When "crisis" and "extramural funding" are mentioned, most academics think about problems such as the low percentage of proposals funded by federal agencies (now approaching single digits in many fields) or inadequate indirect-cost recovery rates that fail to reimburse universities for all costs of research. These are great problems draining resources away from public universities in an era of severe budget cuts, but they are merely the symptoms, not the underlying malady. The real problem is that for several decades the quest for outside funding has come to play a central role in an increasing number of colleges and universities. The current system of federal research programs cannot sustain the demands put upon it, however, and the pressure to increase extramural funding is threatening to supplant the core values of the public university. There is nothing intrinsically wrong with extramurally funded research. Indeed, the system of competitively awarded funding has greatly benefited the American research enterprise and accelerated technological innovation. Funding from federal agencies has enabled universities to accomplish much more research than would have otherwise been possible. The practice of peer review and awards conferred according to merit has generally given resources to those with the best ideas rather than the best personal connections. Yet this system is now failing as cutbacks to state support for higher education drive universities to use extramural funding to replace rather than enhance their own resources. In this article, the author contends that if state support continues to decline, public research universities will be forced to abandon their historic mission and scientific research for the common good will suffer.