Facilities and Administrative Costs Presentation by Grants & Contracts Accounting

1. Facilities and Administrative Costs Presentation by Grants & Contracts Accounting

2. Facilities and Administrative Cost Rate • Today’s session will: • Define facilities and administrative costs • Eliminate the myths relating to F & A recovery • Provide an overview of F & A Cost Rate • Calculation • Negotiation • Recovery • Distribution

3. What the PI KnowsFacts and Myths about Facilities & Administrative Cost Rate • Negotiated organized research F & A is 46 percent • 5 percent of F & A returned to the PI • Consistently told certain expenses can’t be charged direct to a federal grant • Reason: The cost is being reimbursed through the F & A Rate • PI is generating the F & A costs, so should be receiving greater return • F & A recovery is Profit • Grants and Contracts Accounting controls how much F & A is returned to PI

4. FACILITIES AND ADMINISTRATIVE (F & A) COSTS WHAT ARE THEY?

5. Cost of indirect services to support sponsored and non-sponsored programs and are essential for the overall operation of an institution.

6. But Really! What are F & A Costs?

7. They are the costs of: • Janitorial and Utility Services • Repairs and Renovation • Buildings & Grounds Maintenance • University Housekeeping • Physical Plant/Safety • Environmental Safety • Facility Planning • Central Receiving • Public Safety • Physical Assets

8. continued • Real Estate Insurance • Office of The President • General Counsel • Office of VP Finance & Administration • Purchasing • Payroll • Internal Audit • Human Resources • Bursar’s Office • Budget Office • University-Wide Committees

9. continued • Accounts Payable • Accounting Services • Office of Grants & Contracts Accounting • Office of Research and Sponsored Programs • Office of Research Development • Office of Research Integrity • Deans Offices • Department Chairs • Department Business Officers

10. How are These Costs Developed Into an Overall Facilities and Administrative Cost Rate?

11. Expenses Grouped into Cost Pools • Depreciation • Building • Equipment • Interest • Operation and Maintenance Expenses • General Administrative and General Expenses • Departmental Administration Expenses • Sponsored Projects Administration • Library • Student Administration and Services

12. Once Cost Pools are Established • Step down allocation performed • Costs in each pool are allocated to the benefiting functions • Order of pool allocations prescribed by OMB Circular A-21

14. Example

15. Example

16. Next Steps In Rate Process • Certified F & A Cost Rate Proposal Submitted to DHHS-DCA • Negotiations Are Held • Final Rates Are Established • Usually for a Three-year Period • F & A Negotiated Rate Agreement Signed by • Director, DHHS-DCA • VP Finance and Administration, MUSC

17. Example Certificate of F&A Costs

18. How Do We Get F & A Recovery • F & A Expenses: • Calculated monthly based on project expenditures • Actual Recovery Ranges from 0% to 46% • Depending on Terms of the Grant/Contract • Actual Recovery in FY00 was $15,863,619; however, actual allocated expenses were $25,048,735

19. What Happens to the F & A Recovery • Distributed Based On Predetermined Formula Established by the Provost • Current F & A Distribution: • Provost 35% • Infrastructure 20% • Dean/college 40% • PI 5%

20. continued • Any Allocation to the Department is Determined by the Dean/College • GCA Makes No Decisions on How Much is Returned to the Respective Areas. Merely Performs the Distribution Functions as Directed.

21. Rising Issues Which Could Increase F & A Recovery • The American Association of Universities (AAU) and The Council on Governmental Relations (COGR) entered discussions with Federal Officials that could significantly - Increase the Administrative 26 Percent Cap - Increase the 8 Percent F & A Rate on Career Development and Training Grants • Proposal for 15 Percent VA add-on