Understanding Indirect
Costs
REC INFRASTRUCTURE RETREAT
APRIL 7, 2015
N A N C Y L . W I L K I N S O N , O F F I C E O F T H E D E A N F O R R E S E A R C H ( I FA S )
Understanding Indirect Costs– Today’s Agenda
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Definition
Key Concepts – Facilities & Administrative
Facilities & Administrative Cost Pool Elements
F&A Formula
◦ Examples with and without Cost Sharing
UF Rate Agreement – comparisons to Peer Institutions
UF/IFAS Distribution of IDC annually
On vs. Off Campus
Your Questions
Next TOPIC ---- Capacity Funds
What are Indirect Costs? – Definition
◦ Costs that cannot be specifically identified to a sponsored activity
◦ Typically this cost is known as “Facilities & Administrative (F&A) Costs”
◦ UF uses different lingo – IDC
◦ Formula is used to determine the F&A “rate” at UF
◦ Prepared by Cost Analysis
◦ UF calculations are submitted to Federal government (so called cognizant agency) for negotiations
◦ Our “approved” F&A Rate Agreement is less than actual costs incurred
◦ DHHS negotiates down
◦ Even if we are paid the “full” federally negotiated rate - it is less than UF’s actual costs
Key Concept for F&A Rate
Facilities
(examples)
◦ Building Depreciation
◦ PO&M
◦ Interest Expense on
Capital Items
◦ Bond Payments
Administrative
◦ General Administration
◦ Department and College
Administration
◦ Sponsored Project
Administration
Strategies:
•
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Fully depreciated buildings used for
Administrative purposes
Building divided into components (building
shell, service systems, fixed equipment, etc.)
with various depreciation schedules
(examples)
Limited
What are Indirect Costs? – Facilities Cost Pool
◦ Determination of Cost Pools and Distribution Base all governed by federal regulations
◦ “Facilities” cost pools are typically:
◦ Building Depreciation
◦ Equipment Depreciation
◦ Capital Improvements to Land and Buildings at UF
◦ Plant Operation and Maintenance costs
◦ Interest expense on capital expenditures
◦ Library costs (building)
What are Indirect Costs? – Administrative Cost Pools
◦ “Administrative” cost pools are typically:
◦ General University Administration
◦ UF President; VP’s; CFO; HR; Development;
◦ Department/College Administration
◦ Deans; Departments; Centers
◦ Sponsored Projects Administration
◦ Division of Sponsored Programs; Contracts & Grants; Cost Analysis
◦ Interest expense on capital expenditures
◦ Library costs for administration
◦ Limited – cannot exceed 26%
What are Indirect Costs? – Formula
1 year of Facilities Pools (Building & Equipment Depreciation + PO&M + Interest Expense + Library costs)
PLUS +
1 year of Administrative Pools (University Administration + Sponsored Programs Admin. + Colleges/Departments)
1 year of Expenditures on Research Grants (Funds 201 and 209)
PLUS +
Cost Sharing
What are Indirect Costs? – Example
Facilities Pools - $150,000,000 +
+Administrative Pools $250,000,000
=$400,000,000
Expenses on Sponsored Programs = $800,000,000
Rate = 50%
What are Indirect Costs? – Example including C/S
Facilities Pools - $150,000,000 +
+Administrative Pools $250,000,000
=$400,000,000
Expenses on Sponsored Programs = $800,000,000
+ Cost Sharing =$200,000,000
=$1,000,000,000
Rate = 40%
Cost Sharing impact is to reduce F&A Rate
What are Indirect Costs? – Comparison to Peers
F&A Rates
Research (on campus)
University of Minnesota
52
University of Florida
50
Ohio State University
54
Penn State University
50.7
U California - Davis
55.5
Indirect Costs Distribution – Within IFAS
◦ IDC Expenses in Fund 201 (Federal) & 209 (non-Federal) accumulated by Contracts & Grants (CnG)
◦ Total is “earned” IDC to IFAS
2014 IDC
Earnings
• $10,904,855
RCM
• $5,099,298
Net to
IFAS
• $5,805,557
Indirect Costs Distribution – IFAS Distribution Percentages
Percentages:
IFAS
Approved
Centers
50% Sr.
VP
2/3 from Sr.
VP
1/3 from
Dean
25%
Dean(s)
15% Unit
Leader(s)
10% PI
Key Concept for On/Off Campus
On Campus
(criteria)
UF Owned Facility
Does not have to be the
Gainesville campus
Off Campus
(criteria)
Non UF Facility
Budget includes– rental
costs
Remember - there is no
“facility” cost in the IDC
Questions & Comments?
