School of Medicine DUKE MEDICINE SCHOOL OF MEDICINE ORGANIZATION, TERMINOLOGY, AND FUNDS FLOW April 2010 Billy Newton Vice Dean for Finance and Resource

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?


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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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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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?

Documents

School of Medicine DUKE MEDICINE SCHOOL OF MEDICINE ORGANIZATION, TERMINOLOGY, AND FUNDS FLOW April 2010 Billy Newton Vice Dean for Finance and Resource