Keeping track of lab finances

Recently, I’ve spent a lot of time working through lab finances. I need to make personnel decisions, and what I want to do is:

  1. Make sure the amount of money I think I have to spend is the amount I actually have to spend.
  2. Encumber the salaries/stipends/tuition of people currently in the lab.
  3. Play around with different scenarios (e.g., What if that prospective grad student comes? What if I hire another postdoc?) to see what impacts they have on the budget.

This seems like it should be straightforward. It’s not.

First, to make sure the amount of money I think I have to spend is the amount I actually have to spend: At both Georgia Tech and at Michigan (and I’d guess most other universities), there is an online system for tracking accounts. Here, I log in to something called Wolverine Access, then click on the M-Reports option, and then can see a summary of projects (where “projects” are startup and individual grants, in my case). This system is updated once a month when accounts are reconciled. I can see something labeled “Official Balance as of last month closed” (at the moment: Feb 2015) and the Projected Balance. Those two numbers differ from each other, for reasons that I’m guessing are related in part to salaries of people currently supported on that funding. But those salaries don’t seem to be able to fully account for the differences, so I’m not sure why the projected balance is different. Maybe they’re projecting further than one month? Or maybe they’re assuming we’ll spend a certain percentage of the non-personnel funds each month?

Let’s assume, though, that I can figure out whether I should be looking at the “official balance” or the “projected balance”. Additional questions that then arise are things like 1) Has the most recent installment of the grant hit the account? 2) Has the REU supplement hit the account yet? 3) Did the invoice for that spec get paid yet? There are ways to look at the nitty gritty details of all the transactions associated with my accounts, but it always takes me a long time to find the right spreadsheet and, once it’s opened, it’s somewhat overwhelming. It’s tempting to stick my head in the sand and just totally ignore the details of individual transaction, but I know people who’ve opened those files to find things like that someone else’s grad student was accidentally put on their grant. That’s the sort of thing you want to figure out sooner rather than later! I’ve never found anything that major, but I have found discrepancies that needed to be corrected.

Assuming I get all that worked out, the next thing I want to do is to encumber the salaries/stipends/tuition of people currently in the lab (and also any major planned expenses, such as those associated with molecular analyses). My first priority, before taking any new people into the lab, is to make sure I can properly support the people already in my lab. For grad students, this means stipends, benefits, and tuition. For staff (postdocs and technicians), this means salary and fringe benefits. Plus, when charging to grants, there’s also overhead, which gets tacked on. So, if I want to pay someone in mylab $40,000/year, $82,000/year gets charged to my grant. People are expensive.

The way I do this is to take whatever number I came up with above and then go over to excel to play around with numbers (e.g., let me pay my current technician off funds X & Y for the next two years). I pull up the budget template in excel that I get from the grants person prior to working on a budget for a grant proposal. And then I go in and play around with numbers. What I would prefer would be to have a system that integrates with the one above, where I can ask them to project the budget through to the end of the grant, assuming the additional yearly increases from NSF and various encumbered personnel. This should be flexible so that, for example, if it took 6 months longer to hire a postdoc on a grant than was originally planned, the salary encumbrance on the grant gets moved by 6 months. The report I downloaded at Georgia Tech allowed me to play around with numbers like this better than the report I can download here at Michigan does. I’m guessing there’s a way to do this, but I haven’t figured it out yet. I have a meeting set up with the financial folks to get pointers!

Then, once the current people are taken into account, it’s somewhat straightforward to do a similar thing but with scenarios involving new lab personnel (or, for something like startup, new equipment purchases). But these can sometimes be trickier because there isn’t complete information. This is the most notable in terms of prospective grad students. In my department, the expectation is that I will support grad students for two semesters on a grant.* So, if I make offers to two grad students in a given year, between the time when I make those offers and when I hear back from them, I’m not sure if I should budget $0 for them or two years worth of support. That can make a big difference when trying to make other budget decisions.

From discussions with other faculty members, budgets are always a source of stress. We don’t get training in accounting, but we need to handle pretty substantial budgets. And I’m always really nervous that I will make a mistake somewhere along the line. So, after poring over the spreadsheets for a while, I emailed the accounting folks in my department to ask them for a meeting. We’ll meet tomorrow so that I can make sure I am doing things correctly. Then, just to be safe, I’ll email them to make sure the outcome I think we came to is the one they think we came to as well. And then, after all that, I’ll hopefully be able to feel comfortable that the lab finances are in order.

