Tuesday, June 20, 2017

About grants: What are "indirect costs"?

Before blogging further about science, I wanted to explain something about the way research grants work in the US.  Consider this part of my series of posts intended to educate students (and perhaps the public) about careers in academic research.

When you write a proposal to a would-be source of research funding, you have to include a budget.  As anyone would expect, that budget will list direct costs - these are items that are clear research expenses.  Examples would include, say, $30K/yr for a graduate student's stipend, and $7K for a piece of laboratory electronics essential to the work, and $2K/yr to support travel of the student and the principal investigator (PI) to conferences.   However, budgets also include indirect costs, sometimes called overhead.  The idea is that research involves certain costs that aren't easy to account for directly, like the electricity to run the lights and air conditioning in the lab, or the costs to keep the laboratory building maintained so that the research can get done, or the (meta)costs for the university to administer the grant.  

So, how does the university to figure out how much to tack on for indirect costs?  For US federal grants, the magic (ahem) is all hidden away in OMB Circular A21 (wiki about it, pdf of the actual doc).  Universities periodically go through an elaborate negotiation process with the federal government (see here for a description of this regarding MIT), and determine an indirect cost rate for that university.  The idea is you take the a version of the direct costs ("modified total direct costs" - for example, a piece of equipment that costs more than $5K is considered a capital expense and not subject to indirect costs) and multiply by a negotiated factor (in the case of Rice right now, 56.5%) to arrive at the indirect costs.  The cost rates are lower for research done off campus (like at CERN), with the argument that this should be cheaper for the university.  (Effective indirect cost rates at US national labs tend to be much higher.)

Foundations and industry negotiate different rates with universities.  Foundations usually limit their indirect cost payments, arguing that they just can't afford to pay at the federal level.  The Bill and Melinda Gates Foundation, for example, only allows (pdf) 10% for indirect costs.   The effective indirect rate for a university, averaged over the whole research portfolio, is always quite a bit lower than the nominal A21 negotiated rate.  Vice provosts/presidents/chancellors for research at major US universities would be happy to explain at length that indirect cost recovery doesn't come close to covering the actual costs associated with doing university-based research.  

Indirect cost rates in the US are fraught with controversy, particularly now.  The current system is definitely complicated, and reasonable people can ask whether it makes sense (and adds administrative costs) to have every university negotiate its own rate with the feds.   It remains to be seen whether there are changes in the offing.


Anonymous said...

Off topic: Did you notice that the APS has a new, new editor in chief?

Meystre resigned after few months on the job. Remember that Meystre himself replaced Sprouse after his abrupt departure. Not an encouraging sign, I would say. What do you think?

Douglas Natelson said...

Anon, thanks - I hadn't seen that. I think that's an incredibly tough job and something of a thankless task. It's the kind of role where by its nature most of the interactions with rank and file members probably involve some level of author/referee dissatisfaction, and that has to wear on a person. At the DCMP/DMP executive committee meeting in March, there was a very good conversation with him about the journals and their roles. One big question looming out there, and I think only relevant professional society insiders really have the information to answer with any authority, is, "Why are the ACS journals seemingly doing better than the APS ones?" Perhaps that's just a matter of perception, and the ACS journals are also facing serious fiscal and operational challenges, but somehow they don't give that impression.

Anonymous said...

I read somewhere that Meystre resigned because he "felt miscast" into the role.
That means the communication was not optimal - whether that is the APS assuming the candidate knows the position well (after being PRL editor if I remember correctly...?), or whether that is Meystre not realizing what he was getting into, or both as most of the times when dealing with communication is not clear.
I'd assume the APS will scratch try to extract an actionable "lessons learned" from this episode...

Anonymous said...

follow up:
the last paragraph here contains the quote I mentioned:

Anonymous said...

Surprising and unexpected news. Doug, I completely agree, not an easy job. However, Anonymous #2, I am not convinced that this can simply be ascribed to suboptimal communication between interested parties. We are talking about a very high level position that requires significant stature and experience, both of which Meystre presumably had in abundance. He was the chief editor of PRL for years before being appointed editor in chief after an international search.

