[HN Gopher] The Economics of Duke University
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The Economics of Duke University
Author : paulpauper
Score : 42 points
Date : 2025-12-31 17:11 UTC (5 hours ago)
(HTM) web link (dontaylor13.substack.com)
(TXT) w3m dump (dontaylor13.substack.com)
| djoldman wrote:
| "Grants and contracts revenue represents the largest component of
| University revenue ($1.5 billion and 38%)."[0]
|
| Indeed. Many large US universities are more accurately labeled as
| research centers with schools attached.
|
| Because those grants are extremely restricted in what they can
| pay for, it's not quite accurate to include them in anything like
| an "available operating revenue" number.
|
| [0]https://resources.finance.duke.edu/resources/docs/Financial_..
| .
| SoftTalker wrote:
| Yes, grant money must be spent according to the approved budget
| plan for the grant. But Duke is also one of the "elite" schools
| that charge over 60% "overhead" on federal research grants.
| conception wrote:
| Most federal grants offer that level of overhead, or did. And
| not sure why overhead is in quotes. You can't charge
| electricity or HR to directs.
| SoftTalker wrote:
| Duke's overhead rate is (was) among the highest. Average
| for all universities is 28%.
|
| https://www.forbes.com/sites/georgecalhoun/2025/02/26/unive
| r...
| estearum wrote:
| Unsurprisingly it appears the universities with the most
| advanced facilities/equipment and are therefore able to
| conduct the most advanced research have the highest
| overhead rates.
| bpt3 wrote:
| I would love to see a breakdown of what overhead is going
| to pay for that "most advanced facilities/equipment" and
| what is paying for the assistant to the assistant vice
| provost to hire a new assistant.
|
| As someone who interacts with R1 research institutions as
| an adjunct and a prime contractor hiring professors as
| subs, they are far from efficient (like any large
| organization). My issue is that the people who are
| producing the actual value are paid and treated pretty
| poorly generally, and treated as cattle specifically by
| people whose contributions to anything of substance are
| extremely unclear but are quite well paid.
| estearum wrote:
| Agreed, totally a discussion worth having there. But you
| kinda point to my assumption on this: "like any large
| organization."
|
| I'm doubtful that the organizations at the top end of the
| list are 4x more bureaucratically bloated than those at
| the bottom end of it.
|
| I'm highly confident that much more sophisticated
| research has much higher indirect cost, because a
| defining characteristic of "sophisticated research" is
| that it entails exquisite facilities and equipment that
| cannot possibly be paid for under individual studies.
|
| Another thing I'm confident of is that Harvard et al have
| much more talented negotiators than the smaller schools,
| and I'm sure that plays a role. I would be surprised if
| it explains the bulk of the discrepancy.
| bpt3 wrote:
| It really makes no sense for overhead to be calculated at
| the university level, but it sounds like that's how it is
| done?
|
| Sophisticated research into particle physics, material
| science, and (for the last several years) AI does come
| with significant overhead costs for opex. Sophisticated
| research into most of computer science, mathematics, and
| other theoretical scientific disciplines does not, let
| alone humanities research.
|
| I think a large portion of the difference in overhead
| rates is due to the last item you are confident of in
| your list (i.e. Duke can tell NIH "if you want our world
| class researchers to work on this problem, here are our
| rates", and some random school cannot).
| estearum wrote:
| Yeah I suspect the university level determination is just
| that negotiating it study by study would be too
| burdensome?
| bpt3 wrote:
| I would think that calculating rates for a department
| would be more reasonable, or maybe have a few models to
| choose from could also make sense.
|
| What doesn't make sense to me is to apply the same
| overhead burden to a theoretical CS or math research
| effort where someone basically just needs commodity IT
| resources and an office and one that requires significant
| time using a particle accelerator.
| jltsiren wrote:
| The 28% claim is wrong. It seems to be based on a common
| misunderstanding of how overhead rates are calculated.
|
| In the supplementary table cited as the source, 72.1% of
| the total costs were awarded as direct costs and 27.9% as
| indirect costs (NIH, around 2020). That means an average
| overhead rate of 38.7% over all grants. Because some
| grants (such as equipment grants) have lower overhead
| rates, the average over grants with a normal overhead
| rate is higher.
|
| At my (unexceptional public R1) university, the latest
| negotiated rates are 56.5% for on-campus research and 26%
| for off-campus research. The latter is lower, because
| many expenses that are normally covered by indirect costs
| become direct costs in off-campus research.
| djoldman wrote:
| Are they not a maximum of 15% now after the
| administration's actions?
| bpt3 wrote:
| I was going to check this, so thanks for doing that work.
|
| There are at least 3 ways I'm aware of to calculate
| overhead rates, so I suspected people were comparing
| oranges to apples in some places.
| bbminner wrote:
| I'd be curious to know the breakdown of "wages and benefits"
| between academics, teachers and administrative staff. I've heard
| that admin takes up a huge fraction of the cost. How large can it
| be?
| JadeNB wrote:
| What distinction do you draw between academics and teachers?
| Those are usually overlapping roles.
