I will begin by describing a place that currently exists. It's an institution occupying 700 acres, well supported by the federal government, in a lovely sylvan setting. Dotted across the acres are 238 buildings, including major scientific facilities su pporting more than 1000 researchers and support staff. Many of the buildings overlook a golf course that provides recreational opportunities for the staff. Over the past 50 years, this place has developed a distinguished history of supplying the federal government and the nation with important technological advances, especially in the fields of aerospace engineering and physics. In recent years, it has received an infusion of funds from the federal government to develop new research facilities. To be sure, all has not been completely rosy. Like many of our nation's leading research universities, this complex needs more preventive maintenance, and its administrators have faced the challenge of meeting evolving environmental and safety standards. What is this place? Ann Arbor you might say? Austin, perhaps. Berkeley?

   None of the above. I'll give you a hint. This facility is located less than 10 miles from here and it's not in College Park. In just two years this venerable institution will close its doors forever. No lobbying will save it. Its demise is guaranteed.

   This particular research institution isn't a university—it's the Naval Surface Weapons Center in Montgomery County, Maryland. Its closure has been mandated by the Congressional Defense Base Realignment and Closure Commission, more affectionately known as BRAC.

   While I'm confident no major research university will share the Naval Surface Weapons Center's ultimate fate, the Center's demise—despite powerful lobbying efforts from influential members of Congress—demonstrably illustrates that fundamental change in federal support of research is no longer just talk. If any doubters remain, I invite them to walk the emptying streets of the Navy Research Center, as some from the University of Maryland recently did. It is a very sobering and disturbing stroll.

   Now lets travel the 3 or 4 miles from the Naval Surface Weapons Center to the University of Maryland at College Park. As we arrive on this campus, do we see overt signs of the impending crisis in federal funding for research? Amazingly, the answer is no! In fact, this year the university received approximately $150 million in competitively funded sponsored research, up a healthy 9% over the past year and a whopping 50% since 1990. The institution's federal research dollars are at an all time high and I suspect the same is true at many of the universities represented in the audience. This dichotomy: the closing of a major, highly-regarded federal laboratory within a few miles of a national research university with record levels of federal support makes my task today especially difficult. I feel like the person whose secretary has just told him the IRS auditor is on the telephone. You know bad things are about to happen, you just donšt know how bad they will be. Moreover, the present level of sponsored research at universities makes it difficult to get people focussed on the impending crisis.

   One thing is clear. At least until some time well into the next century, we have seen the "best of times" in federally sponsored research. While I'm not ready to predict we are about to experience "the worst of times," we are entering a period that will require—and I don't think this is being too dramatic—fundamental change at our major research universities.

   Why is this happening to us? A common response is that itšs the conservative revolution—symbolized by the Contract with America—that is forcing through a reduction in the size of government and, in particular, a decline in federal support for research. I don't believe this is a fair assessment. What we are now experiencing has been building for a much longer period of time and is rooted in something unsettling about American society. As pointed out in a recent report done by Clark Kerr, our present problems lie in the steady decline of our nation's per capita productivity. Throughout the 50's and 60's, the per capita productivity increased on average by 3% annually. During the 70's it fell to 2%. This past decade it dropped to 1%. At 3%, we double our standard of living every 25 years; at 2%, every 40 years; and at 1%, every 75 years. Moreover, as Kerr notes, the effects of the decline in per capita productivity since the 60's have been masked, until recently, by the near doubling of the proportion of women in the workforce and by turning the US from the world's greatest creditor to its greatest debtor nation. Both of these adjustments have now taken place. They will not be available to us in the future. Thus, without significant change in our level of per capita productivity, there simply will not be the funds available to support the nation's current level of federal appropriations. This condition has nothing to do with which political party happens to be in power. Both parties recognize that the budget must be cut, and both parties recognize that the magnitude of the cuts will be so large that essentially every federal program will feel the impact. The only real questions are the priorities in dividing up a smaller federal pie. On this point, there is plenty to debate.

   So what does the future hold for our research universities? This is difficult to predict for two reasons. First, as I indicated, many universities have not yet felt any real—that is to say...bottom line—fiscal impact from the anticipated cuts, although the impact on many individual researchers has already been severe. Second, the actual shape of future outlays of federal research support is hard to read, except in its broadest outlines. Moreover, whenever I'm asked to make predictions, I am reminded of a story told about Franklin Roosevelt.

   Early in the 1932 presidential campaign, Roosevelt gave a speech at Forbes Field in Pittsburgh. In this speech he laid out his point by point plan for bringing the nation out of the Depression. Four years later, when Roosevelt was running for reelection, the country was still in the Depression and the Republican candidate—Alf Landon—cited Roosevelt's Forbes Field speech in every address that he gave, accusing the President of having misled the public and having failed on his promises. Outraged, Roosevelt ordered his staff to book an engagement at that same Forbes Field and to get out that old speech so that he could go before the people and demonstrate—point by point—how he had done precisely what he said he would do. After reviewing the speech, Roosevelt's advisors came back and said, "Mr. President, we've canceled the trip to Forbes Field. And if anyone asks you about a speech there in 1932, deny that you ever gave it."

