Since Fall Quarter, the Medical School has been directly receiving the revenue it brings in and paying for the costs of running the school. In the past, NU received the money first and then distributed it back to the Medical School, said David Browdy, director of strategic planning and management for the Medical School, which is on NU’s Chicago Campus.
This new process gives the Medical School more control over its money, allowing Medical School administrators – rather than NU administrators – to decide where to allocate funds.
“We’re putting the resources and responsibility for resources where the decisions are made,” Browdy said. “The person who makes the decision has the consequences at his level.”
Eugene Sunshine, NU’s senior vice president for business and finance, said NU has a similar financial relationship with the Kellogg Graduate School of Management and might adopt the same with the Law School.
He said he hopes the new system will push Medical School administrators and faculty to raise more grant money and to use their resources more efficiently.
“We are creating a set of incentives that tends to make schools more productive and more efficient in the use of their funds,” he said. “If you have the opportunity to keep income or revenue that you earn, you have an incentive to get more.”
Although Sunshine and Browdy want the Medical School to increase its grant money, they said professors have hardly been sitting on their hands the past 10 years. Since 1991, Medical School research grants have grown 14 percent annually, well above NU’s overall 8 percent rate.
Browdy said the new agreement between the Medical School and NU mainly changes how both schools handle money from tuition and research grants.
Under the old agreement, NU received medical students’ tuition and paid the departments within the Medical School lump sums for faculty payroll and supplies. Now, the Medical School keeps the tuition and pays directly for the teaching costs and supplies.
Browdy also said the agreement allows the Medical School to receive all of its federal grant money directly, rather than some of it passing through NU first.
Grant money is split into direct costs, which are applied directly to research, and indirect costs, which fund research-related expenses such as administrative and building overhead costs.
Although Medical School professors always have directly received the grant money to cover their research, the new policy allows the Medical School to receive the indirect grant money as well.
In 1999 the grant money for indirect costs totaled about $19 million. Browdy said the Medical School now will split that money to fund research and administrative costs.
The Medical School departments receiving the grants will get 60 percent of the money. NU will get 25 percent of the money for operating costs, such as maintaining University Police. The remaining money will pay for the Medical School dean’s office and for special projects chosen by the dean.
Browdy said the change allows departments that focus on teaching to get tuition money and departments that focus on research to get grant money.
“A lump sum is being replaced with a series of allocations based on their mission,” Browdy said. “We’re paying them for what they’re doing.”
Medical School Prof. Peter Gann said the new system will reward professors who received grants because their departments will have more access to the money.
“There will be more independence and entrepreneurship,” he said. “You’re going to go out and get as much money as you want.”
Sunshine said that although the new financial system is a large change for NU, it is not a “radical” idea. He said other major universities, including Johns Hopkins University, where he worked for 10 years, have the same financial relationships with their medical schools.
