Initiating body:	Division of Finance and Planning
Contact:	Comptroller's Office, 438-5674
Revised on:	06/2002

7.4.1 Grants and Contracts

Definition

Grants and contracts are sometimes referred to as “restricted fund” accounts. Restricted funds are monies received from sources outside the University. They are to be used for a specified or restricted purpose. Restricted fund accounts are established by the Comptroller’s Office when Research & Sponsored Programs accepts an award or contract.

The University receives grants and contracts from many different sources. These sources fall into three major categories:

• Federal funds
• State funds (from other state agencies)
• Private and miscellaneous funds

Federal grants and contracts provide approximately 45% and state grants and contracts provide approximately 30% of the restricted funds received by the University. Private and miscellaneous grants provide approximately 25% of the total funds.

Some of the major agencies providing grants and contracts include:

• Illinois State Board of Education
• Illinois Board of Higher Education
• National Science Foundation
• United States Department of Health and Human Services
• United States Department of Education

The administration and financial management of grants, contracts, and other awards to Illinois State University are governed by a variety of laws, regulations, and guidelines promulgated by the University and other state agencies, which are responsible for the operation of this institution.

In addition, the sponsoring agencies develop their own rules and regulations. These range from zero governance by certain private sponsors to very complex regulations such as those described in the U.S. Office of Management and Budget Circulars A-21, A-110, A-128 and A-133, which are implemented according to the dictates of several federal granting agencies.

Grants and contracts are usually date specific rather than fiscal year specific. A typical grant could begin October 1st and end the following September 30th. Each grant usually does have an end date, which must be adhered to (much like the fiscal year end accounts).

Unique Elements

Grants and contracts can contain three other elements that make them unique.

• Indirect costs are one of these elements. Indirect costs are general University overhead items, which have been factored as a percentage (43%) of Modified Total Direct Cost (includes all direct costs less equipment over $5,000 and subcontracts for the portion over $25,000). Additionally, there is an off-campus rate of 26%. The off-campus rate is used when a majority of the research and/or training occurs in a building not owned by the University. Some grantors will not pay indirect costs (IDC) and will need IDC waived. Unless waived by Research & Sponsored Programs, each grant contains a budget line item for indirect costs. The Principal Investigator cannot expend this line item. This line item is automatically expensed at month’s end based on a defined percentage of actual expenditures for the month. The University and the Department of Health and Human Services negotiate the federal rate.
• Fringe benefits are another unique element. State regulations mandate that the employer portion of retirement, insurance, and Medicare be paid to the appropriate agency by the grant. There are no exceptions.
• Cost sharing is the third unique element. Cost sharing is the dollar amount of contributions the University provides to share the costs of the project. This cost sharing can be provided in the form of telephone charges, supplies, copies, tuition waivers for Graduate Assistants, release time for faculty and the fringe benefits associated with the release time. Cost sharing may or may not be required by the granting agency. Some granting agencies require this information in financial reports.

Comptroller's Office - Grants and Contracts

The Grants Accounting area of the Comptroller's Office handles the financial management of the grants and contracts.  This area is involved from the time of proposal review to the time when the final financial reports are submitted.

Typically, early in the proposal, the Principal Investigator requests assistance with completing the proposed budget. After the proposals are completed, and prior to submission to the various agencies, the Grants Accounting area performs a final review of the budget.

An account number is established when a grant or contract is received by the University. This account number begins with the digits 115xx (the payroll portion begins with 05 and Grants/Datatel uses 115xx). Budgets are posted to this account, expenditures are processed and posted, and monthly reports are mailed to the fiscal agent to keep him or her informed of the financial activity.  For payroll purposes, another account number must be built. Check with the Grants Accounting area for the number before sending forms to payroll. In addition, external financial reports are submitted to the various agencies as required. Some grantors require an independent audit.

If the agency requires an invoice to make payment to the University, the Grants Accounting area completes the invoice.  Therefore, the Grants Accounting area collects monies due to the University for grants and contracts.