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Page 2 - The Michigan Daily - Thursday, March 9, 1989
Indirect costs provide key to budget

NOELLE SHADWICK
DAILY NEWS ANALYSIS
The University recently proposed
a slight increase in the rate of indi-
rect cost reimbursements charged to
federal research sponsors.
The new rate would require federal
sponsors to pay 59.6 percent over
the principal cost of a research pro-
ject to cover indirect costs - costs
that cannot be attributed to any one
person or department.
As an integral part of the Univer-
sity's budget, indirect costs are im-
portant, but often misunderstood.
The root of this confusion often
lies beneath the principles of direct
and indirect costs.
Indirect costs include heating,
lighting and renovation - costs that
cannot be pinpointed on any specific
person. For example, the University
cannot gauge who uses 10 or 30 or
140 hours of electricity.
Direct costs are those costs which
can be assessed and charged to a par-
ticular person or school such as
salaries, supplies and travel ex-

penses.
The University pays for indirect
costs from its general fund, which
includes monies from state
appropriations and student tuitions.
In addition, nine percent of the
general fund, or about $37.5 mil-
lion, comes from indirect cost reim-
bursements from research sponsors.
All federal research sponsors are
required by law to pay a set percent-
age of the sponsored research grant
or contract, and the University as-
sesses rates to non-federal sponsors.
The current rate of indirect cost
reimbursement is 59 percent of the
project's principal cost.
This means if a researcher applies
for a $500,000 federal grant, the
sponsor must pay an additional
$295,000, making the total award
$795,000.-.
The rate of reimbursement is
renegotiated each year between the
University and the Department of
Health and Human Services, the
University's largest sponsor.
Confusion often arises at this
point. When the award is announced

as $795,000, people who are not
familiar with the way indirect cost
charges are assessed, assume that the
University takes a percentage right
off the top and that the money is
somehow subtracted from the re-
searcher's salary.
This is not true for two reasons.
First, the reimbursement is addi-
tional money added to the principal
cost of the project. Secondly, the re-
searcher's salary is not directly af-
fected by the money provided by the
sponsor.
The researcher benefits from the
indirect reimbursement because the
University does not collect rent for
the use of its space, heating or other
indirect costs.
The University uses the same
cost principals used by the federal
government to determine reim-
bursement rates for state, private and
commercial sponsors.
Commercial sponsors are asked to
reimburse the University at a rate of
66 percent, private foundations are
asked for 15 percent, and the state
will pay up to a 20 percent reim-

bursement rate.
If a non-federal sponsor refuses to
pay an indirect cost, the University
and researcher must decide if the
project is worth keeping.
Though indirect cost reimburse-
ments cover a substantial amount of
indirect costs, they do not cover all
of the costs. The difference must
still be paid by the University out of
other general funds such as state ap-
propriations and student tuition.
Without indirect cost reimburse-
ment, the University would have to
cut back on its research and instruc-
tional activities or use more money
from other sources such as tuition
and state appropriations.
The general fund, projected to be
nearly $500 million for 1988-89,
provides money for renovations of
buildings, purchases of equipment,
faculty salaries and student support.
Though the general fund receives
the greatest proportion of indirect
costs, another fund reserved specifi-.
cally for research expenditures re-
ceives about one-quarter of the indi-
rect cost reimbursements.


'01

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tunity to sit down with each other
and air our views on why we feel the
way we do," said first-year Law Stu-
dent Ted Deustch, who spoke at the
rally.
After the meeting, Kurtzberg said
he thought the discussion was held
with sensitivity to the opinions of
each side. "'The Daily will be judged
by what it writes in the future," he
said.
One of the main concerns brought
up by the Jewish students during the
discussions was that many of the
Daily editorials contained offensive,
non-political attacks that injured the
character of the Jewish people.
"Criticism of the policies of the
state of Israel is legitimate, but to

