Research Financing

To execute a funded grant is to manage its budget. My graduate studies experience didn't include project management training: personnel, project deliverables/outcomes, project timelines, budgets, etc. This academic research budget starter kit is intended to spark conversations with your advisor, mentors, advocates and/or colleagues. To provide some concreteness to these budgetary matters, I supply some rough numbers where appropriate, but be sure to check your institution's rates. 

Understanding the inner workings of a research project budget and which expenses can be allocated to which account is just another skill to learn as a faculty member. The NSF provides a proposal budget template to get you started. Each line-item in the budget allocates monies to a specific need for the proposed project. Here's some relevant terminology that if you don't know, you should make it a top priority to know.  

• PI: Principal Investigator, research project director
• co-PI: assistant Principal Investigator, research project co-director
• CY: calendar year, January 1st-December 31st
• AY: academic year, traditionally August 15th-May 15th
• Summer Salary: up to 10 weeks of wages and fringe benefits allocated to personnel during May 15th-August 15th
• FTE: full-time employee
• GA/RA/GRA: graduate assistant, research assistant or graduate research assistant
• F&A: Facilities and Administration fees

Depending on the NSF solicitation, the research team comprises of one PI and up to 4 co-PIs. The distinction between the CY, AY and summary salary may be obvious to some, but just in case it isn’t here are a few comments. CY is a more flexible allocation, in which you can expense the grant monies at any time during the grant period, while AY or summer salary are typically designated to the 9-month academic year or 10-week summer period, respectively. Department Heads (or Chairs) may prefer AY monies allocation. Why? Chairs are primarily concerned about the academic year budget, e.g., how each faculty member is drawing his/her salary from which account, AY teaching assistantship allotments (based on course enrollments), travel and equipment, etc. So you, through your grant, can pay for your own wages and the Chair could re-allocate what would have been your AY salary & fringe benefits to other departmental budgetary activities. Your Chair could hold back these “departmental budget savings” from the AY budget and dispense some of it directly to you as summer salary.

Course buy-out. Each institution decides the flat percentage of a faculty member’s AY salary and fringe benefits that is needed to deliver a course. Each department sets the semester course load expectation. I'm most familiar with a 2-2 teaching load, in which I'm expected to teach 2 of the department's courses per semester. So for the department budget, 4 courses a year means roughly 50% of your employee contribution and duties go toward classroom instruction. The other 50% should be  for mainly research activities and some service. Let''s suppose that your base 9-month salary is $100,000 and the course delivery flat rate is 12.5%. If you have a course buy-out for each year of the grant, the funding agency will pay $12,500 of your salary and not the institution. This $12,500 is used by the Chair, with the assistance of the faculty member, to select and hire a temporary staff member (an adjunct faculty, lecturer or instructor) to deliver that course. An institution may have a flat temporary staff member salary rate of $7,000 per course. Given our example, that $5,500 differential could be re-allocated at the Chair's discretion. Special note to tenure-track faculty: A course buy-out prior to promotion and tenure may be perceived negatively by your promotion and tenure committees because you would not be contributing to the departmental course delivery needs.

Summer salary.  A faculty member has the responsibility to cover their own summer salary. Due to U.S. federal regulations, an employer (institution) can not pay an employee (faculty member) more than 50 consecutive weeks. When grant monies are routed through an institution, faculty summer salary serves an extension of the AY payroll. Thus, a faculty member has a maximum 10-weeks of summer salary to be on the institution's payroll. The advice given to me, and so I give it to you, is to try to allocate a couple of weeks in the summer for every funded project. Most research projects can not be relegated to AY activity. By allocating the summer salary line-item, you can secure pay goes directly to you and guarantee continued funded research project progress over the summer. Assuming your base 9-month salary is $100,000, two-week of summer salary is $5555 (= (100,000/9)/2).  Special note to tenure-track faculty: I would suggest that you reserve some of your summer to writing and submitting your scholarly work to journals and conferences. Be careful of burnout.

Other project personnel. Other senior personnel salary include in your budget are postdoctoral associates, other professionals, graduate and undergraduate students and any support staff. Postdoctoral researchers and other support staff have 12-month position appointment while graduate students are traditionally semester position appointments. Let's take graduate student personnel as an example. A graduate student can be paid as a 0.25 FTE, 0.50 FTE or 0.75 FTE as a teaching or research assistant. At an 0.50 FTE, the graduate student research assistant is expected to contribute 20 hours to the research grant activities. An institution has a fixed semester GRA rate, say $7,000, but there is also graduate fee remission, say $7,000. Graduate fee remission is a form of salary compensation and insurance where graduate employees are not obligated to pay full tuition and fees. The graduate students directly receives the GRA salary while the graduate fee remission is charged by the institution and paid by the grant monies. 

Fringe Benefits. Fringe benefits constitute the institution's charge for staff employee healthcare and other benefits. For each staff employee, the fringe benefits rate, say 27%, is considered a direct cost within a research grant budget. Assuming a 1 course buy-out from your base 9-month $100,000 salary, the salary and fringe benefits charge is $15,875 ($12,500 salary and $3,375 fringe benefits).

F&A: An institution's facilities and administrative are indirect costs charged by the institution to the funding agency. You know, an institution's contribution to infrastructure support of the research, e.g., post-award office personnel, travel and expense management software, the office space, electricity, ethernet and wireless network connection, etc., needed to host the proposed research. At many research institutions, the F&A rate is high, say 54%. You have read that correctly…54%. For every $1.00 you request from the funding agency, $0.54 is requested from the institution. F&A eats into your workable budget, but it is necessary.

So for a budget that a PI/co-PI with a 9-month $100,000 salary requests a course buy-out, 2-weeks summer salary and 1 graduate student for a year, the salary and fringe benefits direct cost is $36,929.85 ($15,875 course buyout, $7054.85 summer salary and $14,000 for 2-semesters of a graduate student) and the indirect cost is $19,942.12. The total cost is $56,871.97.

Whew, and I didn't even talk about domestic and foreign travel for PI meetings/workshops and conference travel or equipment needed to execute the research project! There is so much to learn about the internal and external business operations of your institution.

Final thoughts:

1. Meet with your institution's pre-award grant office personnel
2. Meet with with your institution’s business office personnel
3. Meet with your institution's post-award grant office personnel 
4. Maintain a good working relationship with your pre-award, post-award and business office personnel