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OCR for page 139
6
Restoring the Physical Infrastructure for
Health Sciences Research
The human element is critical to the conception and development of
ideas, and the physical infrastructure for our scientific work force is vitally
important as well. Over the past four decades, scientific knowledge has been
expanding at an exponential rate. In order for this creativity to continue
to flourish in the nation's research institutions, both within and outside
of government, the scientist's physical environment must be conducive to
high levels of scientific achievement. The laboratory buildings and libraries
at research institutions house the essential tools that researchers need for
scientific creativity to flourish. The scientific equipment and apparatus
in those buildings, as well as the knowledge recorded and stored in the
libraries, form the basis for the discovery of new knowledge.
According to various evidence, including surveys, interviews with scien-
tists and administrators, and legislative testimony, laboratory facilities and
equipment are becoming obsolete at an alarming pace, and the deteriorat-
ing condition of the physical research infrastructure limits the quality and
quantity of research that can be carried out. The committee also empha-
sizes that unsuitable facilities will not only hamper research performance,
but that unsuitable facilities will be a suboptimal training environment as
well. Without adequate attention to facilities and equipment, the U.S.
scientific work force will be seriously disadvantaged in its competition with
the European and Japanese work forces.
The condition of physical structures has to be evaluated accurately,
and laboratory equipment must be given equal attention. Advancing tech-
nology is encouraging the development of both more advanced equipment
139
OCR for page 140
140
FUNDING HEALTH SCIENCES RESEARCH
for old techniques as well as promoting newly designed equipment for new
avenues of research. Although state-of-the-art tools may not be necessary
to perform all laboratory tasks, increasing efficiency and accuracy by use
of technologically advanced equipment inevitably will speed discovery and
application of research results. Also, trainees need sufficient exposure to
advanced technologies and equipment to be able to pose relevant research
questions that will expand our medical knowledge base.
Federal regulations have elevated standards that render the present
condition of many facilities no longer acceptable. Safety of laboratory per-
sonnel requires installation of certain costly equipment, such as improved
fume hoods. Regulations on handling and disposal of radioactive and
biohazardous wastes are becoming increasingly stringent, forcing a rise in
overhead costs. These changes are most evident with the recent expansion
of AIDS research, which requires highly specialized containment facilities
for the study of the human immunodeficiency virus (HIV). Furthermore,
there are increasing demands on utilities as equipment becomes more ad-
vanced and the electrical and plumbing systems needed to operate them
properly must be up to date. Also, most new instrumentation requires
climate-controlled environments in order to function properly. Changes in
regulations and guidelines to protect animal welfare also add to the costs
of performing research by forcing research institutions to modify buildings
to meet changing caging and handling requirements.
Adverse conditions of the infrastructure may interfere directly with the
ability to perform research or indirectly may discourage talented individuals
from pursuing active research careers. Congress recognizes that research
is hampered by aging and obsolete research facilities and instrumentation,
and it admits that federal support for the construction of health sciences
research facilities is one of the most complicated issues facing Congress.t
Estimates of needs vary because of differences in definitions, sampling
techniques, and time periods.
The National Institutes of Health (NIH) and the National Science
Foundation (NSE;) construction programs in the l950s and 1960s greatly
expanded the physical infrastructure for all scientific research health sci-
ences included. This period of expansion encouraged talented candidates
to pursue careers in the sciences by providing the expectation of growth in
research funding and adequate facilities and equipment to allow their ideas
and creativity to nourish. Clearly, it would be impossible to build or reno-
vate all health research facilities in order to make every institution a first tier
research organization. However, it would not be sound policy to allow these
institutions to crumble. According to the author of a recent article, "the
government should decide how much science it is willing to pay for, but the
long-run health of science will be jeopardized if uninformed and inconsis
OCR for page 141
RESTORING PHYSICAL INFRASTRUCTURE FOR RESEARCH
141
tent policies result in too much money being put into current operational
support and too little into facilities investment"2
This chapter reviews both the past and present federal programs for
facilities construction and support for equipment as well as private sec-
tor contributions. The discussion focuses on the adequacy and suitability
of existing research space and equipment and the financing mechanisms
currently employed to build, renovate, and equip research facilities.
ADEQUACY AND SUITABILITY OF RESEARCH SPACE
The physical infrastructure for health sciences research in the United
States includes facilities associated with the following institutions: colleges
and universities, private independent research organizations, industry, and
government laboratories. Most of the data available on biomedical research
facilities and equipment concern the condition of college and university
laboratories, although a survey that included nonfederal, nonprofit research
facilities was conducted by NSF and NIH in 1988.3~4 The committee is not
aware of any data concerning the amount and adequacy of research space
in industry.
The 19~ NSF/NIH survey reported that there was an estimated 52
million net assignable square feet (NASF) of biomedical research space
at all institutions performing health research in the United States (Figure
6-1~.3 Forty-four million NASF (84 percent) of this space was located
in academic institutions. The remaining 8 million NASF (16 percent)
was distributed equally between independent research organizations and
hospitals. Of the 44 million academic NASF, about 43 million NASF
were located in doctorate-granting institutions and nearly half (21 million
NASH) was in the top 50 research and development (R&D) institutions.
Also, about two-thirds of all academic biomedical research facilities were
located in public institutions. This distribution among the various types of
public and private institutions has implications for the funding mechanisms
available for construction and renovation.
