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Open Letter on Grants F&A Distribution

October 2011

Open Letter
The purpose of this open letter is to speak to the issue of grants and overhead and answer questions which have been raised about the extent to which the Library is part of this equation.

Background and Core Issues
The University of North Carolina Wilmington receives reimbursement of Facilities and Administrative (F&A) costs related to grants and contracts and is expected to allocate these funds within the appropriate state and federal guidelines. F&A costs (sometimes called indirect or overhead receipts) are calculated for such items as facilities maintenance and renewal, libraries, salaries of technical, compliance and administrative personnel, equipment, scholarly development, and facilities support. F&A rates are set by negotiation between the federal government and each university. Certain sponsoring agencies limit the allowable F&A rates. In such cases, the Office of Research and Sponsored Programs must approve the limited F&A rates.

A percentage of some federal grant applications include indirect costs, which, upon awarding, are allocated to the university for facilities and administrative costs. In response to the Library’s collection reductions planning, several faculty have inquired as to how the Library benefits from overhead. Specifically, one faculty member wrote “At some point, the government may come in and ask why they are paying the overhead rates they do while the university is not providing the facilities needed to carry out research. Has anyone thought about this?”

F&A Distribution
By UNCW policy, 55% of F&A goes to Academic Affairs, 30% to Business Affairs, and 15% to colleges/schools/departments. The details that follow focus on the 55% of F&A that goes to Academic Affairs.

The Vice Provost writes “Because of the nature of the funds available to us, we must ‘mix and match’ all the time. We can use state dollars, for example, for instructional purposes such as the Library. We cannot, however, use state dollars, for example, to fund student travel. We therefore use our F&A dollars for student travel, freeing up state dollars for use in the Library.” The Vice Provost adds however “that of the 55% that will come to Academic Affairs in 2011-12, all but 9% of Academic Affairs’ share is committed to such functions as Office of Research Services salaries, Graduate School, rentals, debt service, and such.”

Q and A

Q Is there a direct link between F&A funds and the Library?

A The Vice Provost responds “There is never, and can never be, a direct link between F&A funds and the Library because a dynamic university such as UNCW requires ultimate flexibility in the allocation of funds. Do F&A funds go to the Library? Without doubt, but you would never be able to track them directly. Only Research I universities with grant activities in the hundreds of millions have specific allocation formulas assigning certain percentages or amounts to specific functions.”

Q Is there a relationship of the collection reductions currently underway and the F&A funds being diverted away from the Library?

A The collections reductions currently underway are not a reflection of F&A funds being diverted away from the Library. Instead, they are the direct result of this year’s nearly 16% reduction in state funding. Again, the Vice Provost “The university adopted the classroom as the highest budget priority, so all other units on campus had to bear a nearly 16% reduction to minimize the impact on classes. The Library’s collections are suffering, but so are all other non-classroom activities at UNCW.”

Q Hasn’t the North Carolina legislature traditionally appropriated special funds to mitigate the impact of inflation on library collections? What’s up with this? And, what is UNCW doing in this regard?

A This year and for a number of recent years, the General Assembly has not provided such funds.

Over to the Vice Provost for the final answer “UNCW has been relying on one-time funds each year to compensate, but has been largely unsuccessful for the past several years because the budget reductions have dried up the one-time funds we would normally use to fight library inflation. And to make it worse, in addition to the permanent budget reductions we are experiencing, the state has also required us to return our one-time dollars (what the state calls ‘reversions,’ as opposed to ‘reductions,’ which are for permanent cuts in our budget), drying up that source of funds previously used to minimize cuts in the library collections.”

Contact: Sarah Barbara Watstein


 

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