question the existence of Israel and
to say it is racist can be anti-Jewish.
By calling Zionism racist you call a
large segment of the Jewish people
racist, which inothis campus envi-
ronment is not a good thing,"
Kurtzberg said.
"A large number of people are
upset with the way you criticize Is-.
rael, not the fact that you criticize
Israel," he said.
Another concern aired during the
meeting was that the Daily used
"unsubstantiated facts" in editorials
and news articles and often
"oversimplified" the issues.
While Esch agreed that unsub-
stantiated facts should not be used in
news stories, she defended their use
in editorials. "Editorials are by their
nature speculative and opinionated."
Daily staffer Noah Finkel con-
tributed to this story.

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INBRIEF
Compiled from Associated Press and staff reports
Britain expells 30 Iranians due to
death threats against Rushdie
LONDON - Britain announced yesterday it is expelling about 30
Iranians on security grounds because of Iran's death threat against novelist
Salman Rushdie. The government also warned Britains to get out of
Lebanon for safety precautions.
The Foreign Office said that the 150 Britains in Lebanon are under
"increased threat" from kidnappers following Iran's severing of diplomatic
relations Tuesday with Britain over Rushdie's novel, The Satanic Verses.
Three Britons are among the 15 foreign hostages in Lebanon.
An Iranian newspaper, Kavhan International, said the diplomatic break
"will leave its negative impact on the fate of the British hostages."
In Beirut, the Revolutionary Justice Organization, which holds two
American hostages, said it has completed plans to kill Rushdie and will
first attack British police to get to him.
Rushdie. is believed to be under police guard in Britain.
Mich. school finance reform stalled
LANSING - A politically touchy plan to revamp school finance in
Michigan was rejected twice yesterday in the state Senate as partisan
politics stalled it well short of passage.
On votes of 21-14 and 22-14, with 26 votes needed, the Senate defeated
a proposal to boost the sales tax to six percent from four percent, slash
property taxes by $1.1 billion and provide more than $500 million more
for public schools.
The Senate was expected to vote on the plan again, perhaps as early as
today. But if defeated again, the proposed constitutional amendment would
die.
It appeared there were potentially enough votes available for the plan,
but minority Democrats withheld some votes while charging that
Republicans didn't provide their fair share. Democratic leaders demanded
one more Republican vote before releasing more of their own caucus.
Troops drag Tibetans into streets
CHENGDU, China - Security forces dragged Tibetans from their
houses yesterday as thousands of Chinese troops took up posts around
Lhasa after three days of anti-Chinese riots, travelers reported by phone.
Travelers quoted Tibetans as saying death tolls in Tibet were higher
than the official count of 12 killed and more than one hundred wounded
since Sunday when Tibetans marched in Lhasa demanding an end to nearly
four decades of communist rule and the return of their spiritual leader, the
Dalai Lama.
The Dalai Lama's government-in-exile in India offered to hold talks
with China to discuss the future of Tibet. The Chinese Embassy in New
Delhi refused comment.
There were no reports of demonstrations or gunfire yesterday, but for-
eign travelers said troops drove through the city announcing the martial
law imposed Tuesday and ordering Tibetans to stay inside.
HHS supports city needle programs
WASHINGTON - Health and Human Services Secretary Louis
Sullivan yesterday threw his support behind community-based programs
that provide clean needles to drug addicts as a way to stem the spread of
the deadly AIDS virus.
Sullivan said he would not favor a federal needle-exchange program
because of strong sentiment against the idea in some communities. But
he encouraged communities to test such programs and said he would
support federal financing for community-based projects.
Much of the opposition to New York City's needle-sharing program
comes from Black and Hispanic leaders who say giving needles to addicts
continues the dependence on drugs. Those leaders say efforts should be
focused on treatment of drug use.
Infected addicts can spread the disease by passing it to their sexual
partners as well as to their babies.
EXTRAS'
Giant chicken causes hullabaloo
Marietta, Ga. - Just about any request for directions in this town
evokes some instruction involving the Big Chicken, so a recent
suggestion to move the structure down the road to Smyrna laid an egg at
City Hall.
"I'm sure if the chicken had a choice it would stay in Marietta," said
Mayor Vicki Chastain.
The 63-foot tall chicken head atop a fried chicken restaurant has been a
landmark for drivers and pilots for more than 20 years.