Capacity (Formula)Funds in
Fund 221/222
REC INFRASTRUCTURE RETREAT
APRIL 7, 2015
N A N C Y L . W I L K I N S O N , O F F I C E O F T H E D E A N F O R R E S E A R C H ( I FA S )
Capacity Funds– Today’s Agenda
• Definition
• Submission and Award Process
•New Uniform Guidance regulations (A-81)
•Specific restrictions
•Cost Principles
• Allowable, Reasonable & Necessary, Allocable
•IFAS Management
•Your Questions
Capacity Funds–Definition
Capacity Funds (used to called Formula Funds) are VERY RESTRICTIVE. More than the typical USDA
NIFA award.
Fund 221 – Research based capacity funds
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Hatch Regular
Hatch Multistate
McIntire-Stennis
Animal Health
Fund 222 – Extension based capacity funds
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Smith-Lever
Expanded Food & Nutrition Education Program (EFNEP)
Renewable Resources Extension Act (RREA)
Civil Service Retirement System (CSRS)
Funding
Grant
Opportunity
(FGO) Issued
with
deadline to
submit
application
Submit
Application
(via Cayuse)
to
Grants.Gov
Award Face
Sheet is
issued to UF
Capacity Funds– new Uniform Guidance (A-81)
2 CFR Part 200 – Uniform Guidance
Subpart A – Acronyms and Definitions
Subpart B – General Provisions (200.1xx)
Subpart C – Pre Award Requirements (200.2xx)
Subpart D – Post Award Requirements (200.3xx)
◦ This was OMB Circular A-110 Administrative Requirements
Subpart E – Cost Principles (200.4xx)
◦ This was OMB Circular A-21 Cost Principles
Subpart F– Audit Requirements (200.5xx)
◦ This was OMB Circular A-133 Audit Requirements
This Award incorporates the following:
1. Application in response to FY 2015 RFA.
2. Formula Grants Terms and Conditions, http://nifa.usda.gov/business/awards/formula.html
3. General Provisions, 2 CFR Part 400, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements adopts 2 CFR
Part 200 - incorporated by reference. 2 CFR Part 400.1 adopts subparts A through F of 2 CFR Part 200; and 2 CFR
Part 400.2 includes USDA department-wide conflict of interest policy in compliance with 2 CFR Part 200.112.
4. Administrative Manual for Hatch Act Funds
5. Administrative Guidance for Multistate Extension and Integrated Activities
6. Guidelines for State Plans of Work
7. Stakeholder Input Regulation (7 CFR 3418)
8. This award will reach the statutory time limitation on 09/30/2016, the end date of this project. No-cost extensions of
time will not be possible.
9. One hundred percent matching is required for this award. All matching must directly benefit and be specifically
identifiable with approved project objectives. The awardee is required to maintain complete, accurate, up-to-date
records to support all matching activities under the award. Matching requirements may not be satisfied with Federal
funds or with property or services provided under another Federal assistance award.
Big Picture – Key Concepts for Spending
Expense must be:
1.
Allowability (200.403)
2.
Reasonable and Necessary for the performance of the project (200.404)
3.
Allocable to the project (200.405)
Big Picture – Key Concepts for Spending
What is Allowable?
Must be necessary and reasonable for the performance
Consistently treated expense in like circumstance
Cannot be included as a cost to meet cost sharing or matching of any other federal award
For RESEARCH capacity funds – must have an active REEport project too!
Big Picture – Key Concepts for Spending
What is Reasonable & Necessary?
• Regulations tell us that a cost is reasonable and necessary if the expense doesn’t exceed that
cost incurred by a “prudent person under the circumstances prevailing at the time the decision
was made to incur the cost.”
• Generally recognized as ordinary and necessary
• Use “market prices for comparable goods or services in the geographic area”
Big Picture – Key Concepts for Spending
Is the expense Allocable? Is the expense assignable to this award in accordance with the relative
benefits received?
• 200.405(c) Any cost allocable to a particular Federal award under the principles provided for in
this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid
restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal
awards, or for other reasons
• 200.405(d) Direct cost allocation principles. If a cost benefits two or more projects or activities
in proportions that can be determined without undue effort or cost, the cost must be allocated
to the projects based on the proportional benefit. If a cost benefits two or more projects or
activities in proportions that cannot be determined because of the interrelationship of the work
involved, then, notwithstanding paragraph (c) of this section, the costs may be allocated or
transferred to benefitted projects on any reasonable documented basis.
• Determining that methodology is the key!
Capacity Funds– Management within IFAS
Block Tuition Remission – prohibited
Require REEport project (CRIS) value for each expense in the Research Capacity Funds
CAS Exemptions will not be requested from the Division of Sponsored Programs (DSP)
Effort reported is aligned to salary charged on Capacity Funds
Working on fine tuning Cost Sharing to ensure detailed tracking
Questions & Comments?