In the same survey institutions were asked to rate the adequacy of their
biomedical research facilities in the following categories: (1) adequate, (2)
generally adequate, (3) inadequate, (4) nonexistent but needed, and (5)
inapplicable or not needed. About half of the academic institutions rated
their space as inadequate to support the needs of the research in the bio-
logical and medical disciplines (Figure 6-2~. Medical schools had a slightly
higher percentage (45 to 51 percent) of adequate space than did colleges
and universities (37 to 46 percent). Academic institutions reported that 50
to 54 percent of their medical science research space and 45 to 46 percent
of their biological science space generally was adequate. Very few academic
OCR for page 142
142
43.6 ~)
\~
Academic Inst
Millions of Net Assignable Square
Feet (NASF) for Biomedical Research
FIGURE 6-1 Distnbution of U.S. biomedical research space.3
FUNDING HEALTH SCIENCES RESEARCH
Hospitals
4 2
Pvt Res Org
4.4
institutions (0 to 13 percent) reported that their space was able to support
all of the needs of the research in these disciplines. Hospitals ranked their
space much the same as the academic institutions, with nearly 45 percent
of the space categorized as inadequate the remainder being adequate or
generally adequate. Independent research organizations reported a much
higher percentage of adequate or generally sufficient space for research in
the biological and medical sciences than did academic institutions, with 60
to 75 percent of the organizations rating the space in these two categories.
The physical condition of research facilities is related directly to the
age of the structure. In 1986 the NSF reported that more than half (56.8
percent) of academic research facilities (all fields) were built prior to 1970,
with about a quarter (26.5 percent) built or renovated before 1960.5 Only
18 percent of research facilities were built or renovated between 1980 and
1986. Whereas these data are for research facilities in all fields, data from
71 institutions with medical schools demonstrate the same general trend.5
The 1988 NSF/NIH survey queried those same institutions on the
suitability of existing research space for performing biomedical research.
Only about one-quarter of the space for medical research at academic
institutions was categorized as suitable for the most sophisticated research
(Figure 6-3~.3 Whereas 35 to 41 percent of this space was categorized as
adequate for most uses, one-quarter of the space required some repair
or renovation, and 15 percent needed major repair or renovation. The
condition of biomedical research space at research organizations generally
was satisfactory, with nearly four-fifths of the space categorized as adequate
for most uses or suitable for the most sophisticated research. However,
12 to 14 percent of the space in these institutions needed limited repair
or renovation, and 10 to 13 percent required major work (Figure 6-3~.
Whereas hospitals reported that nearly half of their space for medical
OCR for page 143
RESTORING PHYSICAL INFRASTRUCTURE FOR RESEARCH
ACADEMIC INSTITUTIONS
Bio Sci (Col/Univ)
Bio Sci (Mea SChlS)
Med Sci (Col/Univ)
Led Sci (Mea SChlS)
PRIVATE RESEARCH ORG
Biological Sciences
Medical Sciences
HOSPITALS
Biological Sciences
Medical Sciences
143
0% 25%
50% 75% 100%
_ Adequate ~3 Generally Adequate
O Inadequate
FIGURE 6-2 Adequapy of the amount of research space for biological and biomedical
sciences.
sciences was suitable for sophisticated research, about 20 percent required
limited or major repairs. The suitability of space for the biological sciences
in hospitals was rated as slightly worse.
Construction and Renovation Investment
It takes an average of 150 to 300 square feet of laboratory space to
house an individual laboratory worker and his or her associated equipment.3
Thus, a research group consisting of a director and 8 to 10 coworkers may
require 2000 square feet or more. Large multidisciplinary teams may
require as much as 10,000 square feet. The construction of laboratories
that provide safe, proper space is estimated to cost more than $300 per
square foot, and extensive renovation can be equally costly.3
The NIH reported that of the 16.7 million NASF of biomedical re-
search space in need of repair and renovation at academic institutions,
work on only 5.1 million NASF would be done in 1988 and 1989.3 Thus,
renovation and repair on the remaining 11.6 million NASF of space would
be deferred. NIH estimated that the costs for planned renovation and
repair would be $422 million, compared to a deferred amount of $920
million. Therefore, for every $1.00 of planned renovation and repair for
1988 and 1989, institutions were deferring an average of $2.18 of needed
repair and renovations.
OCR for page 144
144
ACADEMIC INSTITUTIONS
Bio Sci (Coll/Univ)
Bio Sci (Mea Schl)
Med Sci (Coll/Univ)
Med Sci (Mea Schl)
PRIVATE RESEARCH ORG
Biological Sciences
Medical Sciences
HOSP ITALS
Biological Sciences
Medical Sciences
FUNDING HEALTH SCIENCES RESEARCH
0% 25% 50% 75% 1 00%
_ Suitable
O Limited Repair
Ef fective
Major Repair
FIGURE 6-3 Current condition of research facilities in the biological and medical sciences.3
Variances in deferral ratios existed among the types of academic insti-
tutions (doctorate granting, medical schools, colleges, and universities) in
the survey. Colleges and universities reported the largest deferral ratios-
nearly $3.03 for every dollar planned for repair and renovation, which
was twice the ratio of medical schools ($1.53) Amble 6-1~. Of the nearly
2.2 million NASF of biomedical research space located in hospitals and
research organizations needing repair and renovation, only 1.1 million was
slated for repair and renovation in 1988 and 1989. The deferral ratio for
hospitals was $0.52, whereas research organizations were deferring $1.53
for every $1.00 of planned repair and renovation.
