• Research Administration Forum

Research Administration Forum
Facilities &
Administrative Rate
Overview
June 22, 2005
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 Terms we Use
• Facilities and Administrative costs are referred
to in many different ways – Indirect Costs,
Overhead, F&A.
• All refer to the same idea. People use
interchangeably.
• In 1996, the term Indirect Costs was changed to
Facilities and Administrative Costs.
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 F&A Costs Are Real
• All sponsored projects require two component
of cost be expended; those costs that are directly
attributed to the project and those costs that are
incurred indirectly for campus and/or
department support and facilities management.
• If project sponsors do not fully reimburse F&A
costs, these costs must be paid regardless and
payment will come from other institutional
funds.
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 Federal Agencies Make the Rules
• DHHS – U. S. Department of Health and Human
Services
– UCD’s Cognizant Federal Agency
• DCA – Division of Cost Allocation (DHHS)
• Cognizant Federal F&A Cost Negotiator
• Regions
– San Francisco, New York, Washington DC, Dallas
• OIG – Office of Inspector General
• DHHS, NSF, NIH
• ONR – Office of Naval Research
– DoD, NASA
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 What are the rules?
• Office of Management & Budget (OMB)
Circulars
– A-21
• Circular of Cost Principles for Educational Institutions
• Cost Accounting Standards (CAS)
– A-110
• Circular of Uniform Administrative Requirements for
Grants and Agreements with Institutions of Higher
Education, Hospitals, and other Non-Profit Organizations
– A-133
• Circular for Audits of Institutions of Higher Education
and Other Non-Profit Institutions
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 How do we Incorporate the Rules?
• Our campus
– “Charging Practices for Federally Funded Grants
and Contracts” 1997 (currently being updated)
– Disclosure Statement (DS-2)
– Operating Guidance Memos
• Systemwide (UC)
– Business and Finance Bulletins
– Contract and Grant Manual (Chap 8)
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 A-21 Costs
• Costs for a sponsored project are comprised of the
following:
– Allowable direct costs
– Allocable portion of F&A costs
– Cost sharing
• Factors to consider in determining whether costs are
allowed for a sponsored project or grant
– Reasonable
– Necessary
– Allocable
– Consistent treatment (GAAP)
– Conformance to limitations or exclusions
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 A-21: Section J
• “General Provisions for Selected Items of
Costs” – 54 items
• Provide principles to be applied in establishing
allowability of certain items
• Apply to both direct and F&A cost items
• Use the order of precedence rule: if there is a
difference between this section and the
agreement, the agreement governs
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 A-21: Direct Costs
• Can be identified specifically with a particular
sponsored project, instructional activity, or any
other institutional activity
• Can be directly assigned to such activities
relatively easily with a high degree of accuracy
– Examples:
• Salaries and wages
• Fringe benefits
• Materials supplied from stock
• Services rendered by specialized service centers
• Certain equipment.
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 Direct Costs
Principal Investigator Subcontract costs
Equipment
Research Associates
and Assistants Costs that
can be directly
assignable
to one
program
Laboratory Project related
Technicians materials & supplies
Associated fringe benefits
Project related travel
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 A-21: F&A Costs
• Incurred for common or joint objectives
• Cannot be identified readily and specifically with:
– A particular sponsored project
– An instructional activity
– Or, any other institutional activity
– Examples:
• Administrative and clerical salaries
• Office supplies
• Copying costs
• Telephone costs
– Local service, equipment rental
• Memberships
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 Facilities & Administrative Costs
Pre and Post
Executive Award-SPA
Management-GA
Accounting, Budget
Payroll/ Office-GA
Purchasing-GA Not directly
assignable
to any one
activity.
Human
Library Resources-GA
Building & equipment
Space related & utilities
depreciation
O&M
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 F&A Concept
• Facilities and Administrative costs directly
support projects – they are just calculated and
assigned indirectly.
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 How You Influence Costs
• Departments are on the front line
– Correct cost assignments
• Understand direct charging practices
• Understand “normally” indirect costs
• Know what unallowable costs are
– Assist in coding of accounts
– Understand cost sharing requirements
– Accurate space survey
– Correct rate development of service center activities
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 Facilities & Administrative Costs
• F&A costs represent a recovery of costs already
incurred by the institution.
