Indirect Costs and Salary Savings Policy

(Approved 7/2006)

Indirect costs (also known as F&A) are those costs charged to a grantor as “overhead” costs for a grant. These costs are negotiated at the University-level with the funding agency and can range from 0% to 47% of the grant.

Current University Indirect Cost Distribution
Example: $10,000
Amount Remaining
10% Buildings $1,000 $9,000
30% Chancellor’s Office $3,000 $6,000
30% Vice Chancellor’s Office $3,000 $3,000
30% CEHS $3,000 $0
For grants supported by CEHS Business Center
75% Dean’s office–Research office $2,250
25% Department $ 750
For grants supported by the Nebraska Center for Children, Youth, Families and Schools
75% Center office $2,250
25% Department $ 750

Salary Savings Distribution Policy for the Department.

Salary savings are those dollars that are used to replace the salaries of faculty for their effort on the grant funded project. For example, if the grantor pays 10% of a $50,000 salary, the Department would receive $5,000 to replace the salary of the faculty member. The department will use this money to cover the cost of carrying out the responsibilities of the faculty member's job that that they are not able to do because they are working on the grant funded project. For example, because of grant-funded work, a faculty member may not be able to teach a course that is normally part of their regular assignment of courses. In this case, the Department Chair will use the salary savings to dollars to hire a temporary instructor or graduate assistant to teach the course. Any remaining money may be used in other ways to support research, teaching and extension mission of the department.

The use of indirect costs and salary savings in the department is the responsibility of the Department Chair and the use of these funds is at his/her discretion as the administrator of the department’s budget.

Salary savings is figured on the PI’s salary only, no benefits.

On July 1, 2006 (updated January 2016), the Department implemented a policy for the distribution of salary savings dollars. It is as follows: The Department will pay for temporary faculty and graduate assistants (in the case of Extension faculty without course teaching responsibilities) needed from salary savings. After these expenses, if there is more than $100 remaining, the Department will retain 2/3 of the salary savings. The faculty member will be allowed to use the remaining 1/3 (not inclusive of benefits and not to exceed $20,000) for research-related expenses. Salary savings in excess of $20,000 will be retained by the department unless otherwise agreed. The faculty member must submit a plan to the Chair for how these salary savings dollars will be used within 30 days of award. If there is $100 or less, the Department will retain 100% the funds. If no temporary faculty are needed or in Extension no graduate assistant is needed to cover their work, the department retains these funds.

The Department will use the retained funds for research-related expenses, such as supporting unfunded research (including bridge funding) and innovative projects, the purchase of computers and equipment used by faculty and staff, professional development for faculty and graduate students, travel for faculty and graduate students to professional meetings, to meet with grant officers, etc., and general operating supplies such as photocopying, paper, etc.

Faculty members must develop a plan for the use of the funds and submit the written plan to the Department Chair for approval. The approved plan will be kept on file and will be shared with the Business Office to track the budget and reimbursement of expenses.

Example: Salary Savings
Faculty member salary buyout on grant for one course$6,000
Typical Cost of temporary instructor$3,500
$2,500 Remaining
Department share$1,667
Faculty member share*$ 833*
$2,500 Total
* Requests can be made for additional funds when needed.

Policy related to Distribution of Salary Savings length of time funds can be used.

The faculty member’s portion of salary savings will be available until the end of the fiscal year following the year in which the salary savings became available, (1) if the department can find a way to carry the funds forward into the year, and (2) if the faculty member develops a specific plan for its use indicating the items to be paid and the dates. (This plan, given to the chair and the City Campus Business Coordinator, should be made by May 31 to have funds carried over for the following fiscal year.)

Multiple year grants can only be brought forward year by year. The salary savings earned for one year can only be brought forward for the following year, if the department can find a way to do this and a plan is in place.

If a grant was received in January 2010, and the salary savings will not be spent by June 15, 2010, the faculty member will need to submit a plan by March 15, 2010 for spending the funds before June 15, 2011. If the department can find a way to carry over the funds, the plan will be approved.

If a grant was received in July 2010, and the salary savings will not be spent by June 15, 2011, the faculty member will need to submit a plan by March 15, 2011 for spending the funds before June 15, 2012. If the department can find a way to carry over the funds, the plan will be approved.