Capitol Hill Showdown: What Will October Bring?

preparationI don’t know about you, but when I’m working on an application deadline, I’d like to think about helping my investigator submit a quality application – not whether the government will be open for business to accept the application on the due date.

Unfortunately, it’s mid-September, so that means our elected officials are squabbling again about whether or not they’d like to fund the federal government through the end of the calendar year.

Unfortunately, this political tango has very real consequences for scientific research – both the currently funded kind, and the research in-need-of-support kind. And for this go-around, we have another hurdle to face with an anticipated battle over the definition and scope of the debt ceiling. Our national legislators are seeking to tie this discussion to other mandates, such as reducing or eliminating funding for the Affordable Care Act, or adjusting the terms of sequestration. Regardless of the outcome, the effect is likely to create uncertainty in federal agencies, and if it goes on too long, could lead to belt-tightening.

This drama is likely to play out during the last few days of September, when Congress considers legislation to fund the President’s 2014 budget, or not. For the past 5 years, we have funded the government on continuing resolutions, which are a series of appropriations bills that have passed both houses of Congress and been authorized to fund the nation’s work for a period of time (from weeks to months, to a year). These appropriations bills are sometimes cobbled together and approved in chunks.

After we pass the first hurdle of keeping the government running (and can submit our applications), we must address the debt ceiling hurdle – which has a decision deadline of October 15, after which the Federal government goes into default on its financial obligations, and cannot pay its bills, such as student loans and Social Security checks. There is some discussion that prudent management of the deficit has given the Treasury some wiggle room for the November 1 pay period, but agencies that have “discretionary” payments are already starting to look at the next couple of months and plan for a battle in Washington.

The political environment is even more complicated – a primary election underway in the state of Kentucky has effectively silenced Senate Majority Leader Mitch McConnell as a more moderate force between Democrats and Republicans in the Senate (as was the case during the last debt ceiling debate in 2011). Similarly, House Speaker John Boehner is in a difficult position between a very conservative wing in the House that is attempting to de-fund Obamacare as a condition for raising the debt ceiling and keeping the government open – which if the government shuts down, may cost him his Speakership.

What does this mean for research administrators?

If you are waiting for a non-competing continuation, a subcontract, or a notice of award – don’t hold your breath. Everyone is going to be in a holding pattern until this is sorted out. If your investigator decides to start work, be prepared to open pre-spending accounts, and direct charge expenses (conservatively) until you know what your funding will look like. Encourage your investigators to talk to their program officers and get a read on what’s going on at their funding agency. Monitor activity and costs closely to manage potential cost share commitments until funding comes through. Keep your PI’s and departments updated on developments – and while you’re at it, load up on the antacid.

Buckle up. It’s going to be a bumpy ride.

Justification Nation – Part 2: Supporting Research Personnel: Budgeting Salary and Fringe on Research Grants

scientists working at the laboratoryBudgeting Salaries and Fringe for Faculty and Staff

Sounds deceptively simple, doesn’t it? On most research proposals, personnel costs range from 60-70%. Budgeting and justifying personnel is extremely important and in principle, comes down to a few key issues:

Are the right faculty and staff on the proposal? Does the project have the right leadership?

Are the personnel on the proposal performing the right work?

Are the personnel on the proposal performing the right work for a reasonable estimate of time?

Fortunately, the choice of faculty and staff isn’t up to the research administrator. The PI will select his or her collaborators to achieve the scientific aims and enhance his or her chances of getting funded. But let’s face it. It’s a good thing we’re working on the budget – because there isn’t a PI on the planet that really understands how people are paid (or what they really make). Double and triple checking this information is key to submitting an accurate budget that covers the University’s actual personnel costs. If the proposal is awarded, the salary had better be calculated correctly, proposed with the proper person-months of effort, contain summer salary if the faculty member has a nine-month appointment, and justify the VA commitment if it exists.  Not so simple after all.

Budgeting Salary and Effort on Sponsored Projects

It’s important to start with the FOA – and any requirements from the sponsor. Is there a required amount of effort from the PI, or any others on the proposal? For grantsmanship, you’ll find that for most federal proposals, the PI will have to give at least 15-25%. (1.80 to 3.0 person months)

Who else is essential for the project? What levels of effort will they be working? Note that most PI’s think in levels of effort – you can convert to person months when you are done tweaking the budget. Outline each role for each person on the application. What will they be doing for the level of effort the PI has given them? Discuss with the PI that  20% time is one day a week, 10% time is 1/2 day a week, for that level of effort, how will the PI justify that much time on a sponsored project? Push for detail.

Draft the budget justification based on this information – and then look at the numbers and see where you end up – and edit from there. That’s how the process works. There are a couple of important things to be aware of as you write the document, which I’ll outline below.