• The F&A proposal is an after-the-fact
representation of how our sponsored agreements
are classified, how costs are treated and
accounted for, and the extent of support
institution resources are provided to our
institutions major functions
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 F&A Recovery
• Institutions vary on how F&A recovery is
handled.
• The UC system distribution of Federal recovery
dollars begins with a formula that starts with an
allocation percent fixed by Legislative policy
• See Office of Resource Management &
Planning website.
• http://www.ormp.ucdavis.edu/
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 F&A Rate Calculation
Let’s see now, what can I do to get this rate to what I think it should be.”
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 Who Needs an F&A Rate?
• Educational institutions that wish to be reimbursed
for institutional wide administrative and facility
(F&A) costs associated with conducting sponsored
programs
Here’s your F&A
reimbursement.
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 F & A Cost Rate
• A ratio, expressed as a percentage, where
Facilities and Administrative costs are the
numerator and Direct costs of a specific
function, like research, are the denominator.
• F&A Costs / Direct Costs = F&A rate
– UCD’s Current Rate for On Campus Research is
48.5%
– July 1, 2005 through June 30, 2007: 51.5%
– July 1, 2007 through June 30, 2008: 52.0%
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 F&A Cost Rates
• Other UC campus rates handout.
• Notice the change in on-campus OR rates from
1996 to 2006 (excluding UC Merced)
Rate Change % Change
– UCB 2.1 4%
– UCD 7.0 16%
– UCI 2.6 5%
– UCLA 5.5 11%
– UCR 3.5 8%
– UCSD 3.0 6%
– UCSF 6.5 14%
– UCSB 1.5 3%
– UCSC 1.4 3%
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 Direct Cost Activity
• Major Functions of an Institution
– Instruction
• Department Research
• Sponsored Instruction & Training
– Organized Research
• Sponsored Research
• University Research
• Special rates for CNPRC , GCRC
– Other Sponsored Activities
– Other Institutional Activities
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 Proposal Base Year Process
• Begin with Published Financial Statements
• Reconciliation(s)
• Exclusion(s)
Pool(s) and base development
Allocations
• Rate review
• Future cost projections
• Proposal packaging
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F&A Calculation Process
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 Cost Pool Development
• All costs of the institution must be segregated in
either direct costs, facilities costs, or
administrative cost pools
• Preliminary categorization of costs are usually
performed through use of an institutional chart
of accounts
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 Cost Pool Allocation
• Facilities Pools
– Space survey
– Full-time Equivalent (FTE)
– Uncapped
• Administrative Pools
– Modified Total Direct Costs (MTDC)
– Capped (26.0)
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 2002 Key Data Metrics
• Chart of accounts
– 16,000 records
– Unique DaFis account assignments
– 12,000 or 75% are instruction, research, other sponsored
activities
– 4,700 of the 12,000 or 39% was research
• Space
– 26,400 records
– 200 departments
– Total space = 8,246,438 square feet
– ASF = 7,889,390
– Organized research space = 1,278,833 or 16%
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 Direct Cost Pools
• Costs that can be identified specifically with a
sponsored project, program or activity of an
institution with relative ease and a high degree
of accuracy.
• Typical Direct Cost Pools (Bases) Include:
– Instruction, Sponsored Instruction
– Organized Research
– Other Sponsored Activities
– Other Institutional Activities
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 Major Function
• Instruction
– Teaching and training activities including course
offerings (credit or non-credit)
– Sponsored Instruction and Training
– Departmental Research
• Unfunded, not separately budgeted & accounted for
• In pursuit of ones academic interest
• Informal
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 Major Function
• Organized Research
– All research and development activities separately
budgeted and accounted for
– Federal and non-Federal
• State and Local
• Private
• Gifts
– University Research
• Internal allocation of funds
• Set aside specifically to support research
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 Major Function
• Other Sponsored Activities
– Programs and projects financed by Federal and non-
Federal agencies involving the performance of work
other than instruction and organized research
• Community and health services projects and programs
• Clinical Trials
• Conferences
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 Major Function
• Other Institutional Activities
– Residence and dining halls
– Intercollegiate athletics
– Bookstores
– Student unions, theaters, other auxiliary enterprises
– Chapels, museums
– Unallowable activities, e.g.
• Alumni affairs
• Fund raising
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 F&A Cost Pools
• Facilities & Administrative (F&A) Costs
(Formerly Indirect Costs): Costs incurred for
common or joint objectives that cannot be
specifically identified to a specific project,
program or activity.