John Patterson, city administrator in Smyrna, just south of Marietta,
recently-asked Kentucky Fried Chicken Corp. to move the bird to a new
fast food outlet planned for Smyrna.
But both city's mayors disapproved of Patterson's proposal.
"I'm sure all the City Council members would throw themselves in
front of whatever vehicle would move it," said Ms. Chastain.
Smyrna Mayor Max Bacon said he saw no need to bring in "their
pigeon-dropping Big Chicken."
The Michigan Daily (ISSN 0745-967) is published Monday through Friday during the fall and winter
terms by students at the University of Michigan. Subscription rates: for fall and winter (2 semesters)
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ADDRESS: The Michigan Daily, 420 Maynard, Ann Arbor, MI 48109.
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Fri.
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The University of Michigan
SCHOOL OF MUSIC
Michigan Music Teachers Association--
Student Chapter Recital.
Recital Hall, 8:00 p.m.
FREE
Concert Band--
0 William Wiedrich, conductor
Jenkins American Overture for Band
Gould Ballad for Band
Benson Symphony No. 2 ("Lost Songs")
Ginastera Danza Final (from Estancia)
Hill, 8:00 p.m.
FREE
Contemporary Directions Ensemble, with
the "Twicetime Festival"-- Richard
Rosenberg, conductor
George Crumb Music for a Summer
Evening
Xenakis Waarg (U.S. premiere)
and Jalons
George Balch Wilson Cornices,
Architraves and Friezes, for solo
cello, performed by James Wilson
Laurel Firant World Premiere
Gerald Brennan Sappho's Harp
Joe Laibman From theTable of the

4

EDITORIAL STAFF:
Editor in Chief
News Editors
Opinion Page Editors
Associate Opinion Editors
Photo Editors
Weekend Editor
Associate Weekend Editor
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Adam Schrager
Victoria Bauer, Miguel Cruz,
Donna ladipalo, Steve Knopper,
Usa Pollak, David Schwartz
Elizabeth Escd, Amy Harnon
Philip Cohen, Elizabeth Paige
Robin Loznak, David Lubliner
Alyssa Lustigman
Andrew Milis
Angela Michaels

Sports Editor
Associate Spats Editors
Arts Editors
Books
Film
Theatre
Music
Graphics Coordinator

Mike Gil
Adam Benson, Steve Blonder,
Rich Eisen, Jule Hdiman,
Lory Knapp
Andrea Gadd, Jn Poniewozk
Marie Wesaw
Mark Shaiman
Cherie Curry
Mark Swartz
Kevin Woodson

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News Staff: Laura Cohn, Diane Cook, Laura Counts, Marion Davis, Noah Finkel, Lisa Fromm, Alex Gordon, Stacey Gray, Tara
Gruzen, Mark Kolar, Scott Lahde, Kristine LaLonde, Michael Lustig, Jennifer Miller, Josh Mitnick, Fran Obeid, Gi Renberg, Jonatian
Scott, Noele Shadwick, Nicole Shaw, Vera Songwe, Patrick Staiger, Jessica Stick, Jody Weinberg.
Opinion Staff: David Austin, Bi Gladstone, Susan Harvey, Marc KWin, Daniel Kohi, David Levn, Karen Mier, Rebecca NoM,
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Spots Staff: Sieve Cohen, Andy Gottesman, David Hyman, Mark Katz, Jodi Leichman, Eric Lemont, Taylor Lncoln, Jay Moses,
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Arts Staff: Greg Baise, Mary Beth Barber, Ian Campbell, Beth Colquitt, Sheala Durant, Brent Edwards, Greg Fedand,
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