Institutions also reported in the NSF/NIH survey that new construction
was being deferred. Although "construction" may imply that these projects
are for expansion of the current research plant, this may not be entirely
true. Some new construction is planned to replace existing research space.
That is, an out-dated facility may be demolished and replaced with a
new facility. Although not increasing the NASF of research space of the
institution, these new facilities will meet new building codes and provide a
more suitable environment for advanced research.
According to the NSF/NIH survey, institutions reported actual and
planned construction (renovation, replacement, and expansion) of biomed-
ical research facilities totaling about $3.2 billion, with $2.7 billion at aca-
demic institutions, $0.2 billion at research organizations, and $0.3 billion at
OCR for page 145
145
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OCR for page 146
146
FUNDING HEALTH SCIENCES RESEARCH
independent hospitals. About $1.1 billion of the total investment was for
projects initiated in 1986 and 1987. In 1988 and 1989 institutions planned
a substantial increase in new facilities projects-about $2.1 billion.3
The NIH estimated that if all types of research institutions were to
initiate construction to meet the needs of inadequate space (expansion
construction only) in the biomedical sciences (and assuming the costs were
the same per institution), $3.1 billion would be needed in 1988 and 1989.
However, these research institutions planned construction of only $1.2
billion, creating a $1.9 billion shortfall for 1988 and 1989. Therefore,
for every $1.00 in planned 1988 and 1989 construction, $1.63 was being
deferred in needed but not planned construction.3
Again, there were large variances among the deferral ratios of the
different types of institutions. Research organizations were deferring as
much as $7.71 for every $1.00 of planned new construction in meeting the
needs for the biomedical sciences (Bible 6-2~. Likewise, hospitals reported
that they were deferring an average of $5.32 for every dollar spent on new
construction in the biomedical sciences.
ADEQUACY AND SUITABILITY OF RESEARCH EQUIPMENT
Although it may be true that many pioneering discoveries in the health
sciences were made by very simple means, scientists lacking access to proper
instrumentation are limited in designing their experiments and collecting
data, or they may be forced to turn away from some of the important prob-
lems of their discipline. A 1985 NIH study of 42 U.S. universities and 24
medical schools with the largest amounts of R&D funding collected infor-
mation about instrumentation costs, age, condition, use, and so on.6 More
recently, NSF conducted a survey of academic research instrumentation
in selected science and engineering fields, including the biological sciences
in universities and medical schools.7 These survey data, while appearing
anecdotal, are the most accurate information available on the adequacy of
research instrumentation for the health sciences.
The 1985 NIH survey, which queried the heads of 367 biological and
medical science departments, provided some insight into the condition and
needs of instrumentation in the health sciences.6 Fifty-eight percent of the
respondents indicated that critical scientific experiments could not be con-
ducted because equipment was lacking. Although this response was more
frequent in the biological sciences overall, 41 percent of the departments
in medicine identified equipment shortages as a serious problem. Only
16 percent of the departments rated their equipment stocks as excellent
for tenured faculty (15 percent for nontenured faculty). Between 50 and
60 percent of the respondents indicated that their equipment stocks were
adequate, and nearly a third rated their equipment insufficient. These data
OCR for page 147
147
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OCR for page 148
148
FUNDING HEALTH SCIENCES RESEARCH
were collected in 1983, but the more recent data collected by NSF in 1986
showed no apparent change in response to similar questions.7 In 1985 and
1986, 32 percent and 24 percent of department heads of the biological
sciences in universities and medical schools, respectively, described their
equipment as inadequate for pursuing their primary research interests.
The working condition of equipment is related directly to its age.
The upper limit for equipment to remain state of the art is estimated to
be 5 years, with diminishing usability starting as early as the first year
following purchase.6 For instance, the median age of all 1985 and 1986
systems classified as state of the art by the principal user was only 2
years.7 Technological advancement is one primary reason that research
instrumentation becomes obsolete at an increasingly rapid pace. Thus,
older equipment tends to be obsolete and frequently inoperable. The 1985
NIH survey reported that only 44 percent of the equipment in biological
sciences and departments of medicine was less than 5 years old, about 29
percent was 6 to 10 years old, and the remaining 27 percent was more
than 10 years old. This same survey revealed that only 18 percent of
academic medicaVbiological instruments were classified as state of the art
by respondents. About 65 percent of the instruments in active use were not
classified as state of the art, and nearly 16 percent of equipment physically
present in laboratories was not in use, owing either to mechanical disrepair
or technological obsolescence. The survey showed also that only about half
of the existing instrument systems were in excellent working condition.
The 1988 NSF study of academic research equipment in selected
science and engineering fields reported that about one out of every four
instrument systems in research use in 1982 and 1983 was no longer being
used for research by 1985 and 1986.7 Conversely, about two-fifths of all
systems in research use in 1985 and 1986 had been acquired in the 3-year
period since a 1982 and 1983 baseline study was conducted.
Maintenance and repair of existing equipment are additional problems
for the users and host institutions. For every dollar spent to purchase
equipment for the medicaVbiological sciences in 1983 (a total of $158.2
million), only 22.5,{ (a total of $35.7 million) was spent on maintenance and
repair.6 Moreover, maintenance and repair costs tend to increase after the
instrument is over 5 years old.
