pay attention to units that don’t generate research dollars but still do lots of research to make sure they are supported in terms of space and resources.

Bill: The charge of the committee isn’t to address this issue, but it is still an important issue.

Brad: The vision is to use vacated space for disciplines that don’t use traditional labs.

Question from Senate: Where is overhead money currently being held?

Brad: None of those dollars will be raided; this is a plan for new dollars.

Susanna: The conversation must go back to individual departments and we need to articulate any remaining concerns and questions to continue these conversations.