Re: I C Recovery Naegel, Gary P. 12 May 1995 08:30 EST
The question of Indirect Cost Distribution has been a particularly high profile issue recently for the general public, faculty and institutional administrations, as well as Congress (witness the audits/ misperceptions/turmoil at Stanford, MIT, etc.) Large institutions such as Yale University have not practised a publicly disclosed cost sharing distribution formula between the Provost, Deans, Chairs, and P.I.'s. Given the limitations recently imposed maximums of 26.0% for Administrative costs, along with changes to reduce the indirect cost allowables, and cost shifting from Direct to Indirect (eg. clerical salaries), most institutions are finding themselves in deficit dilemmas. When you add the generally downward level of funding growth (compared to the 80's) of grants from the Federal Government, you end up with fewer dollars going in the door for both direct and indirect costs. It has been known (and recently re-stated at the joint NCURA Region 1/SRA Northeast Section meeting this week) that variances among institutions on their indirect rates reflect only the individual aggressiveness to recover those rates, but also legitimate differences of cost structures of buildings and maintenance that should not be assumed to be equal among all institutions. Indirect costs are basically borne by facility and administrative costs which are real (not imaginary), and recovered through federally audited/ approved reimbursement mechanisms. Both the public and faculty at large have developed mis perceptions about the legitimacy of these expenses, which are often served back in the face of their administration by faculty who feel another institution's methodology or experience is the only correct way. A corollary to this is that the coexistence of multiple reimbursement formulas gives credence to the "bogus" nature indirect cost reimbursement. I think we do a disservice to our faculty when " carrots" of indirect cost returns to the P.I. are offered as faculty incentives. Such a notion carries the underlying assumption, that you can afford to give away this extra "fat", since this indirect cost business is an artificially created scheme to benefit the administration of an institution. This creates a sense of distrust between the government, the faculty, the institution and the general public. We all know that this area is largely complex and misunderstood by most individuals, including our own administration who are not directly involved in the indirect cost calculation/reimbursement mechanisms. Certainly there needs to be fair distribution of these costs to pay the utility bills, maintain the facilities/libraries, etc., as well as for the administrative support of the departments and central support groups. At the same time we should be united in bringing a consistent message that indirect costs are true cost reimbursements for real administrative and facility costs incurred for the sponsorship of research. With most institutions facing budget dilemmas/deficits, how can they afford not to use them for the purposes they were originally intended? Gary P. Naegel Administrator, Pharmacology Yale School of Medicine 333 Cedar Street New Haven, CT 06520-8066 (203) 785-4373 xxxxxx@yale.edu ---------- From: RESADM-L To: Multiple recipients of list RESADM-L Subject: I C Recovery Date: Thursday, May 11, 1995 8:49AM At the University of Nevada Las Vegas we have become involved in a discussion of how to use the indirect cost recovery. We currently have a formula which shares recovery between the PIs, Chairs, Deans, AVP Research, Provost and President. We are interested in what other institutions do with IC recovery. Does any go to physical plant or the business office to offset some of those costs? Is there a limit as to how much any individual can recover? Thanks Bob Swanson Director Grants and Contracts 702-895-1153 702-895-4410 FAX xxxxxx@ccmail.nevada.edu