General Budget Justification Format for Personnel with Salary and Fringe

Henry Smith, Ph.D., P.I. (1.8 calendar months), will serve as PI and Project Director on this project.  Professor of Pathology at Superb University and an HHMI investigator, he has researched nanostructures extensively, and has over 25 years of highly regarded work in the field.  He will have overall responsibility for all aspects of the project, supervise lab personnel working on experiments and will be responsible for organizing and chairing meetings of the advisory committee. In addition, he will be serving as the lead investigator of the microbiology core.

Looking for ways to justify a person or item on your justification? Google it! Someone else has faced the same problem, I guarantee it.

Justifying Faculty and Staff Fringe Rates

Your institution’s F&A agreement also contains the approved fringe rates for all employees. Be sure to use the correct fringe rates for each type of faculty and staff member, depending on their appointment. Most universities require a standard template to be used in the justification.

Remember to Inflate Salaries, Blend Fringe and Use the Cap only When Needed

In these economic times, institutions are ensuring that every salary dollar is proposed on the application – that means using the formula that factors in a salary increase each year, blends the fringe rate across each project year and only uses the salary cap on projects where it is required. Ensure that you include your inflation factors in your budget justification.

TipsA research administrator who is beginning the budgeting process should be prepared for several common questions that may arise, depending on the level of experience that the PI and project staff have with project planning and budgeting. Awareness of these potential concerns can prevent misunderstandings and assist in decision making.

1. Limit the distribution of salary information. Plan to limit distribution of salary information to as few people as possible during the budgeting process, especially during the budgeting of salary on the project. Faculty and staff may not know one another’s salary information if they have not budgeted many grants together. If salary information has to be distributed, hiding the base salary column may be recommended, you can check.

2. Beware of language in your justification that commits cost sharing. If your PI or any personnel for that matter are “contributing services” you need to write about their work in a way that does not specify exactly what they will do or how much time they will give. That’s voluntary committed cost sharing, and it happens all the time. Beware!

3. Understand the basis of a faculty or staff member’s appointment before moving forward with budgeting them on the proposal. Alert the PI if there is a problem with how the PI is proposing them on the application. The faculty or staff member must have an appointment that is consistent with how they are proposed on the application; they should have salary at the institution (versus an affiliate), or be eligible to receive a stipend versus salary and fringe. If there is some discrepancy, it can be corrected at the time of the application, instead of trying to fix a problem downstream at the time of the award (when the budget won’t allow for an increase).

4. Keep in mind that in most cases, stipends are for students or trainees receiving an education benefit from participating in the grant. Investigators are occasionally inclined to propose paying stipends for employees – instead of trainees. Consult your HR guidelines, and the FOA for more information.

5. Similarly, even seasoned investigators propose hiring colleagues on a proposal as a consultant. There are specific rules as to the type of personnel who can fulfill a consultant role. In a majority of cases, the role is fulfilled by an individual from outside the institution who is using their own resources and providing a specific expertise that is essential to the project. This individual does not contribute to the direction of the scientific work of the study.

These are general guidelines for budgeting salary and fringe on sponsored projects – it’s impossible to be specific for each type of application. For specific questions about types of applications there are excellent websites for federal agencies – and you can reach out to experienced research administrators for help.

NEXT: MORE ABOUT BUDGETING FACULTY AND STAFF, AND BUDGETING TRAINEES

Justification Nation – Part 1: Why Do We Write Budget Justifications in the First Place?

images (1)I love writing budget justifications – LOVE them. It’s easy to think that the budget justification should be written last, when the proposal is almost done. But if you do that, you’re minimizing the strategic importance of the budget justification’s ability to reinforce the aims of a scientific proposal. A well written justification supports the science – and shows that the investigator has a reasonable and realistic plan to achieve their aims. A scientist with his or her “budgetary” wet finger in the air is unlikely to get funded, no matter how fabulous the idea.

A savvy research administrator will help his or her PI by outlining the budget justification (along with the budget) as the research plan is taking shape and the subcontracts are coming together – to ensure that everything the PI wants to do is feasible according to Federal cost principles, the funding announcement requirements, the agency’s general requirements and any institutional policies that govern the PI’s activities.

The Budget Justification is a Road Map for How the Project Will be Conducted

If the budget were separated from the proposal, a reviewer should have all the information he or she needs to evaluate the financial resources needed to support a project from the budget justification. It is the only document in the application that maps how the scientific aims of the project relate to the resources needed to successfully execute the work. When I draft a budget justification for a PI, I picture myself much as a lawyer would make a closing argument in a courtroom in front of a judge and jury – here’s where I’m clearly and succinctly presenting the case for my client, in plain language, based on the rule of law. (And I plan on winning the case!)

