Research Administration For Scientists COMP Tim Quigg Class 6: February 11 Cost Sharing OMB Circular A-133 Recharge/Service Centers COMP

Assignment Due February 25 Budgets (with all components from project description) Budget justification (up to 3 pages)

Issues Cost Share Defined Allowable and Unallowable Cost Share Identification of Sources Identification of Responsible Persons Regulations Audits and repercussions COMP

Cost sharing or matching is that portion of the project or program costs not borne by the sponsor. Definition COMP

Types of Cost Sharing Voluntary Committed, offered, excess of mandatory, not a condition to be considered for the award Voluntary Uncommitted, effort or expenditures that are in excess of committed and budgeted COMP Mandatory, required, condition of award

Special Notice!! Commitments in proposals become requirements upon award. COMP

Cash vs. In-kind Cost share from University sources are considered cash Value of non-cash contributions provided by a third party are considered in-kind COMP

Budget Example COMP

Budget Example COMP

Examples of Cost Sharing Employee time, including fringe benefits Equipment Volunteer time or other contributed items Unrecovered F&A, if approved by sponsor Subrecipient cost-sharing Directly related supplies and services COMP

Sources of Cost Sharing University funds Unrecovered Facilities and Administrative Costs Third party contributions Other Sponsored Projects (if allowed) COMP

Responsible Persons Shared responsibilities –Principal Investigator –Department Administrator (Liaison) –Central Office COMP

When to Include Cost Sharing Mandated by Sponsor Contribution is necessary to ensure success of competitive proposal COMP

The amount included as cost sharing should be a reasonable level, considering burden placed on Institution resources. COMP

Finding Cost Share Some Acceptable Items Include: –Salaries and Fringes –Lab Supplies –Travel –Unrecovered F&A COMP

Unallowable Cost Share Items not allowable under A-21 Items normally treated as Indirect Specifically Unallowable Costs Cost share used on other projects COMP

Effect on F & A The amount of cost share contributed by an institution has an inverse effect on its Facilities and Administrative Cost Reimbursement Rate HOW??? COMP

Cost Share or F&A? Items generally considered indirect cannot be cost share. These include: Department Administration Space Utilities Equipment, usually Library resources COMP

Timing Cost share must be expenditures incurred or services rendered during the period of award Some agencies expect / require expenditures to occur at same pace as federal dollars COMP

Where to find the regulations OMB A-110, Subpart c.23 NSF Grants Policy Manual, Section 330 and General Conditions, Section 21 Office of Education (EDGAR), Section Other agency guidelines, including RFPs COMP

Cost Sharing Criteria Verifiable from Official University Records Not cost sharing for other sponsored programs Necessary and reasonable for accomplishing project Allowable cost, as defined in OMB A-21 Incurred during effective award dates COMP

Repercussions of Unmet Cost Share Identify amount and proportion unmet Identify programmatic effect Notify agency immediately Agency may require repayment of a proportionate share of grant funds –Note: Unsatisfactory documentation may be treated as unmet cost share COMP

Audits of Cost Share OMB A-133 Audits COMP

OMB Circulars: A-133 Audit standards for states, local governments, and non-profit organizations receiving over $300,000/year in federal funding Purpose is to promote consistency and uniformity Follow GAGAS (issued by Comptroller General of U.S.) Apply to all federal agencies unless governed by specific law Single Audit Act of 1984, amended 1996

Audits of Cost Share OMB A-133 Audits Program Audits Project Financial Audits Agency Inspector General Audits COMP

Common Audit Findings A lack of written policies and procedures No method exists for valuing contributed effort as cost sharing Incorrect valuation of in-kind cost sharing No annual certification when cost sharing exceeds $500K Unallowable costs claimed as cost sharing Sharon Kiser: Source: Federal Grants News 3/02 – quotes from NSF Inspector General Sharon Kiser: Source: Federal Grants News 3/02 – quotes from NSF Inspector General COMP Failure by institutions to identify cost sharing in their accounting systems

Documentation Mandatory Cost Share must be documented Must be readily identifiable in the official records of the Institution Method of documentation is determined by type of award and type of cost share Inadequate documentation may result in disallowance COMP

Summary Cost share when mandatory Be conservative in valuing for budget Track and document timely Provide information to Sponsored Programs for Official Records COMP

Recharge Centers

Definition A Recharge Operation is a facility, center, operation, function, account, or activity whose output is susceptible of measurement on a workload or other quantitative basis. The costs associated with these activities are separately accounted for and charged to users in proportion to services rendered. The primary purpose of a recharge operation is to provide specific services to the university community although services may be provided on an incidental basis to external users.

Examples Copy Machine Charges Glass Shop Computer Services Lab Animals Electric Power/Utilities

Alternate Names Service Center/Service Facility: – $50,000 - $1,000,000/year – Usually not university wide in scope Special Service Facilities (SSF): –A-21 Section J.44 – “institutional services involving the use of highly complex or specialized facilities such as electronic computers, wind tunnels, and reactors …” –University-wide –> $1,000,000/year Recharge Center: – < $50,000/year

Characteristics The costs of each service must include its direct costs; and when appropriate, its allocable share of facilities and administrative costs. The cost of each service should be directly billed to users based on a schedule of rates that does not discriminate between federally and non-federally supported activity. Break even operation – rates should not recover more than the total costs of the center over a long-term period. A period is normally defined as one year.

Relationship BTW F&A and Recharge Center Operation/Costs Certain costs such as the cost of capitalized equipment should be included in either the facilities and administrative costs proposal or in the rates of a recharge operation. If the cost for the same piece of equipment is included in both the proposal and a recharge operations rate there is the potential that the federal government could be double charged for the same cost.

Equipment Capitalization Depreciation prorates a portion of the cost of “capitalizable” equipment to each period the equipment is in use. In other words, even though the recharge operation pays for a piece of equipment in full during the year of acquisition, the recharge can only include in its rates the depreciation amount attributable to the current year. – Automobiles – 4 years – Computers – 6 years – All other equipment – 10 years

External Users Commercial entities; and students, faculty, or staff acting in a personal capacity (versus in their student or employee role within the University). Inappropriate outside use of recharge facilities could jeopardize The University of North Carolina at Chapel Hill’s tax-exempt status. Umstead Act