Grappling With Laboratory Budgets: NIH, a Workshop, and Software Offer Help

Pity the academic researcher. Doing good science is hard enough, but getting grants and spending them wisely may be even more daunting. By instinct and training, most scientists aren't cut out to be money managers or accountants. Yet, researchers are being thrust ever more into the fiscal realm. "PIs [principal investigators] are carrying more responsibility for the administration of their awards than they have in the past," observes Julie Norris, director of the Office of Sponsored Programs at the Massachusetts Institute of Technology. DETECTING ERRORS: Grant Tracker, which sells for $199, can detect when an expense has been charged to the wrong account. "What's happening is that there is a higher expectation of accountability," says Ann Anderson, director of grant and contract accounting at the University of Washington. "It's coming from the federal agencies and the Congress" as they cast about for ways to balance the federal budget, she explains. Politicians and officials have also been spooked by cases in which schools--Stanford, most notably--were deemed to be overcharging for overhead expenses. One upshot has been changes in the arcane accounting rules that cover government research grants. The two components of a grant are direct costs, expended directly on the research project, and indirect costs, formerly known as overhead. In 1991, the Office of Management and Budget decreed that administrative expenses, when categorized as indirect costs, could not exceed 26 percent of a grant's direct costs. (This summary of the rule is necessarily simplified.) Two years later, OMB said that most administrative expenses couldn't be categorized as direct costs, either. "It was sort of a double whammy--both of those things happening," recalls Norris. These developments don't affect scientists as acutely at well-endowed schools that can afford their own extensive support staff. Instead, the crunch comes at institutions without the central funding to ensure that every laboratory purchase is reviewed or that every faculty member is coached on the latest rules. For these researchers, relief from money-management chores might seem a remote prospect. But limited help could be at hand. A proposal making the rounds at the National Institutes of Health promises to ease the task of drafting budgets for NIH grant applications. A pioneering grants-management workshop at the University of Washington is attracting attention from other schools. Finally, software packages on the market are allowing grantees to keep better track of their spending. If NIH adopts a proposal now under review, researchers outlining budgets for a host of grant applications could find the process far less intimidating after Feb. 1, 1999. Gone would be pages 4 and 5 of the "398" form, which require expenses to be itemized to the dollar in such categories as equipment, supplies, personnel, and travel. Instead, applicants would list the total direct cost in multiples (modules) of $25,000. Underneath, they would present approximate costs in the major expense categories. Brief narratives (for example: "a Canon microscope is required for extensive histological exams") would replace itemization. This proposal, known as the Modular Research Grant Approach (MRGA), began to take shape four years ago as part of NIH's "Reinventing Government" initiative. "It was undertaken as a way to focus the concentration of investigators, their respective institutions, peer reviewers, and NIH staff on the science that NIH supports, rather than on the details of the budgets within the review process," says Mary Jo Hoeksema, special assistant to the director of NIH's Office of Policy for Extramural Research Administration. MRGA is also aimed at reducing wasted effort. Ron Geller, director of the division of extramural affairs at the National Heart, Lung, and Blood Institute, and an early proponent of modular grants, points out that under the current system, "essentially 100 percent of the applicants provide detailed budgets, with a much smaller percentage receiving awards." Noting that budgets are often extensively modified during the grant-review process and even after grants are awarded, he laments that "there are a lot of people doing a lot of work that no one ever uses anymore after it comes in." Thirteen NIH institutes have pilot-tested the modular approach in 29 requests for applications and five program announcements. One applicant was Louis Ptacek, an associate professor of neurology and human genetics at the University of Utah, who won a $200,000-per-year, four-year grant. He estimates that once he is comfortable with the modular format, it could halve the time he spends drawing up budgets for his grant applications (M. Wadman, Nature, 394:306, 1998). But Ptacek told The Scientist that he might still have to draw up detailed budgets for his university's Office of Sponsored Projects. That prospect might calm one qualm about MRGA--that, unlike the current system, it would not force researchers to weigh the costs of literally everything that they propose. Another concern is that awarding grants only in multiples of $25,000 would encourage