But I continue to feel like there has to be a better way. Is there an approach that I’m missing? How do you track lab finances?

 

*The rest of the time is covered by a mixture of fellowships and TAing. And, yes, I realize we are very lucky to have this much support!

19 thoughts on “Keeping track of lab finances

  1. On the one hand, I’m sorry to hear you have the same struggles with University accounting systems that I do. On the other hand, I’m glad I’m not the only one!

  2. This is also a very important part of being a government scientist, where budgets must be spent to a certain percentage by the end of the fiscal year, and are often not available until late in that same fiscal year.

  3. Managing budgets is my absolute *least* favorite part of my job, for all the reasons you describe. I have exactly the same problem you have with reconciling the University-provided budgets with my own accounting. What is worse for us is that the University-provided budgets split things up into budget lines/categories that are not aligned with the way we’re expected to report budgets to our major granting agency. (e.g., the Uni provides a line for ‘salary for all employees’, but NSERC wants salary split by MSc, PhD, postdoc, and technician, which is then difficult to extract from the University budget info.) On the other hand, one benefit for those of us in Canada is that at least some of our major grants are pretty flexible in terms of spending relative to individual budget lines as long as the whole grant spending comes in at budget, so that gives some breathing room for adjusting on the fly. I do much better with these flexible allotments than with grants where I have to end with each budget line within 10% of the proposal.

    As for strategies: I’ve tried getting really detailed in my own spreadsheets and not relying on the Uni ones, but it takes a ridiculous amount of time and I inevitably leave out something important. Getting pointers from the financial admin folks has also done me well, as has simply hiring someone to help with budgets. I also tend to be extremely conservative in spending and overestimate spending on students so that I am sure to have enough $ if push comes to shove. Perhaps this means I do less science than I would if I was more aggressive, but my time is probably the limiting factor for me in terms of the amount of science that gets done anyway.

    Good luck! I’ll be curious to hear an update after you talk to the financial staff.

    • “I also tend to be extremely conservative in spending and overestimate spending on students so that I am sure to have enough $ if push comes to shove. Perhaps this means I do less science than I would if I was more aggressive, but my time is probably the limiting factor for me in terms of the amount of science that gets done anyway.”

      Right now, I’m coming to the conclusion that I probably should be a little more aggressive. My inclination is to be super conservative, but that’s not necessarily the right strategy. But being worried about running out of money isn’t good, either! And, yes, my time is definitely a limiting factor, but one thing I’m very much hoping is that the new postdoc I hire will help make it so I don’t have to spend quite so much time in the lab during field season.

      • I’ve been finally learning, very late in my career, that it’s better to be aggressive than conservative. Money in the “bank” doesn’t generate science, whereas money spent can generate papers that might generate more money.

      • @Ellen: That’s what I’ve been starting to think. I keep thinking “sometimes you have to spend money to make money”. Part of me feels like I should be conservative in case there are funding shortfalls in the future. But then more of me thinks that I’m more likely to get future grants if I spend more money now (especially on people).

      • I suspect you two are right about being more aggressive, though it is very hard for me to do. When I was managing budgets as a postdoc on the Millennium Assessment, I have a very clear memory of being proud of being considerably UNDER budget at the end of the first year, only to have all of the $ I’d saved taken away and given to another group who had come in OVER budget.

        Still, I feel comfortable with the way that I’m managing things and am satisfied with the science I’m able to get done, so perhaps this conservative strategy is ok for me … ??? (Though perhaps it is time to hire a lab manager with some of the excess.)

    • Oh, and my meeting for tomorrow got canceled due to illness, so it will be a bit longer until I feel confident in the budget numbers, unfortunately.

  4. I’ve seen this from both ends of the cow- having managed my own grant funds, and having done a couple of stints in business management many moons ago. By far & away, the best system of accounting I ever used was an integrative/ interactive system. The institution had implemented business management/ accounting software that allowed PIs (or their employees) to directly enter debits & credits to the accounts. This software immediately performed the calculations & projections to give you the information immediately. At the end of each month, business office personnel reconciled accounts to ensure mistakes had not occurred.