The Basis for Budget Justifications

  1. To provide documentation regarding the basis for budget calculations and documentation of project costs.
  2. To establish compliance with federal grants management policy and cost principles.
    • Allowability, allocability, reasonableness, and consistency.
  3. To demonstrate that the proposed research meets the specific announcement requirements.
  4. To demonstrate compliance with specific agency regulations or policies.
    • Ex: Documentation of summer salary for NSF vs. NIH summer months; charging salary at the NIH cap
  5. To document institutional processes, policies or standards.
    • Providing template language for the basis of faculty appointments, cost sharing language, etc.

This material is the foundation for budget justifications – everything else is added once these elements are fully established.

Planning Your Budget and Budget Justification

The next step is to ask the following questions:

  • What type of budget justification do you need? (Detailed or Modular?)
  • Will you be constructing draft budgets and draft justifications for subcontractors or consultants?
  • How many personnel will be participating on the project, and what type of personnel will there be?
  1. Faculty
  2. Staff
  3. Post-docs
  4. Research Staff
  5. Students

What type of expenses will this project have?

  1. Equipment
  2. Services
  3. Supplies
  4. Consultants
  5. Other Costs

When you and your PI have discussed the research plan and mapped that against the planned budget, you can begin to outline the budget justification. You’ll have to make some assumptions at first, but your PI will be able to refine your work as you review drafts together.

COMING UP NEXT: JUSTIFICATION NATION – HOW TO JUSTIFY PERSONNEL

Which Comes First? Business Administration or Research Administration?

FORTUNATELY, THE CHICKEN AND EGG QUESTION HAS BEEN DEFINITIVELY ADDRESSED BY SCIENTIFIC RESEARCH.

You might think that we’d start off this discussion of research and business administration with a metaphor that has no actual scientific answer – and I’m happy to say that we seem to know which came first. The chicken.

So can we answer the question at hand – business administration or research administration? Which comes first? I think we can.

Research administrators cannot operate successfully in the world of academics and medicine without business administrators first performing their essential responsibilities. It’s that simple. Business administration comes first. It is true that there are complex and close interactions, but at the end of the day, when it comes down to it, in order for research administrators to do their jobs successfully, business administrators first have to do their work well.

EVIDENCE TO SUPPORT THIS HYPOTHESIS:

  1. Faculty appointments and position funding are the responsibility of business administrators, and managed jointly with research administrators due to their impact on effort reporting and sponsored research compliance.
  2. Business administrators manage department accounts that cover “over the cap” salary cost-sharing, the portion of administrative time that PI’s cannot cover on grants, the funds that are available to cover research staff who are not fully funded on grants. Without business administrators managing department funds successfully (and these days, carefully) investigators could not keep staff employed and research administrators would not be able to manage sponsored projects successfully.
  3. The process of ordering and accepting supplies, equipment and services is a business administration function that impacts sponsored research. Business administration staff often consult with research administration to check on an order placed by a lab tech or a research assistant to make sure that the costs are being allocated correctly, but these business staff are directing the purchasing process in order for the research administration team to later reconcile the purchases with the investigator.

While these processes are intricately related, we know now that – like the chicken and the egg – one is  present before the other. It is also important to realize that, like the chicken and the egg, business administrators and research administrators need to support and work together to ensure a successful outcome.

Our Love-Hate Relationship with Effort Reporting

Some Research Administrators Hate Effort Reporting, Some Love It

I love effort reporting. I know I’m crazy, but I appreciate the reasoning and the logic of it all – everything adds up to 100% effort, and it’s about understanding the basis of that effort. The secret is to break effort into fractions.

Effort Reporting Starts When Faculty Are Hired

It starts with the faculty appointment process. We have all the information we need to know in the faculty appointment, because it specifies what our faculty member will be doing and how much time he or she will be spending on each activity. Ain’t life grand? No one can work more than 100% time. Full time is full time. You can give 110% of your blood, sweat and tears to the job, but the whole pie is still 100% mathematically.

Committed Effort for Research Occurs When Faculty Submit Applications and Receive Funding

Then our faculty member starts to commit effort on sponsored projects and receive funding (our faculty member is pretty fantastic). So we know, of the amount of the pie our faculty member has to commit to research, how much of that effort is now committed effort.

Certified Effort Occurs When Faculty Perform Work Against Committed Effort

Now starting work on research, our faculty member will certify regularly and on time how much he or she has worked on the sponsored project. Was it more or less than the committed effort? Then we come behind with a salary journal to make sure that the payroll is corrected. This is to make sure that the payroll charged equals the amount of effort expended in the time period for the faculty member.

What if our faculty member becomes so well funded that he or she has little “research” time available to  on his or her current faculty appointment? We’ll work with his or her business administrator to adjust the faculty member’s clinical and administrative commitments to ensure the research appointment reflects enough time to perform current research and apply for new awards.

