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CHAPTER VI CENTRAL CONTROL OF RESEARCH IN THE UNIVERSITY OF CHICAGO GENERAL ORGANIZATION OF THE UNIVERSITY In order to have some basis of comparison, the methods of financial control of research work in a University and the methods in an indus- trial laboratory have been studied. The University of Chicago has been selected as an illustration of a great university research center. In general the same order of presentation will be followed as in the preceding sections devoted to state government. The University of Chicago is well known as an institution devoted to the prosecution of research in many fields. For the purpose of this study it has the further merit of possessing a private foundation and of being entirely free from control by any public authorities. The governing body is a Board of Trustees composed of twenty-five mem- bers, and including the President. The University is organized for graduate instruction and research into a number of schools, including The Ogden School of Science, The Graduate School of Arts and Litera- ture, The Law School, The School of Education, The School of Com- merce and Administration, The School of Social Service Administra- tion, The Medical School and The Divinity School. Within some of these schools there are smaller units known as Faculties, organized on the basis of the special fields of knowledge. The more important research departments are, in the natural sciences, Mathematics, As- tronomy, Physics, Chemistry, Botany, Zoology, Anatomy, Physiology, Physiological Chemistry, Pathology, Hygiene and Bacteriology, Geol- ogy and Geography; in the social sciences, Psychology, History, Soci- ology, Political Economy and Political Science; in the language group, Comparative Philology, Romance Languages, and German. Attention will be given in this report primarily to the natural sciences and to certain special work of the social sciences. The University is, of course, also a teaching institution, and the research and teaching activities are so intertwined as not to be readily separable. No accounts segregating research expenditures are kept, but it is possible nevertheless to describe with sufficient accuracy the methods of financial control. On the administrative side, the University is organized in some detail. The President is the chief administrative officer, assisted by two Vice-Presidents, one of whom is concerned chiefly with general financial problems, the other with general educational problems and i04
IN STATE GOVERNMENTS the formulation of the University policy. sideration of the University budget. 105 This policy involves con Educational administration is handled by a number of Deans and Boards. Business administration is handled principally by the Uni- versity Auditor, the Business Manager, the Purchasing Agent, the Press, and a number of committees, including especially the Committee on Expenditures, which consists of the President of the University, the President and Secretary of the Board of Trustees, the Business Man- ager and the Auditor. As will appear in the description of the func- tions of this committee, it occupies a position analogous to that held in the state governments by the director of finance. The following diagram, published by the University in 1922, gives a visual presentation of the general plan of organization. The only important change that has occurred has been the addition of two Vice-Presidents as already noted. APPOINTMENTS Faculty appointments in the University usually originate with the department. It conducts preliminary investigations and nominates the person found to be best qualified. Formal recommendation is made to the President, giving the academic degrees, teaching experi- ence, publications, qualities as investigator, teacher, and administrator, and a statement of the personality of the candidate. In the case of permanent appointments the recommendation is considered by the President; in the case of appointments for a term of years, by one of the Vice-Presidents. In either case, preliminary consideration is given by the four major Deans. Their approval, while formally necessary, usually is granted on the recommendation of the department. ACCOUNTING CONTROL All expenditures for any purpose pass through the hands of the Auditor and must be approved by him before payment is authorized. The Auditor inquires with regard to each voucher or requisition, (1) is there an appropriation for the purpose with an unencumbered bal- ance adequate to meet the proposed charge, (2) is the voucher- or claim charged against the correct appropriation? The Auditor acts on the general principle that the wisdom or expediency of a particular expenditure within the limits of an appropriation is to be determined by the department concerned. An expenditure which reduced the available balance to a point which gave promise of a deficit might, however, be questioned; and an expenditure which incurred a deficit would not be allowed unless by authorization of the Committee on Expenditures.
