>>>BTW, universities do the same thing. They however, have a wrap of
>|>10% to 15% (again, this is over and above any overhead charge).
>|>
>|> Allen
>|>
>|
>|
>|Wrong Allen. The max overhead charge is ALL of the charge. There is no
>|seperately budgeted overhead in any shape size form or fashion. How do
>|I know? I write proposals and have won contracts and I know to the dime
>|what the charges are. At UAH for example the overhead is 36.6%. At Utah
Stanford, I understand, was 70% or so, My univ-Chicago was 65% at the same time.
>|State it is somewhat higher. At Stanford it was really overboard. All of
>|the schools that I have experience with use the overhead percentage number
>|and that is ALL the system can charge on a contract.
>>
>
>Gee, UAH, has afairly low overhead charge. Are there any hidden charges?
>
>I know some schools applied hidden charges. 33% overhead, when the grant c>ame
>in, but everytime you bought equipment there was a 10% procurement tax,
>and a 10 % labor tax for every salary check. Rotten sneaks.
There is no overhead charge made on equipment. A procurement tax imposed by an institution sounds rather unethical, especially considering that title to equipment bought on fed. grants generally passes to the institution and the researcher.
I don't know about "labor tax", at U of C there is a 22.6% charge on salaries to cover the cost of the very comprehensive benefits package for full time employees. There is also when appropriate a tuition charge for student research associates who are taking classes. These are expected and accepted by the federal grants and contracts (primarily National Inst. of Health in my dept.). These grants are monitored very closely, both inside aand outside the University
>
>I think universities should have to compete on the Overhead charges.
They do. Actually the rate is pretty much dictated by the feds. A bad audit can have a profound effect of both receipt of grants and the Indirect Cost Rate (aka overhead) allowed.
>>
>>I know that MSFC gets somewhere in the billions per year. If your asertatio>n
>>were correct that would mean that the skim is near a billion per year. This
>>is prima facia absurd. Where the heck is the money going? To lawfully
>>contracted programs. There are small amounts of money that the center >director
>
The money in our case goes to the salaries of all the administrative support people (Myself included), the facilities maintainance, the departmental budgets (for office supplies, copiers, faculty salaries, administrative and some academic equipment, etc etc etc.). This year overhead from federal grants and contracts made up something like 30% of the budget for the U of Chicago's Biological Sciences Division (that's the WHOLE Medical School plus five other basic research departments) When they lowered our
IDC rate by 5% it cost us about 7 Million Dollars of basic budget cuts (actually improvements in some other areas-clinical revenues made up for this somewhat, but it still hurt)
In other words, the intent of the "overhead" charge on grants is to support the institution sponsoring the grant and reimburse them for costs associated with the research that is not directly charged to the grant. Since the Stanford incident we have been required to account for every dollar both of the direct cost portions of the grants, AND the indirect cost portion (which pretty much just got dumped into the operating expense budget before). REst assured that money is being used to support research, as
is the intent.
>Dennis.
>
>Programs may be lawfully contracted, but not have a line item
>appropriation, even within the NASA budget. Look at all the people
>at MSFC, do they get separate line items, no. Is there even
>a line item for their salaries, probably not. MSFC, probably gets
>funding of X, and then Money from each program office. any
>insufficiency of X gets funded out of program wraps. It's a
>very detailed argument in the acctg.
>
>My philosophy, is fund the centers on a 5 year basis. Give them their
>base operating funds, and if they don't produce, kill them off.
>Bell labs worked very well this way.
NIH grants are 5-year grants. This is good. I see American Cancer Soc. grantees scrambling around to make sure there is "significant progress" in a year's time so they can get refunded. The 5-year grants still require a progress report and that a budget be submitted each year, but researchers can employ people with the assurance of at least 5 year's worht of salary money to pay them.
One other thing to understand about Indirect cost rates, a 65% rate actually means that for every $1.00 spent an _additional_ $0.65 is paid to the University. the full dollar is still spent on research. Grants are awarded with this in mind also; a researcher who gets a $100,000 grant will get a check for $165,000 - she is not expected to take overhead out of the research funds.
Sorry I got so long winded - this stuff is what I do - grant and contract management.
I don't have News right now so I sent this to you. Fell free to post it with the disclaimer below.
-Pete
"The opinions expressed certainly have nothing whatever to do with
the University of Chicago or the Department of Biochemistry (I just
