Economic downturn will impact research in different ways

The widespread, global nature of the recession, officially in progress as of Monday, has left researchers concerned about already-scarce federal funding. And the administration now has to figure out how to allocate the University of Minnesota’s limited funding to bridge researchers through impending tough times.

Though the effect of the current economic crisis on federal research funding will be delayed in comparison to other funding sources like business and industry, Vice President for Research Tim Mulcahy said he expects the trend of tight government funding to continue in the near future.

A more immediate effect will come from industry sponsors, charitable foundations like the American Cancer Society and state institutions like the Department of Natural Resources , he said.

As businesses look for ways to cut costs, Mulcahy said he’s concerned many of them will be cutting back on research investments, at least for now.

Dick Sommerstad , director of the Academic and Corporate Relations Center , is already seeing the impact. Even as he finds increased University interest in industry collaboration, business interest in sponsoring research has slowed, and it’s taking them longer to commit to University research.

Bob Lewis , director of technology transfer at IPrime , a University consortium in which industry members sponsor research, said they started to see some members not renewing around September.

From 45 members in August, membership is down by three or four, he said. Still, he said they’re talking to other companies about joining. Those that stay in and see the long-term picture will get the biggest benefit, he said.

“This is a very successful center,” Lewis said, “one that is used as a model for other centers — it’s just getting harder now, given the financial situation we’re in.”

Mulcahy said he expects the University will have to redirect some of its own funding away from research to do things like defray tuition.

At the same time, he said he does expect more pressure on the University to bridge researchers through funding droughts.

That means the University may have to put off developing new research programs and buying new equipment, and instead focus on maintaining what it has.

Also, the University will have to be especially critical about cutting programs that don’t measure up, Mulcahy said.

Though the University hasn’t decided on specifics, Mulcahy said it’s working on a plan for re-appropriating and postponing research program funding, which will depend on the state’s budget.

“A bureaucratic step”

The University’s decisions about how to deal with the economic crisis are already affecting researchers through a hiring pause. The pause applies even to externally funded research personnel, Huber Warner , College of Biological Sciences associate dean for research, said.

The hiring pause is very difficult, Mark Paller , Academic Health Center assistant vice president for research, said. If a researcher needs a certain number of personnel to do the research they’ve gotten a grant for, “you can’t not rehire those positions when there is turnover,” he said.

The administration anticipates approving hires fairly routinely, Warner said, “nonetheless, it adds a bureaucratic step that wasn’t there before.”

Federal funding

On the federal front, despite legislators’ expressed interest in research funding in recent years, it’s been increasing only incrementally over the past four — and it’s actually decreased in terms of spending power, since it hasn’t kept pace with increased research costs and inflation.

The trend continued this September when Congress left funding for most agencies at 2008 levels, with a budget that will fund the government through February. Those agencies include research funders like the National Science Foundation , National Institutes of Health and Department of Energy .

The Department of Defense , which funds basic research, was an exception with a 13 percent increase.

A prolonged economic downturn will further affect federal funding, Mulcahy said. If the government is using its discretionary budget for economic stimulus packages or buyouts, that means less research money. Those effects won’t be seen for some time, though.

Because federal funding comprises such a large portion of research funding, the effects would be profound.

In 2007, 71 percent of research funding at the University came from federal agencies like NIH and NSF.

Decreased federal research funding, when it does occur, has both immediate and delayed effects on researchers.

For example, as soon as an NIH budget is determined, the dollar amounts for grants people are applying for get reduced, Paller said.

The longer term effect, he said, is a decrease in the total number of grants available, which takes a year or two to feel.

After Congress’ move in September, the NIH told researchers it would temporarily withhold 10 percent of the funds promised for the year, Paller said.

A permanent 10 percent decrease in the NIH budget “would be disastrous,” he said.

It’s not only the magnitude of federal funding that makes decreases profound. It’s also the fact that federal research grants include indirect operating costs for things like buildings, electricity, secretaries and libraries.

That means decreased federal funding “is essentially a double whammy,” Mostafa Kaveh , Institute of Technology associate dean for research and planning , said.

Federal grants also help new faculty get “jump started on their research,” he added, so decreased funding makes it tough to not only pay the bills, but also to hire new faculty.

Though funding downturns are nothing new to Kaveh, he said what’s different this time is the global nature of the financial stress and the way it crosses so many sectors.

Lobbying for funding

Channing Riggs , the University’s federal relations director , said she’s hopeful the new budget year will bring appropriation of research funding through the AmericaCOMPETES act, which would make “real increases” in federal research funding — not the 1 and 2 percent increases of the past several years.

She’s looking to get research money in other places, like stimulus packages, but she’s also counseling caution to researchers with ideas for new programs.

A biofuels program is one example of a project on hold, Warner said.

A number of University researchers are working on biofuels, he said, and they’d like to put them all in one building and get a collaboration going.

But the money isn’t there, so for now, biofuels research stays at the “one-scientist, one-lab level,” he said.