Facilities & Administrative (F&A)
Cost Recovery
March 5, 2009
What is F&A?
OMB Circular A-21 term for what was formerly
referred to as indirect cost recovery.
 Also known as “overhead”
 Cost recovery mechanism – not a “tax”
What is F&A?
Facilities & Administrative (F&A) costs are
 “Costs incurred for common or joint objectives and,
therefore cannot be identified readily and specifically with a
particular sponsored project, an instructional activity, or any
other institutional activity.”
Not Direct Costs – direct costs are specifically
identified to individual research projects, instructional
programs or other major functions.
 Examples: Salaries, fringe benefits, travel related to project,
lab supplies, subcontracts, etc.
F&A Cost Basis
Universities that receive $10M+ from federal sources
must use a modified total direct cost (MTDC) basis for
calculating F&A.
MTDC includes all project costs except equipment,
renovations and subcontract costs in excess of the first
$25,000.
F&A is recovered as the sponsor’s funds are expended
(and billed) for direct cost items allowed per the
project budget.
How are F&A Rates Calculated?
Calculation is a ratio of:
F&A costs allocated to Organized Research
divided by
Organized Research Modified Total Direct Costs
F&A Rate Calculation
Rate Calculation Process
 Each indirect cost pool is allocated to major
functions (Instruction, Research, etc.) based on Cost
Allocation methods
 Amount allocated to each major function is divided
by a ‘base’ – direct operations of the function
 Resulting % is the indirect cost rate for that function
F&A Cost Pools
F&A Rate Component
Examples
General Administrative Costs
Department Administration
Capped
at 26%
Central administrative offices
(Payroll, accounting, disbursements,
purchasing)
Academic Departments/Colleges
Sponsored Administration
VPR / Grants & Contracts Financial Services
Operation & Maintenance
Repair & maintenance, utilities, custodial,
grounds, police
Building and Equipment Depreciation
Standardized asset classifications and lives
Interest Costs on Building & Equipment
Debt Service on certain buildings
Libraries
F&A Rates
F&A Costs are recovered based on F&A Rates
 Rates are developed based on cost studies.
 UTSA contracted with Huron Consulting Group to develop
our most recent cost study.
 Significant effort.
Proposals are submitted to cognizant federal agency
for review, audit, negotiation & approval.
Once approved, rates are applied to each grant &
contract to determine the amount of indirect costs to
be charged/recovered.
F&A Cost Rate Agreement
Recent COGR survey:
F&A Cost Rate Agreement
F&A payments as a % of
total NIH awards was
stable at 28.5% for FY0305 accdg to GAO.
2000 Rand study
estimated that universities
were subsidizing between
$700M and $1.5B of F&A
F&A rates have held
relatively constant at
~51% for the past 6 yrs!
FY06 NSF survey showed that
universities contribute more than
$9B of their own funds to support
R&D activities or nearly 20% of
total R&D expenditures.
Comparison of Cost Study to the negotiated rate
75.6%
80.00%
70.00%
13.90%
General Administration
60.00%
13.70%
Departmental
Administration
44.50%
Sponsored Projects
Administration
50.00%
9.80%
Building Depreciation
9.60%
40.00%
26.00%
12.20%
Equipment Depreciation
Interest
9.60%
30.00%
Operations & Maintenance
5.60%
6.80%
23.50%
20.00%
5.00%
Library
4.00%
3.00%
2.00%
10.00%
14.90%
9.00%
0.50%
0.50%
0.00%
Actual
Negotiated *
Administrative Costs are capped at 26%; the Facility rate component is
negotiated down to less than half the computed ‘actual’ costs.
Why is F&A Recovery Important?
Supports the cost of conducting research
If sponsors don’t pay, someone else must
Important new revenue source to UTSA
$7,000,000
$5,703,051
$6,000,000
$5,201,496
$5,000,000
$4,000,000
$6,055,402
$3,933,801
$2,978,543
$3,000,000
$2,000,000
$1,000,000
$FY 04
FY 05
FY 06
FY 07
FY 08
UTSA F&A Revenue - 5 Year History
F&A revenue grew by $3.1M over the last 5 years, an increase of 103%
Net Effective F&A Rate
The net effective F&A rate is computed
as follows:
TOTAL F&A Recovery Revenue
divided by
Restricted Sponsored Program
Expenditures (Net of F&A)
F&A Net Effective Rate
Includes all
NACUBO
Programs
FY 07
Basis
Net
Effective
Rate
FY 08
Basis
Net
Effective
Rate
All Restricted
$5,703,051 /
$31,442,181
18.1%
$6,055,402 /
$34,035,958
17.8%
Restricted
Federal
$5,404,985 /
$26,194,640
20.6%
$5,753,973 /
$27,725,858
20.8%
Restricted NonFederal
$298,066 /
$5,247,542
5.7%
$301,429 /
$6,310,100
4.8%
Restricted
Research Only
$4,973,465 /
$20,283,600
24.5%
$5,188,035/
$21,908,637
23.7%
We are subsidizing ~50% of the negotiated cost of overhead for
restricted research (69% of cost study developed costs)
F&A Revenue Recovery by Source
FY 04
Federal
FY 05
FY 06
FY07
$2,872,068 $3,781,347 $5,032,063 $5,404,985
FY08
$5,753,973
State
31,627
68,132
52,261
65,799
65,992
Local
16,321
17,805
30,175
22,842
37,325
Private
58,527
66,517
86,997
209,425
198,112
$2,978,543 $3,933,801 $5,201,496 $5,703,051
$6,055,402
TOTALS
95% of F&A is from federally sponsored activities.
