1. MANAGING U.S. UNIVERSITY RESEARCH WITHIN OMB RATES Weldon Ihrig University of Washington July, 2008

2. 6/10/08 Weldon Ihrig, University of Washington2 UW Current F&A Rates (effective July 1, 2007 – June 30, 2009) Organized Research Rates: On-campus: 56% Off-campus: 26% South Lake Union: 66% Regional Primate Center: A (44%) and A+B (75%) Applied Physics Laboratory: 17% Vessels: 25% (salary base) Instruction Rates: On-campus: 58% Off-campus: 26%

3. 6/10/08 Weldon Ihrig, University of Washington3 UW On-campus F&A Rate Components

4. 6/10/08 Weldon Ihrig, University of Washington4 F&A costs source of revenue For FY 2006-2007, awarded grant and contracts exceeded $1 billion(US). For FY 2006-2007, F&A recovery was ~$189 million(US): ~48% distributed to pay facilities costs ~31% distributed to fund departmental RCR ~20% used for other general administrative and library costs (from Office of Research Facilities and Administrative Rate Primer http://www.washington.edu/research/4researchers/fa.php) http://www.washington.edu/research/4researchers/fa.php

5. 6/10/08 Weldon Ihrig, University of Washington5 UW negotiated vs calculated F&A rates Negotiated on-campus rate: 56% Calculated on-campus rate: ~61% (administrative costs calculated ~31% versus 26% cap) If 61% rate applied in FY 2007, recovery estimated to have increased by almost $19 million(US)

6. 6/10/08 Weldon Ihrig, University of Washington6 What works for universities? Competitive awards without politics Single Federal indirect cost rate applied to all agencies Rate based upon demonstrated prior indirect cost expenditures by the universities Research opportunities enhances graduate & undergraduate student experiences

7. 6/10/08 Weldon Ihrig, University of Washington7 Areas for Improvement Remove 26% cap on administrative costs rate Prohibit attempts by Federal agencies to cap indirect costs they will pay Consistent interpretations of A-21 rules among regions & reduce complexities Exclude university cost sharing in calculating rate Negotiations based upon cost components data, not bottom line target

8. 6/10/08 Weldon Ihrig, University of Washington8 Cautions for universities Indirect costs recovered are for expenditures incurred, not “free money” Risk of over investment in facilities assuming growth in research Universities must comply with the A-21 rules to avoid political interventions Growth in research requires investment in support services & modernization of facilities Fully loaded charge-out rate option for private foundations/businesses