applicants to round up their requests. Geller replies that a survey of applicants found equal numbers rounded up, rounded down, and hit the target squarely. MRGA received preliminary approval in May from top NIH officials, including Director Harold Varmus. A formal announcement of the proposal has been drafted, and a committee is reviewing criteria for evaluating MRGA should it go into effect. If the modular approach wins final approval, it will cover applications for grants of up to $250,000 (direct cost) per year in these categories: R01, R03, R15, R21, R41, and R43. A grants-management workshop was swiftly developed, and the university's top brass mandated that all faculty researchers with externally funded grants and contracts had to attend a session every three years. Since 1994, 45 sessions have drawn more than 2,300 attendees, the vast majority of whom were principal investigators. According to Fenwick, noncompliance at UW has dropped from 23 cases in fiscal 1994, when auditors questioned $189,000 in costs, to seven cases in fiscal 1997, none of which involved questioned costs. The two-hour workshop covers such topics as OMB Circular A-21 and the "whistleblower" law (the Federal False Claims Act). It also provides tips on budget management and what to do during an audit (see box). Anderson, UW's director of grant and contract accounting and an instructor in the workshop, says feedback from 95 percent of the attendees has been "very positive." But, she adds, "usually one in every group says, basically, 'this was useless,'" and a few faculty members have even refused to enroll. Apprised of a cutoff in funding, all but one researcher registered within "two minutes to 24 hours," Anderson recalls. SAVING TIME: Grant Manager, which retails for $690, automatically calculates overhead costs. One valuable take-home lesson is that researchers "shouldn't isolate themselves from grant administrators," says Gary "Max" Whisler, UW's director of audits and another workshop instructor. "Some of them may. They get so wrapped up in their lab work that they are not in tune at all with their budget, how it's being spent, who's spending it, or even how to spend it. And they need some interaction with those people who are more knowledgeable about the regulations and who process their paperwork." About 30 schools have expressed interest in the workshop, according to UW officials. "It's a model program," says Cheryl-Lee Howard, assistant dean for research administration at Johns Hopkins University. "And the nice thing about it is that it's mandatory. All faculty are required to participate in the training." She contrasts UW with Johns Hopkins, where "we do a lot of one-on-one. So the people who would teach these courses actually go out and sit individually with the faculty, who don't attend [a course]. It's more work for us." University grant administrators would still commit an occasional bookkeeping error, even if government policies weren't placing them under increasing pressure. Consequently, many scientists keep their own set of books by installing accounting systems on their laboratory computers. Some of these programs were written by the researchers' departments or schools, while others, such as Lotus 1-2-3 and Microsoft Excel, are commercially available spreadsheets for general use. Grant Manager and Grant Tracker are also commercially available, but these software packages are specially designed for researchers who want to keep tabs on their grant budgets. Versions of these two programs were first sold in the mid-1980s. Grant Manager has saved some of its users tens of thousands of dollars, according to Pertti Karjalainen, product manager of Northern Lights Software, which markets the product. In these cases, universities mistakenly applied inappropriate overhead formulas to certain sub-accounts, resulting in overcharges. Grant Manager nabbed the errors, says Karjalainen, because "it has a feature that automatically calculates overhead expenditures." He notes another useful feature: "You can set thresholds after which the program starts telling you that you're running out of money or this grant is about to expire." Grant Manager, which retails for $690, can also be used in conjunction with Personnel Manager, a Northern Lights product that tracks salaries. Kendric Smith created Grant Tracker when he was a professor in the radiation oncology department at Stanford University. Now retired from Stanford, he is president of KCS Software, the firm that sells Grant Tracker. According to Smith, the program comes in particularly handy at the end of a grant year "when university accounting is a month behind, and they don't know what you just bought or whom you just hired or fired." Noting that "faculty accounts are frequently off by one number," he says the program can also detect when a researcher has charged an expense to the wrong account "by just typing one number wrong." Grant Tracker, which Smith describes as "very commonsense and very simple," sells for $199. Douglas Steinberg is a freelance science writer based in New York.

Grappling With Laboratory Budgets: NIH, a Workshop, and Software Offer Help

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