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FA Rate Explained

National Council of University Research Administrators FRA IX Conference 2008. Common Myths. The F

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FA Rate Explained

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    1. © National Council of University Research Administrators FRA IX Conference 2008 F&A Rate Explained Lynn Kingsley University of Maryland, Baltimore NCURA FRA IX Conference New Orleans, February 2008

    2. © National Council of University Research Administrators FRA IX Conference 2008 Common Myths The F&A Rate represents profit (markup percentage) F&A costs are not real costs F&A is not necessary to perform research

    3. © National Council of University Research Administrators FRA IX Conference 2008 Building the Rate

    4. © National Council of University Research Administrators FRA IX Conference 2008

    5. © National Council of University Research Administrators FRA IX Conference 2008 Direct vs. Indirect Costs Can the costs be readily and specifically identified with a particular sponsored project, an instructional activity, or any other institutional activity? relatively easily with a high degree of accuracy? Or are the costs incurred for common or joint objectives?

    6. © National Council of University Research Administrators FRA IX Conference 2008

    7. © National Council of University Research Administrators FRA IX Conference 2008 Direct Cost Bases Organized Research Instruction Other Sponsored Activities Other Institutional Activities

    8. © National Council of University Research Administrators FRA IX Conference 2008 Organized Research All research and development activities of an institution that are separately budgeted and accounted for Externally Sponsored (Federal and Non Federal) University funded

    9. © National Council of University Research Administrators FRA IX Conference 2008 Instruction Teaching and training activities of an institution Departmental research

    10. © National Council of University Research Administrators FRA IX Conference 2008 Other Sponsored Activities Programs and projects which involve the performance of work other than instruction and organized research Federal and Non Federal Health service projects, Community service programs.

    11. © National Council of University Research Administrators FRA IX Conference 2008 Other Institutional Activities All activities of an institution except instruction, departmental research, organized research, and other sponsored activities Auxiliary Enterprises Hospitals and Clinics Intercollegiate Athletics Chapels This definition also includes any other categories of activities, costs of which are "unallowable" to sponsored agreements

    12. © National Council of University Research Administrators FRA IX Conference 2008

    13. © National Council of University Research Administrators FRA IX Conference 2008 MTDC vs. NonMTDC MTDC generally excludes: Equipment, Capital expenditures, Charges for patient care and tuition remission, Rental costs, Scholarships and fellowships The portion of each subgrant and subcontract in excess of $25,000

    14. © National Council of University Research Administrators FRA IX Conference 2008

    15. © National Council of University Research Administrators FRA IX Conference 2008

    16. © National Council of University Research Administrators FRA IX Conference 2008 Indirect Cost Categories Facilities Building Depreciation Equipment Depreciation Plant Operations and Maintenance Library Administrative General Sponsored Projects Departmental Student Services

    17. © National Council of University Research Administrators FRA IX Conference 2008 Depreciation Acquisition or construction costs of buildings, capital improvements, and equipment spread over the useful life of the asset

    18. © National Council of University Research Administrators FRA IX Conference 2008 Interest Interest on debt to acquire or replace capital assets Construction, Renovations, Alterations, Equipment, Land, Capital assets acquired through capital leases)

    19. © National Council of University Research Administrators FRA IX Conference 2008 Plant Operation & Maintenance Costs that have been incurred for the administration, supervision, operation, maintenance, preservation, and protection of the institution's physical plant. Janitorial services Utility services Repairs and ordinary or normal alterations of buildings, furniture and equipment; Care of grounds; Maintenance and operation of buildings and other plant facilities;

    20. © National Council of University Research Administrators FRA IX Conference 2008 Plant Operation & Maintenance, continued Security Earthquake and disaster preparedness; Environmental safety; Hazardous waste disposal; Property, liability and all other insurance relating to property; Space and capital leasing; Facility planning and management; Central receiving.

    21. © National Council of University Research Administrators FRA IX Conference 2008 Library Costs that have been incurred for the operation of the library, Including the cost of books and library materials purchased for the library, Less any items of library income that qualify as applicable credits

    22. © National Council of University Research Administrators FRA IX Conference 2008 General Administration Costs that have been incurred for the general executive and administrative offices of educational institutions Other expense of a general character which do not relate solely to any major function of the institution

    23. © National Council of University Research Administrators FRA IX Conference 2008 Sponsored Projects Administration Costs incurred by a separate organization(s) established primarily to administer sponsored projects, Grant and contract administration, Special security, purchasing, personnel, administration, Editing and publishing of research and other reports

    24. © National Council of University Research Administrators FRA IX Conference 2008 Departmental Administration Costs that have been incurred for administrative and supporting services that benefit common or joint departmental activities or objectives in academic deans' offices, academic departments and divisions, and organized research units

    25. © National Council of University Research Administrators FRA IX Conference 2008 Student Services Admin Costs that have been incurred for the administration of student affairs and for services to students Deans of students, Admissions, Registrar, Counseling and placement services, Student advisers, Student health and infirmary services, Commencements and convocations.

    26. © National Council of University Research Administrators FRA IX Conference 2008

    27. © National Council of University Research Administrators FRA IX Conference 2008

    28. © National Council of University Research Administrators FRA IX Conference 2008 Unallowable Costs Defined in Section J of A-21 For example, Alcohol Bad Debt Entertainment Memberships Indirect cost pools must be scrubbed

    29. © National Council of University Research Administrators FRA IX Conference 2008

    30. © National Council of University Research Administrators FRA IX Conference 2008 Step 2 – Allocate Indirect Costs

    31. © National Council of University Research Administrators FRA IX Conference 2008 Allocating Depreciation, Interest, Plant O&M SPACE !!!! Costs are allocated to the individual functions performed in each building on the basis of usable square feet of space

    32. © National Council of University Research Administrators FRA IX Conference 2008 Allocation Statistics Example

    33. © National Council of University Research Administrators FRA IX Conference 2008 Allocation of Plant O&M

    34. © National Council of University Research Administrators FRA IX Conference 2008 Allocating Administration General Total Direct Costs Sponsored Projects Sponsored MTDC Departmental Department’s MTDC Student Services All to Instruction

    35. © National Council of University Research Administrators FRA IX Conference 2008 Cross Allocations Indirect Costs are allocated using step down methodology in the following order: Depreciation Interest Plant O&M Library General Admin Departmental Admin Sponsored Projects Admin Student Services Admin

    36. © National Council of University Research Administrators FRA IX Conference 2008 Cross Allocations Generally, indirect costs are allocated to all indirect and direct functions that occur after it in the step down order

    37. © National Council of University Research Administrators FRA IX Conference 2008 Cross Allocations Indirect Costs are allocated using step down methodology in the following order: Depreciation Interest Plant O&M Library General Admin Departmental Admin Sponsored Projects Admin Student Services Admin

    38. © National Council of University Research Administrators FRA IX Conference 2008 Cross Allocation of Plant O&M to General Admin

    39. © National Council of University Research Administrators FRA IX Conference 2008 Step 3 – Calculate Rates F&A rate is a percentage F&A rate is a fraction Denominator – Direct Cost MTDC Base Numerator – Indirect Costs Allocated to the Direct Base

    40. © National Council of University Research Administrators FRA IX Conference 2008

    41. © National Council of University Research Administrators FRA IX Conference 2008 Numerator – Allocated Indirect

    42. © National Council of University Research Administrators FRA IX Conference 2008 Caps Administrative component is limited to 26% Portion of departmental administration related to faculty departmental administration is an allowance of 3.6%

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