MISSOULA – University of Montana budget and accounting officials are working to stave off a projected $675,000 deficit in the Office of Research and Development.
The projected deficit is rooted in an overhead account that deals with the portion of federal grants called “indirect costs,” which is money UM receives from granting agencies to pay bills and other expenses related to the funded research.
State law also allows UM to use this money to invest in the overall campus research enterprise, said Daniel Dwyer, vice president for research and development.
The account in question had $1.5 million at the start of the 2007-08 fiscal year, Dwyer said. It now has a balance of $364,000 — not enough to cover expenses if all the bills came due at once.
“We did not have a deficit this year. We have a modest positive balance in all the indirect (cost) accounts,” Dwyer said. “That being said, we have drawn down a very positive fund balance to what we consider a minimal fund balance, and we are concerned about the potential of a deficit this current fiscal year.”
Much of the money is committed to grants that require matching funds from UM, and to paying research administrators to manage the grants.
But a large chunk of the indirect cost money is committed to research startup packages for new faculty. UM has hired 30 new faculty members since 2005, and as part of their hiring agreement each faculty member was promised research funding in amounts ranging from $200,000 to $500,000, Dwyer said.
Therein lies the problem. If all research faculty withdrew their allotted funding, and if other budget items for things like research-related travel stipends were cashed out, there wouldn’t be enough money to cover the expenses.
The predicament set off alarms in recent weeks as UM officials closed out the 2007-08 books.
When UM’s budget officers got involved, they quickly learned what Dwyer has long known: Monitoring the ebb and flow of federal research money as it moves through campus is challenging because UM has hundreds of funded projects, each project has its own timeline, and each grant gives the university a different indirect cost rate.
In addition, coming up with a new fiscal year budget is a juggling act of knowing how much money is expected to come in from those grants, how much money in federal grants faculty have been awarded but not yet received, and the indirect costs associated with those grants.
It’s taken a full push to right the listing ship that is the research budget, but UM is catching the matter before it becomes a crisis, said Bob Duringer, the school’s vice president for administration and finance.
He has applied the lessons learned during UM’s $1 million athletic budget deficit crisis in 2004 to this scenario.
“We are building a model for a five-year period similar to what we did with the athletic situation a few years ago,” Duringer said. “We got our hands around it on the front end and got a grip on it, and retired the debt early.”