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IN STATE GOVERNMENTS BUDGET CONTROL 107 The estimates of expenditure are made in detail by each department and school. These estimates include as the basic figure the appro- priation for the preceding fiscal year, and any increases authorized by action of the Board of Trustees. The departments divide their estimates over and above the basic figure into two groups, one includ- ing necessary expenditures, the other desirable expenditures. These estimates go first to the Vice-President, who receives a state- ment of anticipated revenue frown the Auditor, and in the light of this statement reviews in detail the estimates of the departments and schools. Broad questions of policy are settled by the President who in turn gives the estimates careful consideration. He has, of course, authority to amend the estimates as seems necessary. No formal machinery for consultation with departments has developed, although it is natural that the President should confer with members of the faculty concerning any point on which he is not clear. The estimates as revised by the President are presented to the Board of Trustees for their consideration and approval. The Board acts as the counterpart of the state legislature. No arrangements exist for contact between the Board of Trustees and the various departments and schools. The appropriation is made annually. Three times during the year, however, the rate of expenditure is compared with the actual revenue, and adjustments are made by allowing further expenditures in case of a revenue surplus, or by holding expenditures to a minimum if a deficit is anticipated. By a conservative appropriation policy, the University has frequently been able to make adjustments in the nature of additional grants during the year. After an appropriation is made, the departments are not required to apportion their expenses nor to make estimates of expenditures for monthly or quarterly periods. The rate of expenditure in some cases is very uneven. On the other hand, the expenditures for salaries, which are by far the largest single item, are on a contractual basis and are paid in equal monthly installments. The general operation of the budget plan is given in the following excerpt from the Report of the Auditor for 1916-1917: "The receipts and expenditures of the University for operation are cared for by the budget system of accounting. About eight months before the begin- ning of the University's fiscal year a careful estimate of the receipts is made, and the total amount thus shown, less a sum reserved for contingencies, is appropriated among the several departments, with the endeavor to supply their needs to as great a degree as possible. In thus dividing the receipts among the several departments, the income of each school or division of the University
108 FINANCIAL CONTROL OF RESEARCH from the funds which have been given to the University for its benefit is appor- tioned first to that division, and if that be found inadequate an addition is made from the general funds of the University. "In the course of the year, statements based upon a study of the accounts of the budget ledger are made for the purpose of 'ascertaining whether the estimates of income are being realized and whether the expenditures are propor- tionately within the amount of the appropriations. In this ledger an account is opened with each appropriation of the budget. The account gives the amount of the appropriation, and to it are posted the obligations and commitments for expenses as they are authorized, as well as the payments when they are actually made. Thus, before any obligation is incurred, it is possible to determine whether there is sufficient amount left in the appropriation to pay it when it is discharged. Should it appear from the statements which are made from time to time that there was a falling off in receipts, steps would be taken to see that the expenditures were reduced wherever possible to meet the reduced receipts. On the other hand, if it were found that the receipts were increasing and there were pressing and acknowledged needs, the University could make additional appropriations from the increased receipts to satisfy the needs." ITEMIZATION The University budget is itemized in so far as salaries are concerned. The necessity for arranging in advance for the courses to be offered by a department and for the research to be carried on makes such itemization both desirable and feasible. A university is not liable to so great a degree as is a government department to rapid fluc- tuations in the amount of work it is called upon to do. The appro- priation for supplies and materials and for other expense is usually a lump-sum figure and may be used, within the general understanding of the character of the appropriation, as desired by the department. These expenditures are, however, subject to the supervision of the Auditor. There is a university contingent fund controlled by the Board of Trustees; but there are no departmental contingency funds. CURRENT REVIEW OF VOUCHERS All expenditures in theory are subject to review before final authori- zation by the Committee on Expenditures, consisting of the President of the University, the President and the Secretary of the Board of Trustees, the Business Manager and the Auditor. In practice the great bulk of expenditures, raising no question of propriety or of expediency, are approved by the Secretary of the Board of Trustees and the Auditor acting for the Board. Expenditures which raise questions of proper authority or of expedi- ency, are brought before the Committee on Expenditures in which is vested, in edect, complete power to decide whether the expenditure shall or shall not be allowed. Such questions might arise in the fol
