Monday Matters
In past columns I have frequently mentioned value-centered management and stated that this new management philosophy encourages us to be entrepreneurial. In the next two columns I am going to focus on two of the major revenue-generating mechanisms within the College. In the process I will describe the College policies and procedures regarding these activities. Some of these policies and procedures are new. Others have been in existence for quite some time, but I have found that there is often confusion regarding these so I will take this opportunity to dispel some of this confusion. You may have already guessed that the two major methods for revenue enhancements are (1) grants and contracts and (2) Extended Graduate Campus and distance education activities. Grants and contracts are primarily for work we commit to research and service activities. The University's Extended Graduate Campus provides a way to generate funding through instructional activities that go beyond the courses we teach in Wardlaw. This week I will discuss research and service grants and contracts. Next week we will take a look at the Extended Graduate Campus.
Before going further it is worth mentioning that with value-centered management the single greatest source of revenue generation for the College will be the tuition dollars that we receive for each of the classes that we teach. All of the tuition dollars for courses that are offered by the College of Education will come directly to the College. In the past, tuition dollars went to the University and the College was given an annual budget. In the future, tuition dollars will go to the College in this will largely determine our annual budget. The more credit hours that students enroll in with our College, the larger our budget can be.
I wish that I could say that this is the end of the story, but tuition has never covered all of the costs assumed by a University. In fact, only this year has income from tuition become equal to the State allocation to the University. The University relies on both tuition and State revenue for financing operations and so does the College. The portion of the State funding that comes to the College of Education is still determined by the central administration of the University, so our fiscal destiny is not entirely our own. Nonetheless, the bulk of our budget is made up of tuition dollars and that we can control through our course offerings, our marketing strategies, and the reputation we achieve for providing quality education to our students.
The Amazing Grant Machine
Grants provide the opportunity to secure resources in a manner that is consistent with the mission of a research university. In short, a grant from an external funding agency provides funds in exchange for research or service. In all except for rare cases, grants are not awarded simply because the funding agency recognizes that someone has expertise. Usually they must be actively sought through funding proposals that are often part of a competitive process. Like publishing an article in a strong professional journal, the best grants are often the most difficult to obtain and require persistence and a willingness to revise, revise, and then revise.
Grants provide resources for the College in at least three ways. First, there are the funds that go directly to pay for the research or service project. These are often referred to as "direct funds" because they directly pay for the expenses of the project. These monies make the project possible and should always be the primary purpose for securing a grant. As much as we talk about the need to secure external funding in order to address College resource deficits, I believe that the first and foremost reason for securing external funding should be increase our understanding or to use our expertise to bring some benefit to society.
The second way that grants provide resources is through "indirect funds." These are funds intended to pay the hidden costs that might be associated with the project. Such costs include space costs, administrative services, and day-to-day costs such as lighting and local phone calls. Indirect funds are usually provided as a percentage of the direct funds. For example, research grants obtained from the federal government provide for an additional 45% of the direct cost to be added as indirect funds. (For a complete list of indirect fund rates go to http://www.spar.research.sc.edu/indirectcost.html.) For every dollar of indirect funds that comes to the University, 14 cents are set aside for building a research infrastructure. The remaining 86 cents are split into two parts: 43 cents goes to the University and 43 cents is sent to the College. The College of Education has adopted a policy that 50% of the indirect money it receives will be returned to the department that runs the project. When grant and contract proposals are developed by faculty or staff members from more than one department, an agreement is made to govern the distribution of the departments' share of indirect funds.
A Dollar Saved is Fifty Cents Earned
The third way that we obtain resources from grants and contracts is a bit hidden, yet is of significant consequence to the College and departments. In fact, of the three sources of revenue from a grant, this source is the only one for which all of the monies stay with the College without restrictions. These unrestricted funds can be used to enhance our operations in any way that matches our College priorities. This method of revenue generation is known as "salary savings." Grants and contracts necessarily require the use of someone's time to perform the research or provide the service. In almost all cases we should charge this time as a direct cost in the funding proposal. That is, we agree to spend part of our professional time working on a project in exchange for the agency funding part of our salary. This portion of the salary is money that the College had anticipated paying but now does not have to pay because of external funding. This is where the term "salary savings" comes from.