    Obviously there are risks & headaches with this approach. It does open up the institution to the potential of short-term (less than 30-day) instances of employee theft/ fraud. So for instance, one could charge an account for a $50k microarray kit to a bogus entity and walk off with a bundle of cash. However, where this system was used, a designated member of the lab received training in the basics of accounting and the software, and as far as I know, in the three years I was there, no instances of fraud occurred.

    The place where headaches occurred was when the person in the lab made a mistake in entering the numbers to the software. So for instance- entering a debit as a credit, or putting a charge for materials in the animal care budget made the life of the departmental business manage hell… but, that was the kind of mistake that only happened once, because the ire of the manager was something you did not soon forget!

    • “By far & away, the best system of accounting I ever used was an integrative/ interactive system. The institution had implemented business management/ accounting software that allowed PIs (or their employees) to directly enter debits & credits to the accounts. This software immediately performed the calculations & projections to give you the information immediately. At the end of each month, business office personnel reconciled accounts to ensure mistakes had not occurred.” This is exactly what I’d like! I guess it’s not more common because of the risks and headaches you list?

      • I don’t know the answer to that question. It might be the case many institutions shy away from it because of the headaches. I think the potential of fraud is minimal. Obviously more investment is needed in training of employees, which could be a consideration. I know the business folks liked it, because it really cut down on the frequent door knocks of people wanting to know “how much is left in the kitty”.

  5. How many Phds does it take to use a finance system designed by and for accountants…?

    I also use spreadsheets for longer term planning. It took a while to set them up initially, but I can now update all my grants in an hour or two. I find that with my own spreadsheets I can manage an account to +/- a couple of thousand dollars. Fortunately we have a couple of financial wizards on our admin staff who deal with the problem of zeroing out accounts at the end of the fiscal years.

  6. A subtext here is that the large majority of campuses in the US (and I believe much of the rest of the world) have adopted PeopleSoft for all of their HR, accounting, payroll, and student records (including grant reporting). And that this system sucks. So when we each complain about “Wolverine Access” at UMich or “MaineStreet’ at UMaine we’re really using the same basic thing (check out this UMich FAQ http://www.umich.edu/~bhlumrec/admin_unit/mpathways/1999-2000/overview/pplsoft.html and the list of other campuses there was very early days – I don’t know what the market saturation is now but I bet its over 75%). About 15 years ago the computer sales people had run out of large companies to sell to and so started convincing college campuses to throw out their home built systems and switch over and go through BPR (business process reengineering) and adopt an integrated software package (supposedly to save millions of dollars which never materialized). In the business world there were two competing packages (PeopleSoft from Oracle which is a terrible company and SAP) but in the college world there was only one choice, PeopleSoft.They basically broke into the university market by lying and saying it had a lot of university specific functionality (student records, grant tracking) that it didn’t and then whipping it together really fast. And to repeat, it sucked. It was often worse than the systems it replaced. And it has barely improved in 15 years. That is the whole sordid tale of why your accounting software seems (and is) so bad from a quasi-insider.

  7. Pingback: Communicating about lab finances | Dynamic Ecology

  8. This is a really interesting post. I’m not an academic and have never managed budgets in academia- but I have managed budgets at several different companies, from small to huge. The accounting software never gives me the info I want when I want it, so I’ve always had to supplement with my own spreadsheets. The closest the standard system ever came to matching what I wanted was during my time at a large contracting company. That system was custom built for the company by its own people. In fact, I took things I’d learned from using that system along with me to later jobs and implemented them in my own spreadsheets.

    I eventually started to realize that the problem wasn’t that the accounting software sucked (or at least, it wasn’t JUST that the accounting software sucked). It was that the information and the timeframes I needed to make my decisions did not match what accounting needed. When push came to shove, the needs of accounting always won, because their needs were dictated by tax law. Now that I am running my own little company, I can see this even more. I use accounting software. And I also still have my own spreadsheets.

    I have no actual advice/ideas to offer, but I wanted to share that the reason you’re struggling with this is that it is a hard problem. It isn’t that you’re doing anything “wrong.” You’ll probably eventually settle on a system that works for you, but don’t feel bad that it isn’t coming easily!

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