1. ORGANIZATION, TERMINOLOGY, AND FUNDS FLOW
SCHOOL OF MEDICINE
ORGANIZATION, TERMINOLOGY, AND FUNDS FLOW
April 2010
Billy Newton
Vice Dean for Finance and Resource Planning
School of Medicine
DUKE MEDICINE

2. School of Medicine organization
Topics for Discussion
School of Medicine organization
The “big picture”: financial structure of the School of Medicine
The smaller picture:
What types of funds do faculty members typically have?
How are different kinds of funds handled in the accounting system?
What exactly is “overhead”?
Where to direct questions
What does the term “Indirect Costs” mean?
How is it calculated?
What is the Duke indirect cost rate?
How are indirects utilized?
School of Medicine
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3. Some Terms We Will Talk About:
Reserves
Quasi endowment
Overhead
General Funds
Allocated Funds
Restricted Funds
Direct Costs versus Indirect Costs
Who the heck sets the Indirect Cost rate and where does that person live?
School of Medicine
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4. Duke University Organizational Structure Central Administrative
Provost Area
Management Center
Central Administrative
Management Center
Duke Medicine
Trinity College of
Arts & Sciences
University Finance
Human Resources
Facilities
Athletics
Etc
School of Medicine
Duke University
Health System
(DUHS)
Separate 501c3
Non-profit
Professional Schools
Graduate School
School of Nursing
Private Diagnostic
Clinic (PDC)
Separate for-profit
partnership
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6. Administrative Functions Exist at Multiple Levels
University Central Admin Services
-Accounting (General Ledger)
- Budget
- Payroll
- Post award grant accounting
- Gift records
- Human Resources, including Benefits
- Legal
- Internal audit, compliance
School of Medicine
Management Center
Finance, Planning
Pre award office
-Human Resources
-Compliance
IRB, IACUC
Medical Education admin
Department
Chair’s Office
Division
-Lab
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7. Overhead is Allocated Based on Use
University Central Admin Services
Overhead allocated to School’s central
budget based on statistics (budget size,
headcount, etc.)
School of Medicine
Management Center
Overhead allocated to departments
based on discretionary and program
expenditures (not on sponsored funding)
Department
School of Medicine
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8. Basic Funds Flow School of Medicine University Central Budget
Allocated
overhead
Unassigned
income
Allocated overhead
School of
Medicine
Health System
Services (to depts)
Academic support
5b Academic
Transfer (to depts)
Medical Director
services
PDC
Space, Capital (to Building Fund)
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9. Basic Accounting Organizational Structure of the SOM
Central – Dean’s Office
General Funds Central Reserves
Allocated annually
via budget process
by the Dean
~70% of School
of Medicine revenue
Department/Center
General Allocated Externally Endowment
Funds Funds Restricted Funds
Allocated
by Chair 5b
Investment
Income
Start-up
Grants
Endowment
Distributions
Gifts
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10. Basic Accounting Organizational Structure of the SOM
Central – Dean’s Office
General Funds Central Reserves
Allocated annually
via budget process
by the Dean
SOURCES:
-Tuition
-Indirects
-Endowment Income
-Gifts
-Other
USES:
-Dept Support
-Administration
-Plant Ops
-G&A Expense
-Student Aid
SOURCES:
- Health System Support
- Portion of F&A
- Philanthropy
USES:
- Chair Commitments,
- New Buildings,
- Program Investments, etc.
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11. Sources of School of Medicine General Funds
(approximately $187 million of the $1.0 billion Total School expenditures)
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12. Total School of Medicine Expenditures
( in millions)
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13. Indirect Cost Rates
Quick reminder on what indirect cost (or “Facilities and
Administrative” percentage) really means:
It’s not “profit” – it helps to cover facilities and administrative
costs to administer research at Duke University
Research: 56% MTDC (on campus)
NIH Training: 8% MTDC
Clinical Trials: 28% MTDC
DTMI: 25% TDC
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14. Components of Our Rate:
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Exclusions: Equipment > $5k, patient costs, aid, etc.

15. Duke NIH Trend (From NIH Information)
Award Amounts Per Year
(000s)
$328.2 mil
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16. Duke School of Medicine
NIH Ranking Over Time
School of Medicine
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17. Comparison of Duke’s NIH Growth Rate to NIH Overall Growth
Two year rolling average growth rate
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18. School of Medicine Finances on a More Detailed Level
(i.e., so what does all this mean to you?)
Externally sponsored research
A fund code is established which links the grant to the department with you identified as PI. Part of your salary should be charged against this code, depending on your effort. Other than the indirect cost rate, there are no institutional “taxes” or overhead assessments.
School of Medicine
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19. School of Medicine Finances on a More Detailed Level
(i.e., so what does all this mean to you?)
General Funds:
The allocation of the central budget from the Dean to
the Chair/Director. The allocation is fully flexible to the
Chair.
Allocation formula is:
-% of indirect cost recovery to department
-50% of median Chair compensation
-Remuneration for faculty UME & grad student teaching effort
-All space expense charged to the department
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20. School of Medicine Finances on a More Detailed Level
(i.e., so what does all this mean to you?)
Department and discretionary funds:
Includes the PDC transfer (for clinical departments),
gifts, start-up funding.
Clinical departments are now assessed overhead at
a rate of 10% of expenses on these funds to recover overhead charged to the School of Medicine by the University. Basic science departments, centers, and institutes are charged 2%.
School of Medicine
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21. What Happens If I Bring In A Gift,
And I Want It To Be Directed to My Research?
Is it really a gift or is it a grant? (F&A vs. overhead)
Does Development and Gift Records know about it?
How restricted is it?
Department should deposit funds into a gift code with
you listed as PI
Please consult with your departmental business manager.
(FYI – the School of Medicine has over 17,000 fund codes!!)
School of Medicine
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22. Where Do You Go With Questions On:
Finance/accounting: Start with your department
or division business manager
Grants: Your department’s grant manager and
the Office of Research Administration.
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23. If processes seem confusing, we want to know
about it. We have a University-wide initiative
focused on improving efficiency, especially in
grants administration.
And remember, there are worse places to be…
School of Medicine
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24. THANK YOU FOR YOUR TIME Are there any questions?
School of Medicine
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