When Effort Gets Complicated (or Requires Extra Research Administrator Effort)

  1. When faculty members have outside research positions, like a Veteran’s Administration position that is paid by federal government funds. A memorandum of understanding is required to compute the effort that is shared between the two positions that is signed off at the VA and the university to ensure there is no overlap of research salary.
  2. The administration of payroll for a faculty member can affect the presentation of an effort report. Often, university systems can be delayed in removing an old grant off an effort report if it has ended. But if there is an error or a delay in administering payroll for a faculty member, this will create an effort report that is confusing for the faculty member to review.
  3. Effort reports are often released periodically, and faculty members do not understand why they are reviewing their effort. They may understand mechanically what they are doing, but not why. Often universities will have online tools to train faculty to how to review their effort, but it fails to answer this question. So if an auditor were to ask the one question, “did you work this time?” the faculty member would still be likely to say, ” I just put the number that the system told me to.”

Research Administrators Are Vital to Effort Reporting Compliance

For these reasons, research administrators need to pre- and post-review effort for research faculty they administer – not business administrators or financial administrators. This means that it is vitally important for research administrators to be able to answer questions and guide faculty as they complete their effort report. This is different than telling faculty how to certify.

For information on how to do that, review our previous discussion on effort reporting.

What can and can’t be charged to a sponsored project? What are the rules?

Many research administrators ask this question – how do you determine what can be charged to a sponsored project? Is there a list I can use? The answer is – not exactly!

GRANTS AND CONTRACTS

The first step is to evaluate the standards of the funding agency you are working with. Awarding agencies have varying standards for allowable costs depending on the type of work they fund. The Federal Government has core standards which can vary by agency and then the terms and conditions of an award can limit or expand what is allowable.

The second step is to review the A21 OMB Circular for Allowable Costs in Educational Institutions.This document does a couple of things that research administrators need to learn by heart:

  • Defines Cost Accounting Standards on sponsored projects
    • Reasonable
    • Allocable
    • Allowable (follows the terms of the award and A21 guidelines)
    • Consistent
  • Lists Section J
    • Things that are never, ever, ever allowed to be charged to the government!

Exceptional Circumstances may permit you to charge an item as a direct cost where it would normally be considered an indirect cost (and therefore unallowable as a direct charge).  Sufficient documentation would be needed to justify the charge in this case. Examples would be computers and data storage for a data coordinating and monitoring site for a national clinical trial, or administrative support for a program project grant.

CLINICAL TRIALS

When budgeting for clinical trials, IRB fees are not allowable on Federal awards but are permitted as a charge to industry sponsors.

The process for determining allowable costs on clinical trials is first defined by the medical professionals that develop the study protocol. They determine the usual care the participants would normally receive under any circumstance that would be billed to insurance; and the aspects of the study that will be covered under the trial. This normally entails the costs of the study personnel time (never to the degree that they actually work) and the study intervention.

The cost principles at work here are to allocate costs otherwise covered for usual medical care to insurance, and study care costs to the trial. It is extremely important to ensure that usual medical care costs that would be billed to insurance are never charged to the study, especially Medicare costs. In addition, when some medical personnel work on the study, especially some types of residents and fellows, if they are paid to work on the study and paid to see patients in the clinic, it’s important to ensure that this time is carefully tracked by effort reporting.

When a trial is funded by the Federal government, it can take on a lot of the qualities of a grant, yet operate like a clinical trial, under both sets of rules.

Other general considerations:

  1. If a cost is not allowed on a particular federal award, you can’t charge another federal award for it.
  2. An agency can state that certain allowable costs can not be reimbursed on an award.
  3. Any incurred costs on an award that are not recovered can be considered cost sharing.

These are general guidelines – if there’s any hard and fast rule out there, it’s that there will be an award given with an exception to these rules! Read the terms and conditions and talk to the program officer if there are any questions about the award that your principal investigator has received.

An apple a day keeps the auditor away…

We are listening to the assistant director of audit for the NSF office of the inspector general, and this office has been pretty busy this year. The NSF OIG handles allegations and handles:

  • Fraud waste and abuse
  • Research misconduct
  • Violations of law or policy
  • Financial and performance audits

Alllegations are unsubstantiated until fully investigated. A majority of allegations end at the inquiry phase because there is not enough information to substantiate the allegation. Its interesting to note that the speaker notes an increase in recommendations for suspensions and debarments for investigators that have an adverse finding after an investigation. Grant oversight items that the OIG looks for when analyzing grants:

  1. Funding portfolio of the PI (Are they continuously funded by NSF?)
  2. Burn rate.
  3. Use of cost share accounts.
  4. Management of subcontracts and consultants.
  5. Documentation of costs and appropriate approvals
  6. Cost compliance: work the circulars.

The bottom line – an auditor’s role is to come in and assess the issue, and determine the intention of the individual/s  involved. An honest mistake is different than research misconduct or financial fraud. Our job is to prevent this, ultimately, but an auditor can tell the difference.