|
| According to https://publicaffairs.vpcomm.umich.edu/key-
| issues/compensati... (just an example of a public university),
| it's $376K to executives, $481K to deans, and $152.7K to
| faculty in FY2013. Deans usually count as ~50% admin, so we
| could call that $376K + $240.5K = $616.5K to admin and $240.5K
| + $152.7K = $393.2K to faculty, roughly a 3:2 ratio.
| nathan_compton wrote:
| I'm an academic and its difficult for me to imagine what the
| fuck deans do that is worth ~3-4 times as much as the people
| actually teaching and doing research. Fire them into outer
| space, I say.
| JadeNB wrote:
| > I'm an academic and its difficult for me to imagine what
| the fuck deans do that is worth ~3-4 times as much as the
| people actually teaching and doing research. Fire them into
| outer space, I say.
|
| I'm also an academic. To me, the primary role of a dean is
| to insulate me as much as possible from upper admin. I've
| had deans who are good at this job, and those who either
| aren't good at it, or think that their job is something
| else. The ones who are good at what I think their job is
| ... I'm not sure I'd want to see them get 3-4x my pay, but
| I'm definitely willing to pay a premium to have someone
| else deal with upper admin.
| darth_avocado wrote:
| So it's a management layer created to help protect people
| who actually provide value from the OTHER management
| layer. Sounds like a made up problem to me, and also an
| example of what everyone complains about when it comes to
| higher education: too much admin pushing costs higher.
| eigen wrote:
| I mean this is an issue in private industry as far as
| I've seen as well. as a company grows layers of middle
| management are added to translate and implement policies
| from other management layers
| analog31 wrote:
| My relative is an administrator. One of the things he does
| is to manually process the flood of requests to override
| this or that policy because the system for enforcing the
| complex course selection and graduation requirements (e.g.,
| prerequisites etc) doesn't work perfectly. The other is to
| adjust those requirements on a real time basis to comply
| with this or that complex, contradictory, and unclear
| mandates handed down from above (such as getting rid of all
| traces of wokeness).
|
| Pay him his professor salary, and he'd never have stepped
| up to the role.
|
| "All complex systems operate in failure mode 100% of the
| time." What this means is that systems operate with some of
| their automatic controls bypassed, and with those processes
| being carried out manually. The Gimli Glider took off with
| two broken fuel gauges.
|
| My thought about bureaucracy is that you can automate
| complex human processes only to a certain point, and then
| the system needs some manual override capability, and
| possibly human interfaces, to work. This is what
| bureaucrats do. The reason why its seems chaotic and
| inefficient is that the easy stuff has been automated away,
| leaving only the hard stuff.
|
| I can't vouch for every bureaucratic process, and
| bureaucrat, being optimally efficient or necessary. But in
| the past few months, I've observed the hard lesson of what
| happens when you think you can deal with bureaucracies that
| you think are wasteful by taking a chainsaw to them. I
| don't believe in that approach any more, even for dealing
| with systems that I hate.
| analog31 wrote:
| "Academic" is kind of a broad brush. A professor and a
| teacher are both academics. One difference is tenure and
| research. A professor is eligible for tenure, and expected to
| do research or scholarship. They can train grad students.
|
| In contrast, most undergraduate teaching is done by
| "adjuncts" for whom the job is essentially gig work.
| Moreover, professors are considered "faculty" and adjuncts
| "staff," making it confusing to figure out how many employees
| of a university are engaged in teaching versus doing other
| things. For instance a faculty-to-staff ratio would be
| misleading.
|
| Disclosure: I was an "adjunct" many years ago.
| darth_avocado wrote:
| If you're not directly teaching or doing research, imo
| you're an admin or "staff". You need to look at what people
| actually do.
| bpt3 wrote:
| In my experience, adjuncts are not staff. They (we) are not
| considered faculty either at most institutions, but are a
| separate category of their own.
|
| Adjuncts are basically contract labor who in general
| produce much more revenue than they cost.
| bpt3 wrote:
| From https://dukechronicle.com/article/duke-university-
| facility-a...:
|
| > Duke has a F&A rate of 61.5% with the NIH, which means that
| for every dollar provided to a Duke faculty member conducting
| research, an additional 61.5 cents is given to the University
| to compensate for its F&A costs.
|
| This is not an uncommon overhead rate for a large university,
| and is competitive with overhead rates at the largest
| government contractors. That doesn't mean it's entirely
| reasonable or a sign of an efficient operation.
| fuzzfactor wrote:
| From the comments:
|
| >The number of staff and non-tenure track faculty has ballooned
| dramatically since I arrived at Rice in 2004. I agree with you,
| that from what I've read elsewhere, it's a common phenomenon at
| well-resourced institutions.
|
| What I've seen at a number of universities are opportunities to
| get hired on to things like full-time maintenance staff with
| better pay, job security, and work-life-balance compared to
| actual PhDs.
|
| And maybe more likely to be a decades-long career at the same
| institution, compared to recognized scholars.
|
| I couldn't help but notice this about ten years ago, and UH looks
| like it is on track too.
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