Study Calls for Using Public University Research to Boost Economy

Posted on March 4, 2004

A new study that urges the state to work harder to use its public research universities for the state’s economic advantage was reviewed today by several leading legislators.

Members of the N.C. General Assembly’s Joint Select Committee on Economic Growth and Development received the briefing on the study by the Huron Consulting Group and The Washington Advisory Group as part of a session focusing on research as an economic engine. The study examined national and state trends, assessed the strategic significance of research universities and endorsed the practice of permitting campuses to retain 100 percent of their overhead receipts – reimbursements for the cost of conducting research paid by grant-makers, such as the federal government.

The study also recommended policy changes to enhance North Carolina’s competitive position in areas including personnel, purchasing and construction practices. The study was supported by FedEx, GlaxoSmithKline and Winston Hotels Inc.

“Our study aims to provide guidance as North Carolina considers how best to protect the impressive investments the taxpayers already have made in public university research,” said Jim Roth, group managing director for Huron’s higher education and health-care consulting division. “The support from Gov. Easley and the General Assembly for the retention of overhead receipts is directly linked to the recent progress that [UNC] and N.C. State have made in attracting research grants and improving their research capacity. This decision has proven to be a wise policy move that is in the best interests of the North Carolina economy.”

Led largely by UNC, the 16-campus UNC System annually pumps millions of federal and private research dollars into the state’s economy. Those grants, from sources including the National Institutes of Health and the National Science Foundation, support efforts to cure diseases, improve technology, bring innovation to industries, such as agriculture and biotechnology, and spin off new businesses.

For many years, the state and the UNC System General Administration took 35 percent of these funds. This amount was reduced over several years until, starting in 1998, all of the funds connected to UNC remained at Carolina. In each year since 1998, UNC’s faculty has set records in the amount of research funding it has brought to Chapel Hill. The campus now attracts more than 57 percent of the research funding that comes to the 16-campus UNC System.

According to the Huron study, research funding at UNC and N.C. State generated more than $930 million in spending for the state’s economy. Those funds also supported more than 22,000 jobs across the state. For every dollar the faculty attract in research funding, $1.70 worth of spending occurs in the state, the study reported.

Budget forecasts generally predict federal research funding will level off. At the same time, competition among universities in other states that apply for those funds has become more intense.

“Among the universities’ greatest responsibilities is to translate the faculty’s research into new jobs, improved health and well-being for North Carolinians and a larger tax base for our state,” said Chancellor James Moeser. “Those are among the practical benefits that our faculty’s research brings to the taxpayers of North Carolina. We want to keep the pipeline of ideas and innovation strong.”

The Huron study focused on competitive issues facing UNC and N.C. State, but it concluded that other UNC campuses likely would benefit if its recommendations were carried out.

Other study recommendations included:

• UNC and N.C. State should re-examine their collaborative research relationship to look for more opportunities to attract research funding and conduct science. Both campuses should conduct a similar review with Duke University to maximize the impact of three top research campuses on the state’s economy.

• The General Assembly should widen the exemption of public research universities from the state personnel system. More autonomy would help to recruit top faculty and their research teams who can attract funding.

• The General Assembly should change state purchasing regulations so UNC and N.C. State could have the option to choose alternative vendors that offer lower prices, higher quality or better services.

• The General Assembly should ease restrictions on construction and leasing requirements for campus buildings that are built or purchased using nonstate funds, which include overhead receipts, private gifts and revenues generated by campus services.

• In exchange for delegating increased authority in business and facility processes, the General Assembly should expect performance reports at UNC and N.C. State to evaluate the effectiveness of campus business practices. Such evaluations should be based on corporate standards adapted for the campus environment.

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