SOURCES OF SUPPORT FOR FACILITIES AND EQUIPMENT
The traditional sources of capital for facilities and equipment are
funds obtained from operations (tuition), gifts and foundation grants, gov-
ernment grants and contracts, and state and local government support.
Other sources of funds for capital improvements may come from research
partnerships or other arrangements with industry, debt financing, and the
OCR for page 149
RESTORING PHYSICAL INFRASTRUC75URE FOR RESEARCH
149
use of capital or operating leases. This diversification is necessary to help
institutions adapt to changing economic environments by minimizing the
effects of disruption from any one source. The mix of funding sources at
any particular institution depends upon the type of institution (e.g., college,
university, hospital or research organization, public or private sector).
Between 1986 and 1989 state and local governments were the pri-
mary sources of funding for new construction at universities and colleges,
supplying about 46 percent ($1.8 billion) of all new construction money
(Figure ~4~.3 in contrast, 50 to 60 percent of new construction funds
at medical schools, research institutions, and hospitals came from private
monies or institutional funds. I§x-exempt bonds at all of these types of
research organizations accounted for 17 to 30 percent of new construction
funds. Facilities renovation or repair funds, however, largely were institu-
tional monies, varying from 53 percent in medical schools to 72 percent at
research organizations. About two-thirds of renovation and repair funds
at universities and colleges came from institutional money and state and
local government. During this period, the federal government provided
very little support (0 to 8 percent) in the form of direct funds for all types
of research organizations for facilities construction, repair, or renovation.
An exception to this was federal support to historically black colleges and
universities, which obtained more than 80 percent of their funding for
construction and renovation projects from federal sources.3
The NIH has been the principal source of funding for medical and
biological sciences equipment; for example, it funded nearly 38 percent
of equipment in active use in 1983.6 Equipment purchases are funded ei-
ther directly, through research project grants, equipment grants, and block
grants, or indirectly through indirect cost recovery mechanisms. Other fed-
eral agencies (including NSF) have funded about 12 percent of academic
research instrumentation in the health sciences. Whereas the federal gov-
ernment funds nearly half of research equipment purchases, institutions
provide the main portion (about 37 percent) of nonfederal funds for equip-
ment. However, some institutional monies may have included indirect cost
payments from research grants. Other sources of funds for equipment
include state funds, private nonprofit foundations, and industry.6
State and Local Government
In recent years state and local governments have provided the largest
proportion of funding for biomedical research facilities.3 State govern-
ments invest in their colleges and universities to provide higher education
for their citizens. The ability of individual states to support their institu-
tions of higher education is related directly to their tax base. Investment
decisions are made with respect to the state's industriaVagricultural profile,
OCR for page 151
RESTORING PHYSICAL INFRASTRUCTURE FOR RESEARCH
Federal Grant Programs
151
Previous federal grant programs supported research facilities construc-
tion directly.8 In federal construction programs Congress generally gives
authority to NSF, NIH, the individual institutes of NIH, or another gov-
ernment agency or agencies to build research facilities. Funding decisions
for money disbursed through these programs are based on competitively
reviewed proposals. The criteria upon which these proposals are judged
are determined by Congress and can include the following: (1) needs
for expanding research capacity, (2) promotion of geographic distribution
of research facilities, and (3) special programmatic needs. Previous NSF
and NIH programs have required 50/50 matching funds from the recipient
institution.
The first program to construct nonfederal research facilities began in
1948, through authority granted to the National Cancer Institute (NCI).8
During the expansion of NIH in the 1950s, the physical infrastructure for
scientific research had to be improved to pursue emerging scientific op-
portunities effectively. Then, in 1956, the Health Research Facilities Act
(HRFA) authorized a Public Health Service (PHS) program to expand ca-
pacity, improve quality, and promote the equitable distribution of research
in the health sciences. Grants made under this authority provided up to 50
Torrent of the Rat for ~.onstrilctinp remodeling. altering* and equipping
new or existing buildings for the health sciences. A primary condition for
receipt of these funds was a 10-year commitment to use the designated
facility for health sciences research.
Between 1956 and 1968 the HRFA program awarded 1,482 grants
totaling $473 million to 407 institutions in all 50 states. Although this pro-
gram required that only 50/50 matching funds be provided by the recipient
institution, federal funds were matched with $632 million dollars (nearly
60 percent of construction costs) of institutional funds. Approximately
19 million net square feet of laboratory space 60 percent of the health-
related research space constructed between 1958 and 196kwas built with
the assistance of this program. Although this program was congressionally
authorized until 1974, no funds were appropriated after fiscal year 1968.
Unlike most NIH programs in which construction authority is targeted
through institutes or disease programs, in the HRFA program the awards
were made independent of these constraints.
Total NIH construction funds have been negligible over the past 10
years (Figure 6-5~.9 Only NCI, the National Eye Institute (NEI), and the
National Heart, Lung and Blood Institute (NHLBI) have had construction
authority in recent years. Construction obligations fell from $22 million in
1977 to $2 million in 1984 in constant dollars. Funding rebounded to $13
million in 1985, but it declined again to $9 million in 1986. In the 1988
p~1~11L -Vl ally AVOW AVl vet ~7 · _ ^ ~7 ~07
OCR for page 152
152 FUNDING HEALTH SCIENCES RESEARCH
DOLLARS (Millions) NUMBER
35
1 _
30
25
20
10
o
\
-
~0
77 78 79 80 81 82 83 84 85 86 87 88
YEAR
~+~ Current $
Constant 1988 $ ~ Number of Grants
70
60
50
40
30
20
10
FIGURE 6-5 NIH allocations for extramural construction and number of grants awarded
from 1977 to 19~.9
NIH reauthorization bill, $150 million of matching funds was proposed
for construction the most substantial increase in recent years. However,
because the need for construction and renovation could not be verified
adequately, these funds were not appropriated by Congress.i
Early construction authorities generally received separate appropria-
tions, but recent authorities tend to be in direct competition with research
funding. This has led to less use of these authorities by NHLBI and NEI
and to declining construction support by NCI.8 In fiscal years 1988 and
1989, no funds were requested under any of these construction authorities.