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 F&A Cost Pools
• Typical Facilities Cost Pools
– Building Depreciation
– Equipment Depreciation
– Capital Improvements
• Buildings
• Land
– Operation and Maintenance of Plant
– Interest on Facilities
– Library
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 F&A Cost Pools
• Typical Administrative Cost Pools
– General Administration (GA)
– Department Administration (DA)
– Sponsored Project Administration (SPA)
• Pre Award
• Post Award
– Student Administration and Service
• Cap on Administrative Costs
– Administrative components cannot exceed 26%
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 Facilities Cost Pools
• Depreciation & Interest
– Recover annual costs associated with use of
building, capital improvements, and equipment
assets
– Based on the acquisition costs of the assets involved
– Exclude
• cost of land
• any portion borne by the Federal Government
• depreciation costs included in recharge rates
– Interest paid by UCOP on behalf of institution
– Pool debt interest payments
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 Facilities Cost Pool
• Operations and Maintenance
– Administration, supervision, operation,
maintenance, preservation, and protection of
institution physical plant
• Utility costs
• Security
• Environmental safety; hazardous waste
• Insurance related to property
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 Facilities Cost Pool
• Library
– Library administrative staff salaries and benefits
– Books and library materials
– Exclude the cost of rare books (museum type books)
if they have no value to sponsored agreements
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 Administrative Cost Pool
• General Administration: expenses incurred for
the general executive and administrative offices
and other expense of general nature
– Chancellor’s Office
– Central Accounting
– Payroll and Personnel
– Information Technology
– General Counsel
– Budget Office
– Risk Management
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 Administrative Cost Pool
• Departmental Administration: expenses incurred
for administrative and support services that
benefit common or joint departmental activities
or objectives
– Academic dean’s offices
– Academic departments
– 3.6 allowance on faculty (including department
chairs) and other professional personnel conduction
research and/or instruction
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 Administrative Cost Pool
• Sponsored Projects Administration: expenses
limited to those incurred by a separate
organization (s) established primarily to
administer sponsored projects
– Office of Research
– Extramural Funds Accounting
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 Administrative Cost Pool
• Student Administration and Services: expenses
incurred for the administration of student affairs
and for services to students
– Dean of Students
– Admissions
– Registrar’s Office
– Counseling and placement
– Student Advising
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Rate Calculation
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 Rate Calculation
• Numerator expenses
– Depreciation & interest
– Operations & maintenance
– Library
– Administration
• General, Departmental, SPA, Student
___________________________________________
• Denominator expenses
– Sponsored agreements
– Cost Sharing/matching
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 Example for Organized Research
Cost Allocated F&A Rate %
Component Costs Rate Base Component
Bldg. Depreciation $ 6,162,539 $ 143,329,376 4.30%
Bldg. Interest 2,301,947 143,329,376 1.61%
Equip. Depreciation 6,494,402 143,329,376 4.53%
Operation & Maintenance 24,098,900 143,329,376 16.81%
Library 4,831,783 143,329,376 3.37%
Sub-total $ 43,889,571 30.62%
Add Utility Cost Adjustment 1.30%
Sub-total 31.92%
Capped at 26 points 26.00%
57.92%
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 Special Considerations
• Cost sharing
– University’s contribution to sponsored projects
– Must be reflected in base cost (major functions)
Expectation of Federal negotiators
– Impact on F&A rate
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 Special Considerations
• Space survey
– Used to allocate depreciation, interest, O&M
– Must be consistency between space and base
Focus of Federal negotiators
– Impact on F&A rate
• Account Coding
– What type of function (s) are expenditures
supporting?
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 Significant Dates
• Base fiscal year July, 2005 – June, 2006
• Account coding
– Phase 1: Central July, 2005 – Aug, 2005
– Phase 2: Dept Sept, 2005 – Nov, 2005
• Space survey
– Phase 1: Annual Oct, 2005 – Nov, 2005
– Phase 2: A-21 Oct, 2005 – Feb, 2006
• Space to base review Feb, 2006 – Mar, 2006
• Proposal due date Dec, 2006 – Dec, 2006
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 Questions
• Contact
• Nilo Mia
Director, Costing Policy & Analysis
Accounting & Financial Services
University of California, Davis
227 University Services Building
1441 Research Park Drive
Davis, CA 95616-8504
(530) 752-4621
nemia@ucdavis.edu
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