In the new budgeting system that we are using in the College, salary savings is reflected as an income to the College and to departments. Whenever a grant results in salary savings, 50% of the savings is put in the College reserve. In the worst of times, this reserve is used to address budget cuts or deficits. In the best of times, this becomes discretionary money that the Dean can appropriate for special projects, infrastructure upgrades, or other needs within the College. The other 50% of the savings is sent to the department conducting the research or running the project. The department can then decide how to use these monies, but most departments have a policy of allocating at least some portion of the funds (often around 50%) for the investigators' professional use. (For those not familiar with the term, "investigators" are those who are conducting the research. The "principal investigator" is the person who assumes primary responsibility for the research or project.) Faculty members can use professional funds for professional travel, computer hardware or software, and professional dues, to name a few common uses.
There is one situation that slightly changes the distribution of salary savings. Some departments or offices secure grants or projects through the work of faculty members from another "home department." Two good examples of these kinds of offices are the Office of Program Evaluation and the Policy Center. These offices have been established to provide specific kinds of services, but the faculty members who conduct this work usually reside in one of the academic departments. It is the work of the faculty and staff that enables the offices to generate funding, but these faculty and staff members benefit from having the administrative support and resources of these offices. To acknowledge the services of these offices and support their growth, while at the same time maintaining the revenue flow into the home department of the faculty or staff member, the College has adopted a policy of a 50-40-10 split in salary savings when the funding is generated by one of these offices. The College continues to receive 50% of the salary savings, the home department will receive 40% of the savings, and the office will receive 10% of the salary savings. This method of distribution allows us to sustain and enrich our revenue offices and at the same provides home departments a return on the salary savings.
One final word on salary savings: In the past many grant proposals were written without including a portion of salary as a direct cost. This helps keep down project costs and also addresses match requirements (i.e. the requirement of a funding agency for the recipient to contribute resources to the project). Though these reasons may be admirable, they are often not necessary. Many funding agencies do not expect a match of funds. Furthermore, when matching funds are required there are other ways to do this that result in a proposal that is just as competitive as if salary had been used. We must acknowledge that time is our most precious resource right now. Faculty and staffing levels have had to be kept low in order to address budget cuts. It makes little sense to give away our time for free when most of us feel the pressure of maintaining large work loads in order to address budget cuts. I will be reviewing all proposals carefully to make certain that salary charges are included on grant proposals. When the funding agency requires a salary match, my policy will be to restrict our portion of the match to no more than 50% of the time commitment.
Don't Take Grant Procedures for Granted
Procurement of grants and contracts is vital to the health of the College. That is why much of my time is devoted to assisting faculty and staff members with procuring external funding for projects and dealing with management issues that arise during the course of the project. If you want to secure external funding, feel free to draw on my office to provide you with assistance. I am here to help locate funding sources and to assist you with preparing a proposal to obtain the funding. Once a proposal is written, it must be processed through the appropriate College offices and through the Sponsored Programs and Research Office (SPAR). SPAR is the University office for grants and contracts. Designated officials in SPAR are the only individuals authorized to accept funds on behalf of the university, so it is important to process any request for funds through that office.
My office attempts to make the logistics of the grant proposal process as simple as possible. First, simply attach the SPAR processing form (available at http://www.spar.research.sc.edu/indirectcost.html) to your proposal. Obtain a signature from your department head and then drop the proposal in the "in" box at the Business Office. Members of the Business Office staff will review the budget part of the proposal and then pass the proposal on to me. I review the proposal and sign it. After that, we take the proposal directly to SPAR for you. Once SPAR has completed their review process they will create an official University letter for you to send with the proposal and will contact you to let you know that the proposal is ready to be sent.
All these processes take some time, so I require that proposals be submitted to the Business Office five business days before the deadline for proposal receipt or four business days before the postmark deadline. In the past we have been fairly lax about this policy because generating funding is so important so that we have done our best to accommodate your schedule. Unfortunately, our tardiness is giving us a bad reputation with University research offices. I am going to have to become more attentive to timelines, so I plan on enforcing the five/four day rule. Yes, I want to work with you to make this process as convenient as possible, but I believe that our time-crunch problems have as much to do with poor planning as with last-minute requests for proposals from funding agencies. Please be aware of our proposal timelines. I will do what I can to help you meet your deadlines, including our internal deadline.
That is all for this week. Next week I will discuss some changes in the procedures and funding allocation for Extended Graduate Campus activities. The move to VCM has brought several major changes to these activities, so stay tuned. Also, I have had several requests to make past "Monday Matters" columns available. You can find links to these columns on my web page.
Until next week,
Mike