However, $23.9 million was appropriated to the Division of Research Re-
sources in fiscal year 1988 for AIDS-related construction.~° The amount
allocated in fiscal year 1989 was about $5 million. A proposed $150 mil-
lion facilities renewal fund was not approved for fiscal year 1990, although
$14 million was taken from the institute budgets to fund a small program.
The NSF Science Facilities Program also contributed to the renova-
tion and addition of large amounts of research space during the 1960s.8
Whereas this program began by funding renovations and repair during
the first couple of years, subsequent awards were made for building new
and larger multidisciplinary structures as well as for purchasing stationary
general purpose equipment. The program eventually was expanded beyond
doctorate-granting institutions to those awarding masters degrees and to
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RESTORING PHYSICAL INFRAS17RUCTURE FOR RESEARCH
153
nonprofit institutions providing graduate training. This program granted
977 awards to 182 institutions. NSF estimated that awardees exceeded the
50 percent matching funds necessary for construction, supplying about 65
percent of the construction funds. Of the $188 million disbursed through
this program, $500 million of new or renovated space and equipment was
generated. Although the awards were made in all scientific disciplines, the
life sciences received one~uarter of the funds and only 11 percent went to
the behavioral sciences.
In 1960 the President's Science Advisory Committee issued a report en-
titled "Scientific Progress, the Universities, and the Federal Government,"
reaffirming the government's role in expanding the nation's research base.8
After publication of this report, commonly known as the Seaborg Re-
port; the NSF Science Development Grants Program became one of the
agency's major programs between 1964 and 1972. Large grants were made
to "second-tier" institutions to enable them to upgrade their research activ-
ities comprehensively over a 5-year period by providing funds to hire new
faculty, support graduate students, and construct new facilities. Proposals
for these grants were developed cooperatively between the institutions and
NSF and were subject to peer review as well as an internal technical re-
view. The program was divided into four sections, two of which provided
considerable facilities funding. The University Sciences Development Pro-
gram awarded $177 million to 31 institutions, and the Special Science
Development Awards granted $44 million to 62 institutions. About 23
percent of these funds were used for facilities.8
Unlike direct support for facilities construction, equipment has been
financed largely through funds from research project grants or shared
instrument grants.6 In 196611.7 percent of research project grant funds
were used to purchase permanent laboratory equipment (Table ~3~. By
the mid-l97Os less than 5 percent of the funds awarded by NIH through
research project grants as well as shared instrument programs were used
for equipment. In 1984, the last year in the NIH survey, the percent of
funds awarded by NIH for equipment was less than 4 percent of extramural
awards, and has remained at this level through 1988. The committee was
not able to determine the cause of this decline from the data available.
Nevertheless, it is concerned that if this trend continues, scientists may not
be able to conduct necessary research protocols in a high-quality manner
on NIH grant awards.
Earmarking funds for universities, often referred to as pork barreling,
has become commonplace in the 1980s. For instance, in fiscal year 1982
Congress earmarked about $3 million for projects on specific university
campuses, and by 1989 the total earmarking to universities had reached
almost $300 million.~3 Whereas construction funds allocated to science
agencies such as NIH and NSF are awarded to colleges and universities in
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FUNDING HEALTH SCIENCES RESEARCH
TABLE ~3 Percent of NIH Research Project Grant Funds Allocated for Permanent
Laboratory Equipment, Fiscal Years 1966 1988
Year Percent Year Percent
1966 11.7 1978 4.4
1967 11.8 1979 4.6
1968 95 1980 3.8
1969 75 1981 3.3
1970 5.9 1982 3.2
19~71 6.2 1983 3.4
1972 6.6 1984 3.7
1973 4.9 1985 4.1
1974 5.7 1986 3.7
1975 4.6 1987 4.0
1976 3.9 1988 3.9
1977 4.3
SOURCES: U.S. Department of Health and Human Sentences; Public Health Service.
1985. Academic Research Equipment and Equipment Needs in the Biological and Medical
Sciences. NIH Program Evaluation Report No. 85-2769. Bethesda, Md.
U.S. Department of Health and Human Services; Public Health Sentence. 1989. NIH Data
Book Publication No. 90-1261. Bethesda, Md.: National Institutes of Health.
competitive programs, earmarking bypasses all scientific merit and technical
review. The committee believes that the direct lobbying of congressional
members by universities ultimately will benefit only a few institutions and
not necessarily those with a definite need.
Indirect Cost Recovery
Indirect cost (IDC) recovery is a reimbursement mechanism used by
institutions to recoup expenses already incurred. Although the federal
government does not restrict the use of these funds, there are guidelines
that outline reimbursable expenses. For instance, federal IDC funds cannot
pay for the use of facilities originally financed with federal funds. Also,
whereas indirect payments reimburse the institution for the original cost of
the facility, institutions are not reimbursed for replacement costs.
