Voice of Experience.

Voice of Experience is a contributed feature in the Journal of Research Administration provided by various senior leaders of the Society of Research Administrators International, especially those who served as Past Presidents of the Society. This featured column continues a long-standing tradition of the Society to provide discussion and direction for emerging topics of interest and concern for research administrators around the globe. The following are the areas, questions, discussions, and directions collected and collated in the last several months.

1. Stipends

Q: Exactly what is a graduate student "stipend"? How are stipends handled, for tax purposes? Should the recipient get a W-2 or a 1099? How do you pay them: through accounts payable, payroll or the Bursars office?

A: When the term is used appropriately, "stipend" is not payment for services rendered. "Fellowship" is a synonym. It is a payment to an individual undergoing a specific training experience; in this case graduate study. Essentially it is a payment to cover living needs and specifically does not provide a need for services in return. In fact some programs prohibit the recipient from having a "job" in addition. Both "stipend" and "fellow" are commonly misused to describe a payment to a student or a non-faculty, non-classified employee. A stipend is explicitly neither compensation nor a "wage" payment, as defined by the IRS. Therefore neither income tax withholding nor collection and payment of FICA taxes are required. A stipend is "income" to the recipient for income tax purposes, but certain costs may be excluded to find the total taxable income to the recipient; see the tax law for details. The payment of a stipend should be reported on form 1099 MISC, with the payment in box 3, "Other income", NOT Box 7, "Non-employee Compensation", because it is NOT compensation. This does put a burden on the recipient to have funds to pay the tax due, come April. I suggest you should find a way to pay a true fellowship other than through the payroll system. This minimizes errors on taxability questions caused because payroll is set up to handle compensation. The appropriate method of handling it outside of payroll is somewhat at the convenience of the institution. Some institutions use accounts payable but have a classification that is not "procurement" because it is not a common purchase. Some pay it through student aid, again treating it especially because it is not quite what student aid usually means. Incidentally, generally the recipient of a stipend has tenure in the stipend so long as he/she is making reasonable progress toward the training goal. However, the award terms need to be read carefully to determine exactly what the measure of tenure is. In addition, one must be careful when "stipend" is applied to students, undergraduate or graduate. Most student payments are for services rendered: research assistant, teaching assistant, etc. However there are true fellowships for students; most are funded by sponsored programs.

The distinction in terms can be equally

valid outside the USA, and can affect

taxation status. However International

members would need to check the wording

for their own country.

2. T&E reports for project participants

Q: Do participants in a federal project have to fill out Time & Effort (T&E) reports? We have just begun our first REU summer research program, and I need to know if the participating undergraduates have to fill out T&E reports.

A: If you are paying for work--personal services--you must have some record of the time worked; see A-21. It may be, but not necessarily is, the same T&E report faculty and other salaried persons sign off on. Typically student workers are on an hourly payroll, and time sheets create the necessary record. If you are paying a stipend (not wage, see above) you need some indication of attendance/participation adequate to show that the goals of the training program are met. In this case, it can be pretty general.

3. Off Campus Space Charges

Q: Is there a tried-and-true allocation methodology for determining how much rent/lease cost to directly charge to an off-site project? We have had very few sponsored projects done "off-site" in the past, but now are faced with projects that will be performed in space we have to lease, rather than space we own. The challenge is how to reasonably apportion the lease and associated occupancy costs directly to projects.

A: Allocate costs by square footage. Count 100% of space occupied by each project, and divide common/service area total proportionately and add that share to each project. In case you need to separate a project between two different areas (off- and on-campus, or between two off-campus areas with different rental values), make the division based on S&W expended in the various areas; that's a reliable technique used by many. Document as written policy whatever process you will use. That way, even if an auditor makes you change it (unlikely!), what you have done was done in good faith. Keep records showing that your leases/rent was appropriately competitively bid. Those records should document what space rents for in that neighborhood in a dollar/square feet basis. Another approach, if you need to lease considerable space and for a long time, is to consult with your cognizant auditor and find out if you can get this leased space included in your on-campus space. Then all the cost determination and allocation questions disappear.

4. Use of F&A Recovery

Q: How can F&A funds paid to the institution be used?

A: F&A rates are based on real costs and are meant to reimburse the university for those costs. However, universities pay the real costs (heat, lights, snow-removal, etc.) out of one "account" and Facilities and Administration (F&A)reimbursements are deposited into another "account". It is up to the university where they ultimately distribute the money from the F&A account. They can put it back in the account used to pay utilities, etc., or they can use it for cost-sharing or as "discretionary" money for departments or Principal Investigators' (PIs) to further their work, or anything else. Once recovered F&A funds lose the "color" of federal funds and can be used as matching or cost sharing on federal grants and contracts.

It is especially useful to know this US

practice if you are outside the US, where

the whole concept may be foreign. For

Primarily Undergraduate Universities

(PUI's) or relatively young universities

in developing countries, people may

worry about the ethical use of funds that

are given for a specific project, even

as overheads. There are even cases of

funds lying unused for years in recovery

accounts because the University administration

does not really know what to do

with them. I found it useful to include

a clause in the Research Policy that

specified the use of overhead funds (for

research related activities of course!), as

it releases the income stream.

5. Internally Funded Equipment

Q: We are beginning to offer internal research initiation funds for faculty to purchase materials, equipment etc. to conduct pilot research projects. A question has arisen pertaining to the owner of the material/equipment. If the purchase is not a consumable and the researcher leaves the University, whose property is it?

A: All equipment at the university belongs to the university unless a sponsored agreement specifies otherwise. If it was bought with sponsored program funds and the university owns the equipment; and the PI moves that sponsored program with him or her when they leave, most universities arrange a transfer (often in the form of indefinite loan) to the PI's new institution. If it was bought with sponsored program funds and the PI moves after the sponsored program is over, permission to move it becomes subject to the PI's negotiations on leaving, and often involves considering if the equipment is specialized and important to the PI's line of research and/or if others in the department need it. If it was bought with University funds, it does not go anywhere (unless the department is feeling generous and applies the guides above). One caution is if the equipment was purchased with both federal and university funds, be sure that the university retains ownership of the equipment before co-mingling funding.

6. Small Disadvantaged Businesses

Q: I am looking for a couple of good sources that can be used for identifying small disadvantaged businesses, women owned businesses, minority owned businesses, etc. for purposes of fulfilling the requirements of one of our small business plan contracts.

A: There are several sources: Your institutional purchasing department; your state Small Business Development Center (SBDC); your city/county/region agency to support small businesses; local banks, and the US Small Business Administration (www.sba.gov). They all have the info, reported according to federal classifications (dollar and personnel thresholds to reach these classifications differ for different industries.

7. Using federal funds to subcontract to a federal agency

Q: I have always understood that one cannot issue a subcontract/subaward to a federal agency from another federal grant. I have a PI who is insisting that it is done at other universities "all the time" and that as long as the contract is not for salary support of the federal employee it is fine. Can you please give me some background info to explain to her?