Consequently, I find the rapid turnover of two editors in chief worrisome and, frankly, embarrassing for an organization of the stature of APS. Both were by means of resignation! I cannot recall a similar occurrence elsewhere. I suspect that most likely this is the byproduct of internal turmoil. The other, less likely, explanation is incompetence on the part of the selection committee. In any case, the dithyramb on the occasion of Meystre's selection (https://www.aps.org/publications/apsnews/updates/editorinchief.cfm) and his resignation after a few months for apparently being "miscast in his role" are glaringly incongruent. I wonder if the supervising bodies in that organization (quite unclear to me who they are) understand and subscribe to what is going on.

Anonymous said...

Anon @ 9:15 (this is anon @ 11.20 and 21).
"Both by resignation" - but the editor before Meystre had been there for years and years. I assume he retired, but at least that does not worry me.

To me the "miscast" wording strongly suggests a breakdown of communication. Clearly he was not the man for the job. Stature and experience are necessary, but not sufficient. With optimal communication the "not the man for this job" should have been identified in the interviewing phase. (moreover, he was chief editor of PRL only for a couple of years, i.e. not very long, before he moved on to).

So I think this is a rapid turnover of 1 editor, not 2. S*** happens.
If, however, the next editor goes similarly fast, then that points at a systemic issue.

Regardless, this is all speculation on our side as we were not there...

Doug, regarding the APS vs ACS comparison: do you think the fact that the ACS does not have in-house editors as the APS has may be a reason? University based ACS editors still get paid somewhat (I presume), but that will still be significantly cheaper than having full-time employees at the APS in Ridge...?

Douglas Natelson said...

Anon@4:32, about APS vs ACS publications.... I don't know. The ACS surely does have professional production people and journal staff. I just don't know enough about the back-office operations of the two publishing organizations to do a comparison. ACS is also a bigger society, with closer (at least it seems like it) ties to industry, and both factors may affect their finances.

Anonymous said...

Doug (this is Anon 4:32),
but the ACS does not have a scientific editorial staff - they farm that out to active academics. Obviously they get paid for that (say 1 day a week or so), but these consultant type contracts do not carry the same overhead as the editorial staff in Ridge NY.
I.e. it is the production and journal staff is not what I'm talking about, it is the Sami Mitra and Reinhardt Schuhmann I was referring to (i.e. the ones signing the decision letter of your PRL submission). I believe the ACS does not have in-house people like that.

Anonymous said...

Anon@4:32, your assumption is wrong: Sprouse resigned, he did not retire. See https://www.aps.org/publications/apsnews/updates/sprouse.cfm, which is even more conspicuous for him since he had been at the position for years, as you say. So, we have two editors in chief that have resigned, after a restructuring of the executive top took place. That strongly signals internal turmoil, and hence my concern.

Having served in numerous editorial boards, I can say that both models (professional vs. academic editors) have their pros and cons. The larger overhead associated with professional editors comes with significant advantages that justify it. PRL might not be a good example of that, but PRX and PRB are. Critical for both modes of operation is the vision and guidance of the editor in chief. You might see now why I make a big deal out of this.

Anonymous said...

The potential correlation with the restructuring is a fair point.
But do we know there is a causal relation? Did Sprouse resign because of that, or did he simply think "I'm done" after many years.
Maybe you know more than me.

Also, I'd like to kindly ask you to elaborate on why PRL might not be a good example of the advantages of professional editors, but PRB is? (And why you put PRX and PRB in the same qualifier instead of PRL and PRX together...?0


Anonymous said...

Anon@9:44, I know as much as you do. I am trying to understand what is going on. Maybe others can chip in. The corporate lingo in the official APS announcements seems written by a current WH staffer and is not illuminating. As for your question, my statement was an oblique and probably unnecessary expression of frustration. Apologies if it distracted from the argument I was trying to make. If interested in a more in depth discussion, just ask any condensed-matter physicist about their experiences with the editors of each journal. The subject is probably unsuitable for a public forum.

Anonymous said...

Anon 12:29, me again.
Okay no problem, no need to apologize.
I'm a (part time) CMP editor elsewhere, so I know how these things go, but I'm particularly fond of the APS so I was hoping to get some insight.
THanks for indulging me.