Institutions receiving federal research funds negotiate individual IDC
rates with the sponsoring agency.~4 Many foundations and some industrial
sponsors set limits on IDCs allowable. Under current practice, IDCs are
used largely for operations and maintenance of the research facilities and
ancillary costs of doing research. There is a small percentage (2 percent)
of IDC that can be used for depreciation of research facilities, assuming a
50-year life-span of buildings. This assumption may not reflect the life-span
of research facilities accurately, for these facilities may become outdated in
only 20 years.~5 i6
Use allowances, depreciation, and interest payments (since 1982) on
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RESTORING PHYSICAL INFRASTRUCTURE FOR RESEARCH
155
debts for facilities used in sponsored research are allowable reimburse-
ments to universities through IDC recovery. As larger portions of facilities
construction money comes from nonfederal sources, this portion of IDCs
is edging upwards and increasing the overall institutional rated
As the funds for construction grant programs came to an end in the late
1960s and early 1970s, the government shifted its policy to support facilities
through IDC recovery to research institutions.8 With additional emphasis
on research projects in the 1980s, this policy has become ensconced as
the primary means of federal support for facilities renewal. This allows
investigators to apply for equipment funds freely, but little if any money is
for research buildings except through IDC recovery.
The committee believes this policy of IDC recovery as the sole source
of facilities renewal is fundamentally flawed. There is a direct relationship
between the level of sponsored research activity and IDC reimbursement,
which is part of the financial support package to institutions performing
the research. The short duration of grant support, generally less than 4
years, contributes to the tendency of research institutions to meet short-
term needs rather than the long-range planning necessary for science. Also,
whereas the IDCs recovered by the top 50 institutions can be substantial,
IDC recovery by second-tier institutions can do little for major construction
needs at these institutions.
The Office of Management and Budget (OMB) Circular A-21, which
regulates the recovery of IDCs related to federally sponsored research,
was first written in the 1950s.~8 Ceilings were placed on institutions' IDC
rates until 1966; therefore, associated research costs could not be recovered
fully. Although the cap no longer exists, there is speculation that many
institutions underreport IDCs to keep the overall costs of research low, thus
helping their individual institutions remain competitive nationally. Also, as
pressures mount to keep IDC categories down, many institutions may shift
some of these costs to direct cost categories; thus, total awards will remain
the same, but with larger percentages in the direct cost category. Also, the
budget sheets of research grants, which include IDC rates and amounts,
are available to study section members and may influence awards especially
in times of extremely scarce research funds.
Debt Financing
Debt financing is used by academic institutions as one means of raising
funds for capital improvements. Whereas debt financing by state institutions
is controlled by state legislatures, private institutions use tax-exempt bonds
to raise capital for facility improvements. Also, limits on debt financing
through tax-exempt bonds are set by the federal government. The 1984
Ax Reform Act placed a state per capita limit on student loan issues
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FUNDING HEALTH SCIENCES RESEARCH
and limited industrial development bond issues. Further restrictions were
imposed by the 1986 lax Reform Act' which limited institutional tax-exempt
borrowing to $150 million.
For institutions to be able to use the bond market, they must be good
credit risks. Credit evaluations of academic and research organizations are
similar to that of corporations because they ate judged on their estimated
future earnings and past performance for repaying debt. The ability of
faculty to get grants is not a major consideration in credit evaluations.
Therefore, only well-established institutions with a good credit rating can
use this financial instrument to fund facilities projects. It is estimated that
only about 10 percent of the colleges and universities in the United States
have effective access to the tax-exempt market.8 Since there is an economy
of scale in bond issues, institutions frequently combine various facilities
(e.g., parking garages, dormitories, and laboratories) into one bond issue.
Tax-exempt bonds are particularly attractive financial instruments for
private academic institutions, because these institutions can borrow facili-
ties construction money at interest rates below the interest income levels
received on their endowments. However, restrictions in the 1986 Ax Re-
form Act placed a $150 million limit on outstanding bond debt for private
institutions. Nearly 27 percent of the medical schools are affiliated with in-
stitutions who have reached this limit, and another 10 percent are expected
to do so within the next 2 years.3 This severely limits these institutions'
ability to undertake large construction projects, including modifying and
expanding research space.
The federal government currently sponsors two programs to encourage
loans to academic institutions for capital improvement. Congress autho-
rized the Student Loan Marketing Association (nicknamed Sallie Mae),
through the Higher Education Amendments of 1986, to lend funds for aca-
demic facilities construction. Seventy-five percent of these loans must be
made to institutions with credit ratings below the third highest rating. The
second program, the College Construction Loan Insurance Corporation
(nicknamed Connie Lee), authorized by the Higher Education Amend-
ments of 1986, established a program to guarantee, insure, or reinsure
bonds and other debt instruments for academic facilities.~7
Institutional Funds
In addition to federal, state, and local government support, institutions
of higher education obtain revenues from tuition, philanthropy, endowment
income, and revenues from sales and services. The proportions of support
from these various sources have changed over the last decade, with gov-
ernment support declining and revenue from the other sources increasing.