   With the understanding that I may "deny I ever said it," I will make a few observations. In the immediate future, we have the concern over the much-touted train wreck scenario. It is quite likely that the President and Congress will not be able to resolve their differences on next year's federal budget. This has happened before but a compromise has generally been reached after a few days. This year could be different—and in particular the negotiations more protracted—because the disagreements are drawn along such sharp philosophical lines. Apparently, OMB's contingency plan for shutting down the government includes suspension of payments to universities for research and other expenditures if the dispute lasts more than a few days. According to OMB—"research is not essential government work." The government does have a way of letting you know where you stand. At College Park, such an action would cost us over $300,000 a day. Many of these expenditures are for personnel and activities that, at least in the short run, would have to be supported through other means. If the stand-off lasted a week or more, we and many other universities would be facing an immediate fiscal crisis.

   The larger crisis, however, is some years further down the road. As Gerald Roschwalb points out, the shape of the budget recision is a funnel, with the most severe cuts reserved for the out years. And severe they will be. According to a recent report from AAAS, we can anticipate a 1/3 cut in government R&D spending by the year 2002. So, we at universities have what I guess we will come to think of as a brief grace period to begin absorbing some cuts soon and to prepare for a sea change down the road in the nature of the sponsored research we undertake and in the manner in which that research is conducted.

   Foremost on everyone's mind is what steps do we take now to minimize the impact of these cuts. The strategy emerging in Congress, as I understand it, would result in less severe cuts for basic research and in virtual decimation of support for applied research involving the private sector, including programs supporting university/industry collaboration. The assumption appears to be that, through tax cuts and deregulation, the private sector will have the resources to pick up much of the slack resulting from federal R&D cuts. Many observers believe this is unlikely to happen. Eric Bloch, former director of the National Science Foundation, recently predicted that this strategy will tilt R&D spending toward short-term corporate goals and do great harm to the science and technology infra-structure of the nation. In support of Bloch's and others' concerns is the fact that research and development expenditures in the US have already fallen to 2.6% of GNP, a figure almost 20% below that of Germany and Japan. It seems certain this gap will now widen.

   Thus an immediate question universities have to face is: do we reverse the trend of recent years and now place more emphasis on basic research or do we try to build stronger partnerships with the private sector in the hopes that the deregulation, tax-cut strategy will encourage industry to seek greater collaboration with universities? The simplistic answer is—pursue both strategies. But in a time of increasingly limited resources, this will not be easy to do.

   One suggested possibility is that, in an effort to spur their economies, states might increase their support of R&D research and, in particular, university/industry collaboration. Over the past several years, we have seen significant growth in state expenditures on these kinds of activities—almost 20% nationally from FY 1993 to FY 1994 alone. I hold out little hope, however, that anything like this rate of growth will continue. Quite the contrary, I believe that state-level investment in R&D faces a future not unlike that at the federal level. As the federal government moves to balance its budget, federal aid to the states will obviously decline. Most states already have constitutional requirements that prohibit deficit spending. They will be under enormous strain just to meet basic needs. As an example, the projections for next year's budget in Maryland calls for most agencies to receive a 0% increase with no allowance for inflation. Since the Governor and the General Assembly are apparently committed to a tax cut the following year, these state agencies will likely look back at their FY 1997 budget with envy. The situation in many other states is similar.

   Adding to the strain on state investment in higher education is the so called Tidal Wave II, which is about to hit our nation's colleges and universities. This refers to the influx of students as the grandchildren of World War II GIs enter college. In Maryland, for example, between now and the year 2002, we anticipate a 20% increase in college-bound high school graduates. Given these forces at play, I hold little hope that state governments can make any dent in the federal reductions in research support and, in particular, R&D expenditures supporting university/industry collaboration. Indeed, we should consider ourselves extremely fortunate if we can just hold onto the present level of investment.

   There is yet a further impact of federal reductions, at least in states like Maryland, California, Massachusetts, Alabama, and New York where there are large federal installations. Laboratory closings and the loss of federal jobs will have a significant impact on the economies of these states and, therefore, their ability to support public higher education. A study done by the University of Maryland's Economics Department, for example, estimates that there will be a loss of 60,000 jobs in the Washington, D.C. region from federal cuts already planned. A few weeks ago, there were high profile discussions about the possibility of closing Goddard Space Flight Center. Fortunately, this turned out to be more "sound and fury" than a realistic possibility. During the discussion, however, it was pointed out that—through its own activities and those of related private sector firms—Goddard contributes more than $1 billion annually to the state's economy. I shudder to think about the impact on the University of Maryland if there were suddenly a $1 billion drop in the statešs economy, not to mention the loss of the intensive research collaboration that now exists between the University and Goddard.

