Addressing the complex issue of indirect costs at the Feb. 28 Faculty Senate Executive Committee meeting, Provost Elizabeth D. Capaldi helped clear up some misconceptions about the behind-the-scenes costs of research, and put to rest any fears faculty members may have had regarding including those costs in future grant proposals.

"It is obviously in our self-interest to get whoever is giving us money to pay the full indirect costs because those are indeed costs of doing research," she told senators.

Using her own research-conducted in a laboratory with rats-as an example, Capaldi drew the distinction between what constitutes direct and indirect costs.

"I have to buy their feed, and I have to pay for the litter," she said of the rats' provisions, which are necessary to conduct the research and thus are considered part of the direct costs.

"However, when I do my research, I'm doing it in a building that has lights and electricity," she said. "I have people who come and clean the floor. (There are) other things that are there, whether I (am) or not."

Those indirect costs, she explained, often are eclipsed by the more obvious direct costs. But faculty engaged in grant writing also must be cognizant of the underlying, indirect costs, she emphasized-and, in particular, not be shy about asking funding sources to pay those costs.

"We should always be on the side of asking for the costs and getting as much of the costs as we can," she said. "It's actually fair to ask the agencies to pay (indirect) cost.

"If I don't have the lights on in my room when I do my (research), I can't measure the food," she pointed out. "I really do need the lights."

Indirect cost, she said, ultimately is negotiated with the federal government "because they need some kind of verification of what you're charging (agencies)," Capaldi said.

UB's true-or actual-indirect cost is calculated at 78.49 percent of direct costs, an audited number all universities must "demonstrate to the federal government during negotiations that determine what the federal government actually will pay," Capaldi explained.

UB's negotiated rate through June 2001-what UB actually can charge to agencies-is 54 percent, and UB actually recovers even less than that, around 23 percent, from agencies, most of which are not willing to pay the full indirect-cost rate, Capaldi said.

"Often, we get research grants from corporations or foundations who say, 'I don't care what your indirect cost rate is, I'm going to pay 15 percent or I'm going to pay nothing,'" said Capaldi, who stressed that the primary reason to apply for grant monies is to cover the direct costs.

"One thing you need to know is all grants are good," she said. "We don't say, 'Oh, well, you won't pay our indirect costs, we won't take this.'

"From the university's point of view, they're good because you've brought in money to cover your research."

The university and state almost always end up subsidizing indirect costs of research, Capaldi said, pointing out that faculty members often make the mistake of believing that money is "extra" money for the university.

To clarify: UB's annual research costs exceed the amount of money generated by indirect costs reimbursement. Calculating only a portion of the university's entire research budget for 2000-01-that which Capaldi originally billed to the indirect-costs budget and said she expected to be covered by the indirect costs retrieved by UB-totaled more than $22 million.

That number included expenses of the Office of the Vice President for Research, the UB Business Alliance, the Center for Computational Research's base costs, utilities, libraries and facilities. The indirect costs generated from research for the 2000-01 year totaled nearly $19 million.

"This isn't to say we have a problem," Capaldi said. "It just means that the university is already subsidizing for indirect costs because we don't fully recover them."

In terms of calculating what UB's real indirect costs are, using 78.49 percent (the true indirect-cost rate), that estimated dollar amount for 2001-02 totals nearly $41 million.

So in actuality, Capaldi explained, UB is bringing in less than half of what the university's true indirect costs of research are.

As reflected by the numbers, UB and the state are paying for a good deal of the indirect costs, which is fine for a research university, Capaldi said, but she added she'd like faculty to be more aggressive about asking for full indirect costs to help reduce that burden.

"I think we can do better on the indirect costs," she said. "I think we can have that in mind when we get grants."