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157
Recent evidence of this is the skyrocketing costs of college tuition in both
private and public institutions.20
The Government-University- Industry Research Round table (GUIRR)
reports that almost 20 percent of facilities funds annually came from in-
stitutional monies in the years 1986 through 1989.~7 Publicly supported
institutions devoted 15 percent of institutional funds for facilities, whereas
these monies constituted 24 percent of the facilities funds expended at pri-
vate institutions. Institutions also fund nearly as much research equipment
in the biological and medical sciences as does the NIH: 37 and 38 per-
cent, respectively.6 Unrestricted institutional funds can be used as matching
funds for government facilities and equipment grants. Escalating education
costs, which have continued to outpace inflation, coupled with possible de-
clining enrollments in the l990s, inevitably will increase competition within
institutions for distributing endowment earnings between educational and
research needs.
Gifts and donations from philanthropies are other sources of funding
for constructing and restoring facilities. Private institutions rely heavily on
these sources to raise money for capital improvements: About 20 percent
of the science and engineering facilities funding between 1986 and 1989 was
provided through gifts and donations.~7 Unlike institutional funds, which
are controlled by the institutional officers, donors often restrict the use
of gifts and donations; therefore, institutions have less control over their
use. Also, philanthropic giving is affected directly by tax law. Whereas
the lax Reform Act of 1986 has reduced the marginal tax rates, it treats
gifts of appreciated property as a preference item and subjects them to
the alternative minimum tax of 21 percent.2i The effect of tax law changes
on philanthropic giving has been studied by expert groups, and a clear
conclusion on the result remains elusive.
Foundations and Voluntary Health Agencies
Foundations and voluntary health agencies support facilities through
direct and indirect means. These organizations can contribute directly
through specific facilities and equipment programs or indirectly through
comprehensive curriculum development programs with allowances for fa-
cilities construction. For example, the Kresge Foundation Science Ini-
tiative is a matching funds grant program for scientific equipment and
laboratories that provides foundation funds to colleges and universities to
upgrade equipment.22 Indirectly, these types of organizations support fa-
cilities through payment of overhead costs associated with grants to the
facility. However, the committee believes that these organizations cap IDC
rates, and, therefore, they do not pay the full costs for performing the
research they sponsor.
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FUNDING HEALTH SCIENCES RESEARCH
Industrial Participation
Many corporations support their own R&D facilities, but the mag-
nitude of this support is unknown. Industries have not been significant
supporters of research facilities projects at academic institutions or inde-
pendent research organizations. Rather, companies have preferred direct
project or program funding in which they have greater leverage or control.
It is believed that companies, like foundations, may tend to increase IDC
recovery problems for universities by negotiating lower overhead rates than
what federal sponsors pay.23
In recent years partnerships have spawned between industry and
universities.24 These arrangements are intended to provide mutual ben-
efits to both parties without compromising the educational mission of the
university. Although individual project support from industry generally
does not provide full recovery of IDCs, the committee believes these larger
partnerships sponsored by industry provide more reimbursement for facil-
ities and administrative costs of performing the research than individual
projects allow.
SUMMARY AND CONCLUSIONS
The committee concludes that aging research space and obsolete equip-
ment are restricting the number and types of research projects that can be
undertaken. Over the last decade there has been a plethora of studies on
the condition of academic facilities, and there is general agreement within,
as well as outside, the scientific community that many research laboratories
on our campuses are in disrepair. The committee concludes that even after
repeated studies, no long-term federal strategy exists to restore the physical
infrastructure. There is no consensus on the need for expanded versus
renovated facilities, the best mechanism for support, and the respective
roles of the interested parties. Additionally, there is no way to coordinate
the various independent contributors supporting facilities and equipment.
Without a clear set of goals and a cohesive national policy, universities and
other research institutions will be forced to continue seeking short-term
solutions to their facilities' needs by obtaining earmarked appropriations
from Congress.
At a minimum, the committee believes it is critical to maintain the
current level of research effort as well as provide an optimal environment for
training the next generation of health scientists. Meeting these objectives
is becoming increasingly more difficult under the present condition of
research facilities. It will be counterproductive to allow the existing facilities
to slip into a further disrepair where scientists will no longer be able to
investigate the frontiers of science. The committee could not conclude that
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RESTORING PHYSICAL INFRASTRUCTURE FOR RESEARCH
159
all outmoded structures should be renovated; rather, those structures that
can be updated should be, and the others should be demolished and rebuilt.
The committee also believes that the decline in federal programs
for research facility construction and equipment is partially responsible
for deterioration of the nation's research laboratories. Federal support
of facilities and equipment as a percentage of total federal health R&D
expenditures has decreased drastically over the past two decades. Federal
grant programs in the 1960s were very successful in expanding the nation's
research capabilities, but several factors caused the NIT and NSF facilities
programs to be eliminated in the early 1970s.
Except for some limited appropriations for AIDS research facilities,
federal funds for health sciences research facilities have been negligible
or nonexistent over the past 10 years. This comes at a time of escalating
maintenance costs, increasing regulatory standards, and an explosion of
scientific opportunities and technological sophistication. Although research
institutions have been able to raise some money from other sources, a great
deal of biomedical research renovation and money construction needs are
being deferred.
Creative funding mechanisms will be required to fill the enormous
need for new and renovated biomedical research facilities, now estimated
to be in excess of $8 billion more than three and one-half times the
amount to be spent. Alternatives to the traditional forms of capital forma-
tion are beginning to reshape the way academia raises money for capital
improvements. State and local governments are investing in academic fa-
cilities for education and garnering the economic advantages of providing a
sound scientific base in the state. Although the private sector continues to
make significant contributions to supporting the physical infrastructure of
research, it cannot be expected to meet the total need. Partnerships with
industry (although limited) may help fill these enormous gaps for research
institutions but are sensitive arrangements to work out.