   With this rather ominous back drop, I'd like to mention steps that some research universities are undertaking in order to cope with the new economic realties. First, most are deeply engaged in extensive planning efforts, aimed at reducing the scope of their research activities. These efforts are essential but we need to recognize that they, too, will produce some undesirable consequences. For example, we are certain to see a marked decline nationally in the number of PhD programs and a corresponding decrease in full-time graduate enrollments. This will not just increase the fiscal pressure on institutions, it will threaten one of our nation's greatest assets. It is not an exaggeration to say that graduate education in America is the envy of the rest of the world. It is perhaps the only area of productivity where the US enjoys a positive balance of trade with every nation in the world!

   But, not all of the consequences are bad. We are going to see much greater effort directed toward intra- and inter-institutional collaboration. With the reduced scope of research programs, departments and institutions will need partners to respond to the increasingly complex and multi-disciplinary RFPs. This is happening already at the University of Maryland. We have recently launched significant new efforts with Johns Hopkins University and with the University of Virginia. The collaboration with UVa is a good illustration of the point I'm making. Working together, we were able to secure a $7.3 million award from the Army Research Laboratory to conduct research in microelectronics and to provide on-site MS and PhD programs. Working alone, neither institution is likely to have been successful with the RFP.

   The BRAC process, itself, creates opportunities for universities. It should be remembered that, while the "C" in BRAC stands for "Closing," the "A" stands for "Adjustment." This means that either through the BRAC process or through "reinventing government" federal laboratories will be seeking new ways of doing business, new partnerships with universities and the private sector. Recently, the University of Maryland and Lockheed Martin entered into a promising partnership aimed at supporting, on a contractual basis, some of the research activities of a federal laboratory.

   Research universities will modify their administrative structures to increase flexibility, to be more entrepreneurial, and to promote greater inter-disciplinary activity. Last year at College Park, the number of research proposals increased just 3% but the funds requested increased 60%. This increase reflects the fact that agencies are turning away from individual investigator awards and supporting large multi-disciplinary/multi-institutional efforts. Like other universities, Maryland has expanded the role of its research administration office and asked it to play more of the role of catalyst in creating research opportunities. We have created "web pages" on the Internet to connect researchers with each other and with multi disciplinary funding opportunities. Survival of an institution's research enterprise in the years ahead will require a dismantling of the formidable barriers that now isolate disciplines from one another.

   Finally, we will see our research universities become much more involved in building external support for science research. We have learned how to rally parents associations, students, and alumni when states threaten to cut funds for education. To date we have not been as successful in developing comparable support for research efforts. Let's face it, although just as much is a stake, it's a harder sell. Alumni don't flock back to their alma maters on Saturday afternoons in the autumn to watch researchers toiling away in their labs.

   Having become complacent, due to a half-century of ever increasing federal investment in research, universities and their allies have been slow to respond to the looming crisis. There are encouraging signs that this is now changing. I was heartened to see the letter published in the Wall Street Journal and elsewhere signed by most of the CEOs of America's largest corporations defending basic research sponsored by he federal government. AAAS is spearheading an effort to enlist the support of governors to help make the case for research support with congressional delegations. And, the Office of Science and Technology Policy and the research community are urging the White House to have President Clinton make a major address this fall on the importance of federal support for research. Many were disappointed last January when there was no mention of "science" or "research" in the State of the Union address. A high profile speech by the President would help give greater national attention to the importance of research in maintaining our status as a globally competitive, economic superpower.

   By way of conclusion, let me quickly summarize my current view of the future impact of the federal cutbacks in university research. The cuts will be deep and damaging. No university administrator my age or younger (and most are younger) has experienced anything but healthy growth in federal research expenditures during our careers, so we have no experience to draw upon. Much will have to change, not all of it bad...just most of it. Through aggressive lobbying, greater efficiency, and the inherent adaptability of people and institutions when their way of life is threatened, we may be able—in the short run—to mitigate somewhat the size and the impact of the inevitable cuts.

   What really worries me, however, is the impact on our universities and on our society 20 to 30 years from now—assuming as I do that we be entering a protracted era of under investment in research and higher education by federal and state governments. Some reduction in R&D spending is inevitable. But the numbers now on the table, if they become reality, will do irreparable harm to one of the country's greatest assets. Our nation has benefitted enormously from the curiosity driven research emanating from its research universities. I don't need to detail for this audience the enormous contributions to humankind that these universities have produced...in science, medicine, agriculture, engineering, and the humanities.

   If Peter Drucker is correct and the 21st century will belong to the few countries that readily generate new ideas and technology and an abundance of so-called knowledge workers, are we setting a course that will lead to the demise of our nation as the preeminent source of innovation and creativity and, consequently, to its demotion from status as the world's economic superpower? I worry that the answer could be—yes. Regrettably, in the current political climate, this is not the kind of question that is likely to get the careful analysis and serious attention it deserves.

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