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Transparent Cost of Research A promising start but where to from here?

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Presentation on theme: "Transparent Cost of Research A promising start but where to from here?"— Presentation transcript:

1 Transparent Cost of Research A promising start but where to from here?

2 What Is It and Why Participate? Process to identify indirect cost of Australian Competitive Grant (ACG) related research to assist Department of Innovation Industry Science and Research (DIISR) in the allocation of Sustainable Research Excellence (SRE) funding Obtain additional funding and increase transparency and accountability associated with the expenditure of government funding

3 Summary of Presentation 1.Background 2.Promising start 3.DIISR methodology 4.ANU Approach a)General background b)Financial results c)Preferred method 5.Matters to be considered 6.Discussion and questions 7.Additional information a)CAPs suggested by DIISR b)Useful links

4 Background First considered by the ANU in June 2008 Participated in work undertaken by Allen Consulting Group in 2008 and 2009 on behalf of DIISR Based on approaches identified under the UK Model to a degree

5 Background SRE focus to support research excellence and secure longer term sustainability of quality research SRE providing $510 million over 4 years 2009/10 to 2012/13

6 Background SRE Funding - 2010 Base – 20% based on RIBG approach (share of ACG income) 80% linked to participation in SRE Threshold 1 – based on ACG income up to $2.5m calculated by applying RIBG approach Threshold 2 – proportional allocation based on relative share of ACG income >$2.5m moderated by performance (TC and ERA participation and HERDC publications data) Implementation funding provided in 2010 only to assist in meeting the additional costs applicable to participating in TC trial.

7 Background SRE Funding - 2011 Base – based on RIBG approach (share of ACG income) Threshold 1 – based on ACG income up to $2.5m calculated by applying RIBG approach Threshold 2 – proportional allocation based on relative share of ACG income >$2.5m moderated by performance (TC outcome and HERDC publications data [Research Active Staff/weighted publications])

8 Promising Start Open minded approach by DIISR in the development of a TC model Option of 2 models to determine TC Alternate and Preferred Alternate model from high level data and all universities should be able to undertake No disadvantage provision for those adopting the Preferred model if this resulted in a lower value where both approaches undertaken

9 Promising Start Use of a Trial Year approach to enable development of the model TC outcomes used as a moderator NOT a determining factor in the funding model Not a true ABC model Implementation funding for those participating in SRE and TC exercise

10 Promising Start TC Principles Fitness for purpose Simplicity Cost efficiency Transparency Equity of treatment No ‘double dipping’ Materiality Reasonableness

11 DIISR Methodology Universities to provide: Results of a ‘Staff time spent on ACG Research’ survey (Staff Time Survey) Report on the University’s Indirect Costs (IC)

12 DIISR Methodology Identify from Staff Time Survey the amount of time dedicated to ACG research as a proportion of Total Academic effort (Alternate method) or as a proportion of Total Research effort (Preferred method). Academic staff surveyed to determine time spent on: Research ACG Research Other Teaching Research Training Other (includes grant application and preparation) Leave

13 DIISR Methodology Determine ‘Allowable Indirect Costs’* Non academic salaries and on-costs Maintenance of physical infrastructure including most of IT Finance and insurance costs Other indirect costs * For the Preferred method costs must be associated with research activities

14 DIISR Methodology Identify ‘Non-allowable Indirect Costs’ Academic salaries and on-costs Scholarship payments Depreciation Borrowing costs Commercial activity related costs E-research/high performance computing costs Joint venture and controlled entity costs Costs of acquiring research animals

15 DIISR Methodology Alternate Formula (ACG effort as a proportion of all research) x (FTE effort of all research)/(FTE Academic total) x (Total Indirect Costs) = ACG related Indirect Costs Preferred Formula (ACG effort as a proportion of all research) x (Indirect Cost of Research) = ACG related Indirect Costs

16 DIISR Methodology Alternative MethodPreferred Method Staff Survey Component Research (ACG)XX Research (Other)XX TeachingX Research Training Other Leave Financial Data Component Total Indirect CostsX Indirect Cost of ResearchX Research Active = Research (ACG) + Research (Other) Academic Active = Research Active (ACG + Other) + Teaching

17 ANU Approach ANU provided financial data for both methods Utilise base data that is subject to audit Annual Financial Statements Data is reliable Verified by external party to the University Provides Government with degree of comfort

18 ANU Approach Established a system generated report to identify contribution to P&L result by each Fund type* Report can be run at whole-of-University or College or Business Unit level** Can be reconciled back to P&L values * Fund types Recurrent; Contract Research; Consultancy; Other = Trading Areas, Endowment, and Investment returns etc. ** Refer to Operational structure in following slide

19 ANU Approach Recurrent ACGR Contract Research Other Contract Research ACGR Contract Consultancy Other Consultancy OtherTotal Op Income 835,469 Op Expense Acad Salary 184,711 Non-Acad Sal 211,774 Services 264,159 Depreciation 49,546 Other 58,158 Total Op Exp 768,348 AFS P&L 67,121

