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School of MedicineDUKE MEDICINE
SCHOOL OF MEDICINE
ORGANIZATION, TERMINOLOGY, AND FUNDS FLOW
April 2010
Billy NewtonVice Dean for Finance and Resource Planning
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Topics for Discussion
• School of Medicine organization
• The “big picture”: financial structure of the School of Medicine
• The smaller picture:What types of funds do faculty members typically have? How are different kinds of funds handled in the accounting system?What exactly is “overhead”?Where to direct questions
• What does the term “Indirect Costs” mean?How is it calculated?What is the Duke indirect cost rate?How are indirects utilized?
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Some Terms We Will Talk About:
• Reserves• Quasi endowment • Overhead• General Funds• Allocated Funds• Restricted Funds• Direct Costs versus Indirect Costs• Who the heck sets the Indirect Cost rate and where does that person live?
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Duke University Organizational Structure
Duke University
Trinity College of Arts & Sciences
School of Medicine
School of Nursing
Professional Schools
Private DiagnosticClinic (PDC)
Separate for-profit partnership
Provost AreaManagement Center
Graduate School
Central AdministrativeManagement Center Duke Medicine
Duke UniversityHealth System
(DUHS)Separate 501c3
Non-profit
University FinanceHuman Resources
FacilitiesAthletics
Etc
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Administrative Functions Exist at Multiple Levels
University Central Admin Services
-Accounting (General Ledger)- Budget- Payroll- Post award grant accounting- Gift records
- Human Resources, including Benefits- Legal- Internal audit, compliance
Department
-Chair’s Office-Division-Lab
School of MedicineManagement Center-Finance, Planning-Pre award office-Human Resources-Compliance-IRB, IACUC-Medical Education admin
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Overhead is Allocated Based on Use
University Central Admin Services
Department
School of MedicineManagement Center
Overhead allocated to School’s centralbudget based on statistics (budget size,headcount, etc.)
Overhead allocated to departmentsbased on discretionary and programexpenditures (not on sponsored funding)
Basic Funds Flow UniversityCentral Budget
School of Medicine Health System
Medical Director services
Unassigned income
Allocatedoverhead
Allocated overhead
PDC
5b AcademicTransfer (to depts)
Space, Capital (to Building Fund)
Services (to depts)
Academic support
8School of MedicineDUKE MEDICINE
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Basic Accounting Organizational Structure of the SOM
General Funds Central Reserves
Allocated annuallyvia budget processby the Dean
Central – Dean’s Office
Department/CenterGeneral Allocated Externally EndowmentFunds Funds Restricted Funds
GrantsEndowment DistributionsGifts
5b Investment IncomeStart-up
Allocatedby Chair
~70% of Schoolof Medicine revenue
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Basic Accounting Organizational Structure of the SOM
Central – Dean’s Office
SOURCES: -Tuition -Indirects -Endowment Income -Gifts -Other
USES: -Dept Support -Administration -Plant Ops -G&A Expense -Student Aid -Other
SOURCES: - Health System Support - Portion of F&A - Philanthropy
USES: - Chair Commitments, - New Buildings, - Program Investments, etc.
General Funds Central Reserves
Allocated annuallyvia budget processby the Dean
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19%
69%
8%4%
Tuition Indirect Cost Recovery Endowment, Gifts University allocation
Sources of School of Medicine General Funds (approximately $187 million of the $1.0 billion Total School expenditures)
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( in millions)
$543 $540$603
$653$693
$756
$845$891
$929
$1,008
$0
$200
$400
$600
$800
$1,000
$1,200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Total School of Medicine Expenditures
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Indirect Cost Rates
Research:Research: 56% MTDC (on 56% MTDC (on campus)campus)
NIH Training:NIH Training: 8% MTDC8% MTDC Clinical Trials:Clinical Trials: 28% MTDC28% MTDC DTMI:DTMI: 25% TDC25% TDC
Quick reminder on what indirect cost (or “Facilities andAdministrative” percentage) really means:
It’s not “profit” – it helps to cover facilities and administrativecosts to administer research at Duke University
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Components of Our Rate:
Exclusions: Equipment > $5k, patient costs, aid, etc.
2007-08
COMPONENT RATEBuilding Operations & Maintenance 15.0 Building Depreciation 7.5 Equipment Depreciation 3.0 Interest 2.0
Subtotal: Facilities 27.5
General Administration 3.6 Sponsored Programs Administration 2.9 College and Departmental Admin. 19.5
Subtotal: Administration (CAPPED) 26.0
Library 2.5
TOTAL (MTDC) 56.0
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$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
1990
-91
1991
-92
1992
-93
1993
-94
1994
-95
1995
-96
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
Duke NIH Trend (From NIH Information)Award Amounts Per Year
(000s)
$328.2 mil
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8
11 11
8 8
56
5
2
4
6
0
2
4
6
8
10
12
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
Duke School of MedicineNIH Ranking Over Time
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-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1996
-97
1997
-98
1998
-99
1999
-00
2000
-01
2001
-02
2002
-03
2003
-04
2004
-05
2005
-06
2006
-07
2007
-08
2008
-09
2009
-10
Duke NIH
Comparison of Duke’s NIH Growth Rate to NIH Overall Growth
Two year rolling average growth rate
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School of Medicine Finances on a More Detailed Level(i.e., so what does all this mean to you?)
Externally sponsored research
A fund code is established which links the grant to the department with you identified as PI. Part of your salary should be charged against this code, depending on your effort. Other than the indirect cost rate, there are no institutional “taxes” or overhead assessments.
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School of Medicine Finances on a More Detailed Level(i.e., so what does all this mean to you?)
General Funds:
The allocation of the central budget from the Dean to the Chair/Director. The allocation is fully flexible to the Chair.
Allocation formula is:-% of indirect cost recovery to department-50% of median Chair compensation-Remuneration for faculty UME & grad student teaching effort-All space expense charged to the department
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School of Medicine Finances on a More Detailed Level(i.e., so what does all this mean to you?)
Department and discretionary funds:
Includes the PDC transfer (for clinical departments), gifts, start-up funding.
Clinical departments are now assessed overhead ata rate of 10% of expenses on these funds to recover
overhead charged to the School of Medicine by the University. Basic science departments, centers, and institutes are charged 2%.
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What Happens If I Bring In A Gift, And I Want It To Be Directed to My Research?
1. Is it really a gift or is it a grant? (F&A vs. overhead) 2. Does Development and Gift Records know about it?3. How restricted is it?4. Department should deposit funds into a gift code with
you listed as PI
Please consult with your departmental business manager. (FYI – the School of Medicine has over 17,000 fund codes!!)
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Finance/accounting: Start with your departmentor division business manager
Grants: Your department’s grant manager and the Office of Research Administration.
http://research.som.duke.edu
Where Do You Go With Questions On:
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If processes seem confusing, we want to knowabout it. We have a University-wide initiativefocused on improving efficiency, especially ingrants administration.
And remember, there are worse places to be…
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THANK YOU FOR YOUR TIME
Are there any questions?