It seems that the policy options available are few. As IDCs increase,
scientists claim that they consume scarce research resources. Institutional
administrators claim that overhead rates are undercharged and that they
have to find these resources to keep their institutions competitive. With
large federal deficits looming in the immediate future, direct grant programs
for revitalizing the physical infrastructure seem remote. Thus, it appears
that we will be forced to recoup these costs through indirect means.
Despite these problems, the committee concluded that there is a
crucial need to establish a national policy for renewal and expansion of the
health sciences research infrastructure. The objectives of a comprehensive
facilities plan should be twofold:
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FUNDING HEALTH SCIENCES RESEARCH
1. 1b maintain and restore the present physical infrastructure by
improving the capabilities and efficiency of performing health sciences
research.
2. To expand the physical infrastructure and therefore the nation's
capacity to perform health sciences research.
Meeting these objectives will allow scientists to pursue new as well as enst-
ing opportunities in the health sciences in order to expand the boundaries
of health sciences knowledge.
REFERENCES
3.
1. U.S. House of Representatives. 1989. Report of the House of Representatives Appro-
priations Subcommittee for the Departments of Labor, Health and Human Services,
and Education, and Related Agencies Appropriations Bill, 1989. Report No. 100 689.
Washington, D.C.
Massey, W.F. 1989. Capital investment for the future of biomedical research: A
university chief financial officer's view. Acad Med 64~1989~:433-437.
U.S. Department of Health and Human Services; Public Health Service. 1988. The
Status of Biomedical Research Facilities: 1988. Bethesda, Md.: National Institutes of
Health.
National Science Foundation. 1988. Scientific and Engineering Research Facilities at
Universities and Colleges. NSF 88-320. Washington, D.C.
5. National Science Foundation. 1986. Science and Engineering Research Facilities at
Doctorate-Granting Institutions. Washington, D.C.
6. U.S. Department of Health and Human Services; Public Health Service. 1985.
Academic Research Equipment and Equipment Needs in the Biological and Medical
Sciences. NIH Program Evaluation Report No. 85-2769. Bethesda, Md.
7. National Science Foundation. 1988. Academic Research Equipment in Selected
Science/Engineering Fields: 1982-82 to 1985-86. NSF SRS 88-D1. Washington, D.C.
8. U.S. House of Representatives. 1987. Brick and Mortar A Summary and Analysis of
Proposals to Meet Research Facilities Needs on College Campuses. Committee on
Science, Space, and Technology; Subcommittee on Science, Research, and Technology;
GPO Publication No. 77-341. Washington, D.C.
9. U.S. Department of Health and Human SeIvices; Public Health Service. 1988. NIH
Data Book, 1988. Publication No. 89-1261. Bethesda, Md.: National Institutes of
Health.
10. NIH Budget Office.
11. U.S. Congress. 1988. Departments of Labor, Health and Human Services, and
Education, and Related Agencies Appropriations Act, 1989. P.L. 100~36.
12. Panning pork. 1988. Science 242:1383.
13. Cordes, C. 1989. Colleges receive about $289-million in earmarked funds. The
Chronicle of Higher Education. February 1, pp. A1 and A20.
14. Association of American Universities. 19~. Indirect Costs Associated with Federal
Support on University Campuses: Some Suggestions for Change (Draft). AAU Ad
Hoc Committee on the Indirect Costs to the Executive Committee of the AAU.
Washington, D.C.
15. U.S. Department of Health and Human Services. 1988. Report of the Ad Hoc NIH
Study Group on Extramural Biomedical Research Facilities Construction. Bethesda,
Md.: National Institutes of Health.
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RESTORING PHYSICAL INFRASTRUCTURE FOR RESEARCH
161
16. U.S. Department of Health and Human Services. 1989. Report on Extramural
Biomedical Research Facilities Construction. Office of the Secretary. Washington, D.C.
17. National Academy of Sciences; Government-University-Indust~y Research Roundtable.
1990. Perspectives on Financing Academic Research Facilities: A Resource for Policy
Formulation. In Press.
18. Office of Management and Budget. 1979. Principles for Determining Costs Applicable
to Grants, Contracts, and Other Agreements with Educational Institutions. OMB
Circular A-21. Washington, D.C. (Revised February 1979.)
19. National Association of College and University Business Officers. 1988. Capital
Formation Alternatives in Higher Education. NACUBO Capital Management Series.
Washington, D.C.
20. The College Board. 1989. The College Cost Book, 1989-90. New York: College Board
Publications.
21. Ginzberg, E., and A.B. Dutka. 1989. The Financing of Biomedical Research. Balti
more: The Johns Hopkins University Press.
22. The Kresge Foundation. 1987. Annual Report for 1987. Detroit.
23. National Academy of Sciences: Government-University-Industry Research Roundtable.
1986. Academic Research Facilities: Financing Strategies. Washington, D.C.: National
Academy Press.
24. National Academy of Sciences; Government-University-Industry Research Roundtable.
1986. New Alliances and Partnerships in American Science and Engineering. Wash
ington, D.C.: National Academy Press.
Representative terms from entire chapter:
physical infrastructure
