Research spending outweighs revenue


Research spending outweighs revenue

The Australian
by Darragh O’Keeffe
16 November 2016

Key Takeaways:

  1. Research spending exceeds revenue: Universities allocate around 60% of their budgets to research, but research-related revenue accounts for only about 20% of their total income.
  2. Cross-subsidization from teaching revenues: The analysis reveals that research is subsidized by teaching revenues, indicating a need for transparent and full funding of research activities.
  3. Variation in research spending: Different universities show significant variations in their allocation of budgets to research, ranging from less than 40% to over 80%.
  4. Research-intensive universities spend more per publication: Research-intensive Group of Eight (Go8) universities spend approximately one-third more per research publication compared to teaching-focused institutions.
  5. Efficiency measurements: The study measures efficiency in terms of total dollars spent and academic time consumed, with ANU found to be the most productive research-intensive institution, and RMIT most efficient in teaching.

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Full Article:

“As little as 20 per cent of univer­sity revenue is linked to research activities yet institutions spend on average 60 per cent of their budgets on research.

Analysis on research income and expenditure suggests that ­research should be “fully and transparently” funded, given the “compelling evidence” of cross-subsidisation from teaching revenues.

In 2014, universities spent more than $380 million on research and activities associated with it out of a total expenditure of $635m, according to the analysis by Keith Houghton, a former dean of business at Australian National University and Amir Moradi [now a Research Associate of the Higher Education and Research Group]……………Their analysis……shows “very large amounts of university resources get consumed by research and activities associated with it, and rather less than you would think gets committed to teaching”, Professor Houghton said.

The research also highlights the variation in spending on research among individual universities, ranging from Federation University, which spent less than 40 per cent of its budget on research in 2014 to the ANU, which spent more than 80 per cent.

“Understandably, the Go8 universities spend proportionally more on research activities than the teaching-focused institutions,” Professor Houghton said.

The analysis produced similar results to another recent study from Griffith University adjunct researcher Nick Marsh, which found the research-intensive Group of Eight spends almost one third more per research publication than teaching intensives.

The new study analyses data for 37 universities from 2001 to 2014 to determine the costs of teaching and research and to measure efficiency in both.

It says the average cost of teaching was $10,600 a student while the average cost of research was more than $200,000 a publication. Total commonwealth student funding to universities ranges from around $11,000 for humanities to more than $24,000 for science students.

The new study measures efficiency in terms of total dollars spent and the amount of academic time consumed. In 2014, by both measures, ANU was found to be the most productive research-intensive institution and RMIT was most efficient in teaching.

“It is fascinating to look at the differences between the two measures,” Professor Houghton said………

“The relative position on these two efficiency measures has implications for prioritising support. Some institutions appear to have capacity to enhance productivity of academic time as compared with peer institutions.” Professor Houghton said.

He said there were limitations to the work. “We do not control for research or teaching quality — and it is hard to obtain comprehensive comparable data on this.

“The production of research and teaching is an example of the joint costing problem well understood in accounting. Therefore, all we can do is estimate these costs by looking at costs correlated with measures of teaching and costs correlated with research ­activities,” he said.

There is growing anticipation that the federal government’s response to the Universities Accord review’s final report will come soon. Given this and the fact that the budget is less than a month away, it is timely to review one of the final report’s key insights.

Recently released analysis finds that one large Group of Eight university outperformed other public universities in its research and education productivity outcomes during the pandemic.

The joint and common cost problem arises where there are two or more outputs that arise from costs that are shared in the production of these outputs. In many situations, the ability to assign costs to these two or more outputs is not complex. But there are instances where it is highly complex. In these situations, there is a need to use advanced analytics to provide a valid and reliable estimate of costs.

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