Word: overheading
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...indirect-cost rates necessarily add up to a better deal for the public. The University of Wisconsin at Madison, for instance, has a rate of just 44%, but that is partly because state taxes help cover the cost of buildings, heat and other overhead expenses connected with research. Taxpayers still pay the bulk of the bill, just as they do at Stanford; there are simply more state tax dollars in the mix than at a private school. Rates are typically lower at public institutions anyway. Unlike Cornell or M.I.T., these schools have little incentive to comb federal guidelines for every...
...items that schools include in their overhead bills vary widely. Columbia, Harvard, M.I.T. and Cornell argue that their presidents' residences are part of "general administration" in support of research, and they charge the government anywhere from 14% to 68% of the maintenance costs. Other universities, such as Yale and Johns Hopkins, consider the amount involved too small to bother recovering from the government. Unlike those for Stanford's yacht, such charges are legal. Still, they are difficult to defend. "The public doesn't think the president's mansion ought to be shifted to the research budget," says Norman Scott, vice...
...Federal Government is supposed to audit a university's overhead charges every two or three years. In the case of Stanford, however, the Office of Naval Research did not adequately check claims and receipts for fiscal years 1983 through 1988 and did not audit 1981-82 at all. Worse still, during that time it signed off on 125 "memoranda of understanding," formal agreements that exempted Stanford from accounting standards the government imposes at other schools...
Washington also shoulders some blame for creating the impossible tangle of rules that govern overhead reimbursements. "It's important to remember that the same people who produced the tax law produced this horrible cost-recovery system," says Robert Zemsky, director of the Higher Education Research Program at the University of Pennsylvania. Even those schools that are determined to redeem allowable expenses say it is too complicated and time consuming to try to reclaim the full cost of doing research...
Administrators point out that private industry charges overhead rates well over 100%, making university-based projects a relative bargain. "We're not looking at a situation where people are getting rich," says former M.I.T. Provost John Deutch. "This is not like Michael Milken." Despite an overhead ^ rate of 77%, for example, Harvard Medical School in 1989 still had to finance 17% of research-related indirect costs out of its own pocket. The rate has since soared to 88%, and Harvard Medical is now asking government negotiators to agree to an even more mind-boggling figure...