IN STATE GOVERNMENTS 109 lowering types of cases: (1) cases in which a deficit is threatened or has actually been incurred; (2) cases in which the expenditure appears not to fall within the appropriation intended to be used; (3) cases in which the expenditure seems to be inexpedient, either because excessive for the purpose proposed, or because the purpose is thought relatively unimportant. The necessity for the Committee on Expenditures to make decisions of this sort is infrequent because of the common understanding and loyal observance of the proper limits of departmental expense. Yet this function is called into play from time to time and constitutes an essential element in the system of financial control. It is, of course, authoritative in view of the official position of those who compose the committee. It is the counterpart in the University of the power of the Illinois Director of Finance to question the wisdom or expediency of a given expenditure. It should be observed, however, that on the one hand there is likely to exist a much closer harmony of views between the University Committee on Expenditures and the University departments than on the other hand is normally to be-expected between a state director of finance and the directors of other state departments. The sense of unity which prevails in the University, the security of tenure, and the absence of political influences and interests all suffice to create a substantially different atmosphere. But the underlying theory of control seems to be much the same. CENTRALIZED PURCHASING Since 1913 the University has had a central purchasing system which handles practically all University purchases except food.43 When any department needs materials, the Head of the Department sends to the Purchasing Agent a requisition in triplicate. The Pur- chasing Agent fills in the estimated amount, certifies all three copies, and sends them to the Committee on Expenditures. The Purchasing Agent, acting for the Committee on Expenditures, personally investigates all requests for materials which are not strictly routine, and endorses on the requisition a statement concerning the necessity or desirability of the proposed expense. If the Committee on Expenditures should for any reason refuse to approve a requisition, the Department Head could, if he desired, present his case to the Committee, either in writing or in person. In theory, all requisitions are held until the weekly meeting of the Committee. Actually, the great bulk of requisitions are passed by the ~ This statement is taken from a volume written by the University Purchasing Agent, Mr. John C. Dinsmore, Purchasing Principles and Practices, pp. 98 if.
110 FINANCIAL CONTROL OF RESEARCH Auditor and the Secretary of the Board of Trustees acting for the Committee on Expenditures. When a given requisition has been approved by the Committee on Expenditures each of the three copies is numbered, and the estimated amount of the requisition is entered as a memorandum charge against the funds which have been set aside for the use of that particular department. In this way the departmental appropriation is mortgaged for the estimated amount of the purchase, or other expenditure, before the expense is incurred. The original copy of the requisition is retained by the Auditor, the duplicate goes to the Purchasing Agent as his authority to incur the expense, and the triplicate copy goes to the Department Head. Theoretically, the receipt of the duplicate copy of the requisition by the Purchasing Agent is equivalent to the notification that he has at his disposal the amount of money specified for the use of that par- ticular department, but for the purpose specified, and for no other. Any unused balances must be cancelled. If the Purchasing Agent receives an approved requisition authorizing him :to buy a new steam sterilizer for $300, and he succeeds in purchasing one for $250 he cannot use the $50 saved for the purchase of a media rack. The other $50 must be cancelled, and the requisition must be included in his next monthly statement to the Auditor of requisitions to be cancelled. As a matter of fact, all routine purchases are covered by blanket requisitions, drawn for the purchase of "miscellaneous items" up to a given amount. All petty cash disbursements are covered by special requisitions, as are all materials drawn from the various store-rooms. After the Purchasing Agent has received the approved requisition, the purchasing routine is not very different from that in any business concern, with the single exception that, when a purchase order is issued against a requisition, the number of the purchase order is noted on the face of the requisition, together with the amount of the purchase. In this way the appropriation is mortgaged by the requisition when the Committee authorizes the purchase, and the requisition is mortgaged when the purchase order is issued. Thus it is impossible for any department to spend more than the sum set aside for its requirements. When materials are purchased for stock, they are purchased without the specific approval of the Committee on Expenditures, and the amounts and the times of purchase are controlled by the Purchasing Agent in consultation with the storekeepers. When this material is drawn out by the various departments, it at once becomes a charge against a requisition. The only limitation on purchases for stock is the total amount of the investment, which is fixed by the Board of Trustees.
