Where Has All the Money Gone?

Harvard gets bad news from Uncle Sam

It was bicentennial celebration week at the Harvard Medical School, the third oldest and probably most prestigious in the country. Ten Nobel laureates, including the three newest prizewinners (see MEDICINE), came to speak in symposiums, and 75 representatives of medical colleges around the world traveled to Boston to pay tribute. Along with the accolades came an unwelcome rebuke: this week the Federal Government will announce that the medical school may have to pay back $1.7 million given it in research grants. After an audit of how the medical school spent $78 million in federal grant money in fiscal 1975, 1976 and 1977, the Department of Health and Human Services concluded that Harvard did not keep adequate records of salary costs for specific federal programs, and that it routinely used money from one grant to cover cost overruns for another project. Says Edward Parigian, the HHS regional audit director: "These are violations of regulations and good business acumen. Universities shouldn't consider federal funds a giveaway. They should have good accountability."

Did Harvard violate the public trust? Certainly not, answers Harvard's financial vice president, Thomas O'Brien, who claims that the medical school owes no more than $1,400. "The situation is based on the Government's misunderstanding of how universities function," he says. "It has reduced what once was a partnership to a purchaser-supplier relationship." Record-keeping practices are decentralized at Harvard, as they are in most academic institutions. Accounting is further complicated by the fact that most grants involve several departments.

Harvard's troubles are only the latest battle in a war between universities and the Government over the question of cost accountability. Faculty senates of more than 20 universities passed resolutions opposing Circular A21, a directive from the Office of Management and Budget that demands "effort reporting," the documentation of how teachers spend their time while receiving federal funds. Many researchers argue that they cannot assign precise percentages to the time they spend in the classroom, lab or office. Last March, Yale declined a $30,000 federal grant because its proposed recipient, Mathematics Professor Serge Lang, would not prepare or sign an effort report, although he would certify that the money had been properly spent.

Universities usually try to comply with A21, however, in order to receive some of the $2 billion in annual HHS grant money. Harvard Medical School, which received about half its $95 million budget for 1981-82 from the U.S., is not unusual in its dependence. Nor is it the only institution to be audited. Says Parigian: "All of your major schools that receive a substantial amount in federal grants--Yale, Harvard, the University of California complex, the University of Michigan and Johns Hopkins--need to make significant improvements in recording and controlling federal funds." Meanwhile, Harvard intends to continue its fight with HHS on how much money the medical school owes the Government. Maintains O'Brien: "The whole research effort of the country suffers when the public gets the impression that the universities have been ripping off federal funds.''

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