1. Preparing for a F&A Proposal Base Year 2011 NCURA Region VI & VII Conference Presented By: Adrienne Clifton and Ginger Baker, MAXIMUS

2. Agenda Overview of F&A Calculation Preparing for a Base Year Negotiations

3. Overview of F&A

4. Facilities and Administrative Costs Costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity. (OMB Circular A- 21, Section B.4)

5. Facilities & Administrative Costs Administrative components –General Administration and General Expenses –Departmental Administration –Sponsored Projects Administration –Student Administration and Services Administrative components are capped at 26% of modified total direct costs (OMB Circular A- 21 G.8)

6. Facilities & Administrative Costs Facilities components –Building Depreciation –Equipment Depreciation –Interest –Operations and Maintenance –Library

7. Facilities & Administrative Costs Order of allocation –Building Depreciation –Equipment Depreciation –Interest –Operations and Maintenance –General Administration

8. Facilities & Administrative Costs Order of allocation (continued) –Departmental Administration –Sponsored Projects Administration –Student Administration and Services –Library

9. Facilities & Administrative Costs Bases represent an institutions direct cost activities: –Instruction and Departmental Research Sponsored instruction and training Departmental research –Organized Research Sponsored research University research –Other Sponsored Activities –Other Institutional Activities

10. Preparing for a F&A Proposal Base Year

11. This is my base year, what do I do? Define your objectives Review past problems Identify resources Plan Get resources commitment Start early

12. Major Problems Base / Space Relation Space Survey / Space Inventory Reclassifications of Financial Statement functions to F&A functions Rates are decreasing, lower Administrative components also Time constraints Compliance with Disclosure Statement (DS-2)

13. Major Opportunities Special studies Interest New construction since last proposal –Should be occupied Equipment by room Quality space survey

14. Where To Start Is the F&A Proposal due date realistic? Resources –Internal resources Staffing Financial systems –External Auditors Consultants Goals – Expectations for the rate –Rate increase, maintain rate or minimize staff effort

15. Define Base Define the base –Financial Statement reconciliation issues –Financial Statement reclassifications out of Organized Research –Financial Statement reclassifications that are large amounts (i.e. into Operations and Maintenance) –Cost sharing

16. Need For Special Studies Library Study –Requires full year of data Componentization Study –The components of a building have different useful lives and this results in accelerating the recognition of depreciation. –Requires change on Financial Statements for building depreciation.

17. Interest Get it in the State Wide Cost Allocation Plan (SWCAP) Get it by building Get it by department Get it by the total amount for interest associated with Campus Wide Improvements

18. New Construction/Projection What new research intensive buildings are coming on line? When will the building be completed? What departments are moving into that space? What is happening to the space they vacate? Will this building support new or existing research?

19. Equipment Ideally, want to match 90% of equipment to a valid building and room. Accurate inventory Well documented Split funded equipment Service Center equipment

20. Space Survey Best if done in the final months of the base year (spring) or some schools are conducting the survey after the base year ends Identify source and quality of base inventory Identify departments to survey Identify survey tools Identify resources

21. Space Survey Develop Survey Plan Develop Survey Materials Train Surveyors Conduct Survey Quality Assurance Review Results

22. Anticipate Results Conduct a practice year Use partial year data to model results Make adjustments in the accounting system before year end Review physical plant accounting

23. Results The more you can do before year end, the better No surprises during the rate calculation Maximize rate calculation With cleaner data, you can spend more time focusing on data analysis, instead of data clean up

24. Review Are there significant percent changes in the individual components of the rate when compared with your last base year? What is the value of a point? –How many Administrative dollars are required to increase the Administrative component by one point? –How many Facilities dollars are required to increase the facilities rate by one point? –How much Organized Research space is needed to increase the rate?

25. Review What departments have large Direct Charge Equivalent (DCE) ratios, why? Does your system coding facilitate the proper identification of other expenses? Does the campus have a clearly defined definition for Organized Research? Other Sponsored Activities? OIA? Do you have a common consistent understanding of University data?

26. Review What three things are you most comfortable with? What three things do you have the most concern about? Where are there possibilities for an increase in the rate? If you were the government, where would you look to decrease the rate?

27. Negotiations What is the submitted rate? What is the minimum rate the University will accept? What rate can the University live with? What is the ideal rate the University would like? What is the actual rate of recovery?

28. Negotiations How many years should you negotiate for? Do you have new research intensive buildings coming on line? It is ideal to have a full year of costs in your proposal. Do you need to change your off-campus definition? Are you considering an equipment capitalization change?

29. Post Analysis What did you do right? What can you do better next time? Would a practice year benefit you? Document, document, document Fix it before you start the next one!

30. Questions/Comments Adrienne Clifton –773-575-2599 (Mountain Time Zone) –AdrienneClifton@MAXIMUS.com Ginger Baker –702-994-2999 (Pacific Time Zone) –VirginiaBaker@MAXIMUS.com