40 



The second basis for need is science and it is advancing rapidly. 

 New instrumentation, new fields of research produce new needs for 

 research facilities. You can't carry out that state-of-the-art research 

 without state-of-the-art facilities. In addition, regulatory and build- 

 ing standards have a significant impact on the cost of constructing 

 and repairing facilities. Building new facilities is even more expen- 

 sive. I think research costs increase at a rate greater than the rate 

 of inflation and research priorities change in response to changing 

 national goals. 



So those two factors together — responding to the backlog and 

 meeting new demands and opportunities — create a need for ad- 

 dressing this facility financing question regardless of the specific 

 meaning of the data. 



I will confine my remarks to Federal mechanisms. There Eire cer- 

 tainly significant and important State and university roles as well. 



I won't go into detail on the targeted congressional appropria- 

 tions except to say that the overriding sentiment in Roundtable dis- 

 cussions was that that mechanism was not a sound Federal fund- 

 ing approach. I think most of the reasons for that have already 

 been put forth by other witnesses. 



Other mechanisms are important and I think it is important to 

 think of them in meeting several objectives. First, we must sustain 

 and renew the current base of research capacity. We must be able 

 to establish new capacities in growing fields, new institutions, and 

 new geographical areas. We must be able to provide for the review 

 of scientific and technical merit, as well as other considerations. An 

 important consideration that others have alluded to is to distribute 

 the costs and risks for financing across all sectors. The Federal 

 Government shouldn't need to bear all of that. And we need to fos- 

 ter stability and continuity. 



A mechanism that is used significantly now is the indirect cost 

 mechanism. Given that those are funds that reimburse institutions 

 as part of Federal funding for research projects, that mechanism is 

 based on scientific and technical merit and it goes to where the 

 needs are. 



However, the mechanism is deficient in not fully covering all 

 costs. So there have been various proposals to improve the indirect 

 cost mechanism. 



Another mechanism discussed significantly already this morning 

 is competitive matching grants. The grants approach can meet var- 

 ious needs by the definition of the guidelines and it certainly bal- 

 ances the "those that have, get" aspect of the indirect cost mecha- 

 nism. 



I think it is important here to mention, as Congressman Brown 

 mentioned briefly, that all grants programs don't necessarily have 

 to be competitive. And it is useful to think of a Federal approach 

 that might include formula and block grants to States to help meet 

 regional needs. 



There is a significant amount of debt financing. Universities bor- 

 row money. Federal tax policies and Federal indirect cost policies 

 influence that borrowing. There have been proposals to pool small 

 bond issues and to modify the authorities of the Student Loan Mar- 

 keting Association and the College Construction Loan Insurance 

 Corporation to enable more institutions to participate in debt fi- 