Sources of F&A FY07 Revenue
Sources of F&A Revenue FY 2007
Local,
$22,842 , 0%
Federal 94.8%
State
1.2%
Local
0.4%
State,
$65,799 , 1%
Private 3.7%
TOTAL 100%
Federal,
$5,404,985 ,
95%
Federal State Local Private
Private,
$209,425 ,
4%
Sources of F&A FY08 Revenue
Sources of F&A Revenue FY 2008
Federal
95%
State
1.1%
Local
0.6%
Private
Local,
$37,325 , 1%
3.3%
Private,
$198,112 ,
3%
State,
$65,992 , 1%
Federal,
$5,753,973 ,
95%
TOTAL 100%
Federal
State
Local
Private
FY08 F&A (Federal) Sources
0.4%
0.1%
0.2%
0.3%
0.5%
0.6%
0.7%
0.9%
1.2%
3.2%
3.2%
3.3%
4.4%
8.3%
55.1%
17.5%
USAID
$7,493
HUD
$12,370
Interior
Energy
$17,926
$25,575
EPA
$27,770
Labor
$32,971
Transportation
Agriculture
$38,158
$53,283
NASA
$71,524
Homeland Sec
$181,283
SBA
$182,672
Commerce
Education
$250,513
NSF
$476,779
DOD
$1,009,757
DHHS
$3,173,306
$192,594
F&A Recovery by College, Institute, Center, Program
How is F&A Allocated?
In FY07, the VPs for Research, Business Affairs and
Academic Affairs entered into a formal Memorandum
of Understanding (MOU) to document the allocation
of F&A.
The MOU is:
 Flexible - has been amended twice with another pending.
 Transparent
FY 2008 F&A Allocations
Business Affairs
Support, $522,200 ,
8%
Ctr for Arch Res Vac/Sick Leave,
$46,892 , 1%
Research Support,
$855,580 , 13%
Principal
Investigators,
$519,200 , 8%
Ctrs, Institutes &
Major Pgms,
$511,150 , 7%
Bldg Mtnc & Capital
Imprvmts, $278,087 ,
4%
Academic Affairs
Support, $875,000 ,
13%
Faculty Start-Up
Costs, $1,000,000 ,
14%
Colleges , $191,173 ,
3%
Debt Svc - West
Campus (Tobin) Lab,
$667,600 , 10%
Debt Service - Faculty
Startup Loans,
$1,348,693 , 19%
Allocations to Principle Investigators,
Colleges, Centers and Institutes
The MOU allocates 10% of actual F&A recovery
to PI’s, Colleges, Centers and Institutes based on
prior year actual earnings.
 These funds are allocated on a one-time basis
 Not part of the recipient’s base budget due to year-to-year
fluctuations in earnings.
 Funds are currently treated as discretionary incentive.
Debt Service
29% of FY08 F&A recovery is pledged to debt
service:
Renovations to West Campus (Margaret Tobin) Lab
Facility financed through bond series 2006B
 will be retired August 15, 2036:
FY07 debt service paid $665,350
FY08 debt service paid $667,600
FY09 payment due
$666,000
Debt Service
Faculty Start-Up Costs
 Beginning FY04, faculty start-up costs were financed with F&A
to service the debt.
 All debt under this program will be retired August 31, 2012.
 Remaining payments are:
FY09 $1,383,495
FY10 1,251,908
FY11
924,722
FY12
34,795
Building Maintenance & Capital
Improvements
$300,000 set aside as a reserve for capital
requirements and building maintenance for
research related facilities.
 In FY08, funds were used for previously pledged
faculty start-up costs to forego incurring additional
debt.
Unused balances roll forward to reserves.
Center for Infrastructure Assurance &
Security Lease Costs
During FY09, up to $222,000 of the annual lease costs
will be paid from F&A to allow CIAS to move off
campus (near Main campus).
 Allocation is subject to annual escalation of 3%.
 Allows TRIO to move to ITC
 Allows Business Affairs staff to move from JPL to University
Heights
Funds are not allocated directly to CIAS.
Lease term is 5 years.
VP Administrative Overhead
The following VP areas receive a base budget
allocation to support salaries & related
administrative overhead:
 Academic Affairs $875,000
 Research
$855,580
 Business Affairs $522,200
(14% of FY08 Actual)
(14% of FY08 Actual)
(9% of FY08 Actual)
FY 10 Budget Outlook
 FY10 Budget will be set 2.5% higher than FY09
(1.6% higher than FY08 actual recovery)