20 ANU Approach - Alternate Method Result Total 2009 AFS Expenditure768,347,013 A. Excluded Departments168,740,071 B. Excluded Natural Accounts250,364,457 C. Excluded Fund Types (except R Funds)102,580,923 D. TOTAL INDIRECT COSTS246,661,562 Schedule D: Indirect Costs Non-academic salaries & on-costs154,997,648 Cost of maintaining physical university infrastructure30,893,596 Finance & insurance costs3,225,871 Other costs indirectly associated with research and teaching 57,544,447 TOTAL INDIRECT COSTS246,661,562

21 ANU Approach - Preferred Method Result Total Indirect Cost (of Research & Teaching)246,661,562 A. Central Costs Exclusively Related to Teaching1,757,235 TOTAL INDIRECT COSTS244,904,327 Schedule B: Indirect Costs C. Indirect Costs of Research: 1. 100% Attribution70,427,311 2. Allocated Costs75,463,918 3. Unattributable Indirect Costs- D. Other Indirect Costs (not related to research)99,013,097 TOTAL INDIRECT COSTS (C+D)244,904,327 TOTAL INDIRECT COSTS OF RESEARCH (C)145,891,229

22 ANU Approach Alternate methodology applied as prescribed by DIISR Preferred methodology adopted the approach outlined in the following slides This approach differs to DIISR Guidelines May not be applicable to all universities Our operational structure and physical layout allows us to adopt a ‘predominance use’ approach

23 ANU Approach (Preferred Method) 21 Business Units considered to be predominantly Research oriented 10 Business Units considered to be predominantly Teaching oriented 29 Business Units are College or Central Administration

24 ANU Approach (Preferred Method) Cost of Research Recognition Direct Indirect Overheads

25 ANU Approach (Preferred Method) Overhead Cost recognition Recurrent Fund expenses associated with: College General operations (administration of the College) Central University Administration operations ANU Cost Allocation Proxies (CAPs) are applied to redistribute overhead costs to Teaching and Research Business Units

26 ANU Approach (Preferred Method) Overhead Cost recognition – ANU CAPS College Total College expenses allocated to Business Units (BU) of the College based BU AFS Income/Total College AFS Income

27 ANU Approach (Preferred Method) Overhead Cost recognition – ANU CAPS Central Current Replacement Value BU Buildings/Total Current Replacement Value of Teaching & Research Buildings Building Maintenance Campus Wide Property Costs Facilities and Services Division

28 ANU Approach (Preferred Method) Overhead Cost recognition – ANU CAPS Central BU AFS Income/Total Teaching & Research BU AFS Income University Executive Finance & Business Services General University Activities Marketing and Communications Statistical Services Development Office

29 ANU Approach (Preferred Method) Overhead Cost recognition – ANU CAPS Central BU Student EFTSL/Total Teaching & Research BU Student EFTSL Division of Registrar and Student Services BU Raw Staff Numbers/Teaching & Research Raw Staff Numbers Human Resources Division

30 ANU Approach (Preferred Method) Overhead Cost recognition – ANU CAPS Central BU Average of (Staff FTE + Student EFTSL)/Total Teaching & Research BU (Staff FTE + Student EFTSL) Information Services (IT) BU Number of S Accounts Held 31 Dec/ Total Teaching & Research BU S Accounts Held 31 Dec Research Office

31 Matters to be considered How to address direct cost of academic salaries How to address depreciation Current DIISR approach is that the only functions of universities is Teaching & Research Move towards an ABC model in the future Determine cost drivers Understand true cost of Research and Teaching deliverables

32 Matters to be considered System and administrative practice changes Significant cost in both time and dollars The work, fun, and challenges for us in identifying the real cost of Research and Teaching in our universities begins!!!

33 Discussion and Questions

34 CAPS suggested by DIISR Application of the following can be found in Guidelines for Assignment of the Indirect Costs of Research DIISR Paper 9 June 2010 (F1)(F6)(F7B)(F9) Total Research Income (HERDC)/Total Income (F2A) Research Floor Space/Total Floor Space or (F2B) Current Replacement Value (Research Space)/CRV (Total Space) (F2C) [Research Only FTE + 40%(T&R) FTE]/[Total Academic Staff FTE]

35 CAPS suggested by DIISR (F3)(F7A) Average of {[Research Only FTE + 40%(T&R) FTE]/[Total Academic Staff FTE]} + (EFTL HDR Students/EFTL Total Students) (F4) {[Research Only FTE + 40%(T&R) FTE]/[Total Academic Staff FTE]} (F5) HDR EFTL/Total EFTL (F8) International HDR Student EFTL/Total International EFTL

36 Useful Links cuments/IndirectCostsUniResearch.pdf cuments/IndirectCostsUniResearch.pdf cuments/FAQsSREFinance100610.pdf cuments/FAQsSREFinance100610.pdf cuments/GuidelinesForTheAssignmentOfTheIndirec tCosts100610.pdf cuments/GuidelinesForTheAssignmentOfTheIndirec tCosts100610.pdf cuments/SRE2010GuidancePaper.pdf cuments/SRE2010GuidancePaper.pdf

37 Useful Links ews/fec/fecexecsum.pdf ews/fec/fecexecsum.pdf ews/fec/fecreport.pdf ews/fec/fecreport.pdf ews/fec/fecannex.pdf ews/fec/fecannex.pdf uments/qavreport.pdf uments/qavreport.pdf RCUK website

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