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Contracts, Grants Accounting lands major rate increase by Dick Peterson Public Relations Office of Grants and Contracts Accounting director David Welch credits hard work, a great team and a good software program for negotiating a greater share of federal money to fund MUSC’s facilities and administrative costs. The on-campus impact of the quiet, off-campus office tucked away on the sixth floor of Harborview Office Tower will be measured in additional dollars with every federal grant award made to MUSC. Plot the present ascent of federal funding to MUSC three years into the future and the impact counts into the millions of dollars. In fact, Welch charts the impact to be about $8 million in added revenue.  Another product of the negotiations was a Health and Human Services  agreement to move some of MUSC’s administrative costs out of a capped category into a “composite fringe benefit” category. This change in rate means an additional $1 million recovery of retirement incentive, termination pay, tuition assistance, sabbatical leave, employee assistance program and employee health services.  “And in connection with our new rate agreement and accounting procedures we have included faculty base salaries which are paid by MUSC affiliates and can be attributed to sponsored projects. This will generate approximately $6 million,” Welch said. “David Welch and his staff deserve tremendous credit for the increase in our indirect cost rate negotiated with the federal government,” said MUSC President Ray Greenberg, M.D., Ph.D. “It is highly unusual these days for the government to increase these rates, and it is all the more important to us because of the loss of state appropriations. “This was a long and complicated process and the entire university community owes a debt of gratitude to those who represented us so effectively,” he said. Welch started collecting data in 1997 when he came to MUSC. He recalled those days when the federal government was cracking down on academic institutions. A few high-profile scandals had politicians clamoring for greater accountability. Federal agencies responded by capping federal grants to universities and monitoring their research to ensure university compliance with regulations. Welch formed a number of committees to research the regulations and make necessary changes in policies and procedures. He drew on his years of experience at the Georgia Institute of Technology to begin stockpiling the ammunition he would need to apply to the U.S. Department of Health and Human Services for an increase in the indirect cost recovery rate.  And then he thought of a secret weapon. He remembered Velma Graham. She was on the opposing side, 17 years with the Defense Contract Audit Agency he had to demonstrate Georgia Tech’s compliance to. And he remembered she was originally from Charleston, a graduate of S.C. State University, and that she was the recipient of many honors and awards as an auditor. “So I called her and asked her if she would like to come back to Charleston,” Welch said. “And she did.” Graham brought to the team insight into what the HHS auditors would be looking for in a rate increase request. Also on Welch’s team was CRIS—Comprehensive Rate Information System computer software, marketed by Maximus Inc. “The federal agencies put a lot of confidence in that software, and that worked to our advantage.” The request was submitted March 31, 2001. A severely short-staffed HHS responded in October with several pages of questions and phone calls. The second week in December there was a one-week site visit, and then more exchanges by e-mail, fax and phone.  “In February, they returned for two days of negotiations and granted us a rate increase from 43 percent to 46 percent on the last day,” Welch said. He said that an increase of three points higher than the previous rate is nearly unheard of among academic research institutions, where increases are rare, and if increases are approved they are seldom more than one or two points. Welch said it is difficult to realize that MUSC’s upcoming fiscal year (2002-2003) will be our base for preparing our next F&A rate study, which is due by Dec. 31, 2003.