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Prepared by the Office of Grants and Contracts 1 INDIRECTS vs. REDIRECTS

Prepared by the Office of Grants and Contracts1 INDIRECTS vs. REDIRECTS

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Page 1: Prepared by the Office of Grants and Contracts1 INDIRECTS vs. REDIRECTS

Prepared by the Office of Grants and Contracts 1

INDIRECTS vs.

REDIRECTS

Page 2: Prepared by the Office of Grants and Contracts1 INDIRECTS vs. REDIRECTS

Prepared by the Office of Grants and Contracts 2

Definitions• INDIRECTS: Indirect costs are expenses incurred by the University for

its facilities and services. Indirect costs are not profit, but are real costs to the University to support research and sponsored activities. The institution, as a policy matter, has decided to cover these costs out of the instructional budget, using indirect cost funds. Examples of indirect costs incurred by the University include building maintenance and operation, utilities, libraries, computer services and other facilities, payroll, accounting, purchasing, research administration, departmental administration, personnel services, and general administration. The University attempts to recover all of these support costs in accordance with guidelines.

• REDIRECTS: Redirects are the portion of salary that is freed up in a departmental budget due to a grant or contract paying for all or a portion of a faculty member salary.

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KSU’s Indirect Cost Policy

• Senate Bill 73, enacted in the 2003 state of Georgia legislative session, allows for indirect cost recovery year-end balances to be exempt from state law concerning lapsable funds. In order to properly account for these funds and allow remaining balances to carry forward, the Office of Grants and Contracts has established a separate account (deptid) for each College. Indirect cost accounts are identified by a department id that begins with “15”.

• Upon the request of the Associate Vice President for Academic Affairs and the Deans, the transfer of earned indirect costs has also changed. Project Directors no longer need to request disbursement of their indirect cost funding. Instead, the Office of Grants and Contracts will automatically transfer any earned indirect cost funding to the respective Dean’s indirect account on a quarterly basis. Project Directors, Department Chairs, Deans and business managers will receive an email notification each quarter indicating the amount of indirect cost funding earned during the quarter. Business managers may upon approval of the Dean transfer funds from the Dean’s indirect account to an indirect account established under a department within the college. However, funds cannot be transferred to a regular departmental account or dean’s account, only to an indirect cost account.

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KSU’s Indirect Cost Rates

• The federal government actually establishes an indirect cost rate for KSU, which we are authorized to use when preparing our federal grant applications. KSU's indirect cost rate is 34 % of direct cost excluding capital expenditures (buildings, individual items of equipment, alterations and renovations) and that portion of each sub award in excess of $25,000. This is the maximum indirect cost we can charge.

• KSU’s current indirects Agreement was renewed July 2005 and is in effect until June 30, 2009.

• All fixed price contract grants will be required to support an 8% indirects/overhead fee. This overhead is calculated on the total budget.

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Indirects Indirects are awarded on a quarterly basis as they are earned.

The Dean, Dept. Chair, Project Director, and College Business Affairs Manager will be notified via email of the quarterly indirects awarded.

After awarding of the indirects, the College Business Affairs Manager and the Dean distribute and track the indirects.

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Indirects Processing

Responsibilities of the Office of Grants and Contracts Beginning with FY 04 indirects will be processed quarterly. Each quarter at

the time of billing the Assistant Director will notify the budget office, project director, business manager and department chair of the indirects earned during previous quarter.

Responsibilities of Budget Office: Posting of indirects to general account after being notified by the Grants and

Contracts area. Responsibilities of Business Affairs Manager

Tracking each project director’s indirects. Being able to provide reports for each project director to determine amount of indirects remaining. Provide Director of Grants and Contracts balances of any indirects funds remaining.

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Flow Chart for Indirects Processing

Departmental Business Affairs Mgr

transfers indirects at request of Dean

into Departmental Indirects

account number

Budget Office transfers quarterly

indirects into Dean's Indirects

account number

Indirects totals emailed to

Dean, Department Chair,

Project Director & Business Affairs Mgr

by OGC quarterly

Indirects calculated quarterly

by

Grants and Contracts

Page 8: Prepared by the Office of Grants and Contracts1 INDIRECTS vs. REDIRECTS

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Redirects

Redirects can be created by:

• % of individual’s salary charged to grant, freeing up that amount in the departmental budget

• Course release(s) for faculty to work on the grant

• NOTE: You can only redirect salaries, not fringe benefits.

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Redirects Processing with Course Release(s)

• It is the Project Director’s responsibility to notify the Office of Grants and Contracts via email or memorandum of the course release(s) schedule to charge against respective grant each semester (Fall and Spring).

• Once notified, the Office of Grants and Contracts will process course release(s) journal against the respective grant to release the funds in the corresponding department.

• When Business Services has processed the journal, the Office of Grants and Contracts will notify via email the Business Affairs Manager with a copy to Walt Collier, Department Chair and Dean.

• It is the Business Affairs Manager responsibility to work with the appropriate person(s) within his/her college and Walt Collier to process any budget amendments to redirect the funds for his/her college.

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Redirects Processing with % of Individual’s Salary to Grant

When a grant is written to incur an individual’s % of salary for a specified period of time (length of award), it will be handled in one of two ways as deemed appropriate by the Office of Grants and Contracts:

• The Office of Grants and Contracts will notify the Office of Human Resources to automatically charge a % of an individual’s salary to a certain chart string and project indicator, freeing up that same amount in the respective departmental budget.

OR• The Office of Grants and Contracts will process journal(s) at specified

time intervals (i.e. quarterly, monthly, etc) to charge the grant a % of an individual’s salary, freeing up that same amount in the respective departmental budget.

• It is the Business Affairs Manager responsibility to work with the appropriate person(s) within his/her college and Walt Collier to process any budget amendments to redirect the funds for his/her college.

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In Closing…

Indirects and Redirects are very different.

• Indirects are earned quarterly from allowable expenditures charged to grant/contract.

• Redirects are caused by the grant incurring faculty course release(s) and/or % of salary. Thus “freeing up” these funds in the departmental account that can then be “redirected” via budget amendment to other budget lines.