IN STATE GOVERNMENT'S 111 Inquiry among the departments requiring purchase of scientific apparatus or materials indicates that, while they have had occasional difficulties in securing the quality of goods which was necessary, they now indicate the brand they desire, or the firm from which they wish the purchase to be made, and thus obviate any difficulty. A cordial desire to cooperate is found on both sides, and central purchasing is approved by all concerned. PRINTING AND PUBLICATION No department has a printing and publication fund supported from the general University funds. All printing and publication is done through the University Press, subject to the approval of the Committee on Expenditures. The departments do not require as large amounts of printing as are required by the agencies of state government. The results of most of their research experiments are reported and published in the many professional journals of the United States. Other research projects are published by special grants from various endowments. Still others are published by virtue of cooperative agreement with various organi- zations on whose behalf the research was undertaken. The University makes a direct contribution to the publication of the writings of its members by granting subsidies to a number of professional journals which otherwise would be unable to continue publication. Among these journals are the Astrophysical Journal; Botanical Gazette; Journal of Geology; Classical Philology; Modern Philology; American Journal of Semitic Languages and Literature; American Journal of Sociology; American Journal of Political Econ- omy; and the Journal of Religion. The total subsidy for these journals for 1921-22 was $23,046. These sums are not handled departmentally, however, but as a part of the program of the university. The financial policy of the journals comes under the same scrutiny as any other expenditure, and is subject to the supervision of the Committee on Expenditures. Monographs and books written by members of the University are handled by the Press on a commercial basis, exactly as would be done by any other publishing house. Doctoral dissertations were formerly required to be published at the cost of the author, but at the present time the University bears the cost of publication of an annual volume carrying summaries of these contributions. Special publications for which a university appropriation is re- quested, such as the recent report of the Commission on the future Policy of the University Libraries, are considered by the Committee on Expenditures. The-determination of the number of volumes to be
112 FINANCIAL CONTROL OF RESEARCH printed in an edition, the weight and firmness of paper, the make-up of the book are determined in all cases of University publication first by the Committee on the Press, and are then approved by the Com mittee on Expenditures. The individual department or school, therefore, has no authority to order printing, except as small amounts may be charged to the departmental funds held for miscellaneous supplies. All printing is handled through the Committee on Expenditures and the Press Com mittee. THE CONTROL OF TRAVEL Allowances for travel are controlled by the President of the Uni- versity. The departments as such have no travel funds. Requests for travel are made to the President who grants such allowances as are desirable in view of the purpose for which the money is requested. No restrictions are put upon the amount of per diem expense, although naturally members of the Faculties are expected to use the money of the University with care. A report is made to the Auditor showing expenses incurred on travel allowed by the President. There are, of course, no special restrictions on travel outside of the state. The University does not make it a practice to pay expenses of its members to attend professional conventions. Some universities, however, main- tain limited funds for that purpose. SUMMARY The main outlines of central control of expenditures in the Uni- versity of Chicago bear a striking resemblance to the system found in Illinois and in Ohio. In the University is to be found, in addition to the audit of expenditures, central budget-making, authoritative review of proposals for expenditure, centralized purchasing, centralized printing, a centrally controlled contingent fund, and central control of expenditures for travel. In order to avoid deficits and ensure the wisest possible use of its funds the University has developed an admin- istrative control which is potentially as complete as that met with in state government. Yet, as has already been noted, the conditions under which this control operates are in many ways different from the conditions fre- quently found in public affairs. The University of Chicago has no formal duties of a public character to perform. It has no connection with the course of politics. Its general purpose is clearly defined in terms which command universal agreement. Its appointments are made solely on the basis of capacity and merit and are permanent in so far as the higher appointments are concerned. The administrative
11V STATE GOVERNMENTS 113 officers are in thorough sympathy with the desires of the research departments and seek to afford the widest possible opportunity for the research workers to accomplish their tasks. Physically the University is a closely knit unit. Conference between its different officers is easy and natural as compared with the difficulties which surround confer- ence between state officials scattered over a wide area and seldom coming in personal contact with each other. Personal friendships rapidly develop, and in turn lead to a better understanding of the relative duties of administrative and educational officers. These conditions allow a system of financial control to operate with much greater success in the one case than in the other, and the writer does not wish to be understood as asserting that because the University plan operates successfully within the confines of the Quadrangles, therefore it is justified in the wider range of activities of a state gov- ernment. It remains, however, of interest and of some significance that the two systems resemble each other to such an extent as the preceding pages reveal.
