1. Understanding Indirect Costs
REC Infrastructure Retreat
April 7, 2015
Nancy L. Wilkinson, Office of the Dean for Research (IFAS)

2. Understanding Indirect Costs– Today’s Agenda
Definition
Key Concepts – Facilities & Administrative
Facilities & Administrative Cost Pool Elements
F&A Formula
Examples with and without Cost Sharing
UF Rate Agreement – comparisons to Peer Institutions
UF/IFAS Distribution of IDC annually
On vs. Off Campus
Your Questions
Next TOPIC ---- Capacity Funds

3. What are Indirect Costs? – Definition
Costs that cannot be specifically identified to a sponsored activity
Typically this cost is known as “Facilities & Administrative (F&A) Costs”
UF uses different lingo – IDC
Formula is used to determine the F&A “rate” at UF
Prepared by Cost Analysis
UF calculations are submitted to Federal government (so called cognizant agency) for negotiations
Our “approved” F&A Rate Agreement is less than actual costs incurred
DHHS negotiates down
Even if we are paid the “full” federally negotiated rate - it is less than UF’s actual costs

4. Key Concept for F&A Rate
Facilities (examples)
Building Depreciation
PO&M
Interest Expense on Capital Items
Bond Payments
Administrative (examples)
General Administration
Department and College Administration
Sponsored Project Administration
There are both allowable and unallowable activities and charges in Section J; it is important to note that if a particular item was not on the list, it does not imply that it is either allowable or unallowable; if you are uncertain, review the agency terms and conditions as well as the approved budget to see it the charge is allowed. ***Note that just because the agency approved the purchase does not mean it is allowable.***
Allowable charges : Travel, Lab Supplies, Approved and allowable equipment
Now that we have determine the cost to be reasonable and allowable, lets now look at the allocability of an expense
Strategies:
Fully depreciated buildings used for Administrative purposes
Building divided into components (building shell, service systems, fixed equipment, etc.) with various depreciation schedules
Limited

5. What are Indirect Costs? – Facilities Cost Pool
Determination of Cost Pools and Distribution Base all governed by federal regulations
“Facilities” cost pools are typically:
Building Depreciation
Equipment Depreciation
Capital Improvements to Land and Buildings at UF
Plant Operation and Maintenance costs
Interest expense on capital expenditures
Library costs (building)

6. What are Indirect Costs? – Administrative Cost Pools
“Administrative” cost pools are typically:
General University Administration
UF President; VP’s; CFO; HR; Development;
Department/College Administration
Deans; Departments; Centers
Sponsored Projects Administration
Division of Sponsored Programs; Contracts & Grants; Cost Analysis
Interest expense on capital expenditures
Library costs for administration
Limited – cannot exceed 26%

7. What are Indirect Costs? – Formula
1 year of Facilities Pools (Building & Equipment Depreciation + PO&M + Interest Expense + Library costs)
PLUS +
1 year of Administrative Pools (University Administration + Sponsored Programs Admin. + Colleges/Departments)
1 year of Expenditures on Research Grants (Funds 201 and 209)
Cost Sharing
Numerator
Denominator

8. What are Indirect Costs? – Example
Facilities Pools - $150,000,000 +
+Administrative Pools $250,000,000
=$400,000,000
Expenses on Sponsored Programs = $800,000,000
Rate = 50%
Numerator
Denominator

9. What are Indirect Costs? – Example including C/S
Facilities Pools - $150,000,000 +
+Administrative Pools $250,000,000
=$400,000,000
Expenses on Sponsored Programs = $800,000,000
+ Cost Sharing =$200,000,000
=$1,000,000,000
Rate = 40%
Cost Sharing impact is to reduce F&A Rate
Numerator
Denominator

11. What are Indirect Costs? – Comparison to Peers
F&A Rates
Research (on campus)
University of Minnesota 52
University of Florida 50
Ohio State University 54
Penn State University
50.7
U California - Davis
55.5

12. Indirect Costs Distribution – Within IFAS
IDC Expenses in Fund 201 (Federal) & 209 (non-Federal) accumulated by Contracts & Grants (CnG)
Total is “earned” IDC to IFAS
2014 IDC Earnings
$10,904,855
RCM
$5,099,298
Net to IFAS
$5,805,557
47% of earnings to RCM

13. Indirect Costs Distribution – IFAS Distribution Percentages
IFAS Approved Centers
2/3 from Sr. VP
1/3 from Dean
50% Sr. VP
25% Dean(s)
15% Unit Leader(s)
10% PI

14. Key Concept for On/Off Campus
On Campus (criteria)
UF Owned Facility
Does not have to be the Gainesville campus
Off Campus (criteria)
Non UF Facility
Budget includes– rental costs
Remember - there is no “facility” cost in the IDC
It is not about geography!!!
There are both allowable and unallowable activities and charges in Section J; it is important to note that if a particular item was not on the list, it does not imply that it is either allowable or unallowable; if you are uncertain, review the agency terms and conditions as well as the approved budget to see it the charge is allowed. ***Note that just because the agency approved the purchase does not mean it is allowable.***
Allowable charges : Travel, Lab Supplies, Approved and allowable equipment
Now that we have determine the cost to be reasonable and allowable, lets now look at the allocability of an expense

15. Questions & Comments?

16. Capacity (Formula)Funds in Fund 221/222
REC Infrastructure Retreat
April 7, 2015
Nancy L. Wilkinson, Office of the Dean for Research (IFAS)

17. Capacity Funds– Today’s Agenda
Definition
Submission and Award Process
New Uniform Guidance regulations (A-81)
Specific restrictions
Cost Principles
Allowable, Reasonable & Necessary, Allocable
IFAS Management
Your Questions

18. Capacity Funds–Definition
Capacity Funds (used to called Formula Funds) are VERY RESTRICTIVE. More than the typical USDA NIFA award.
Fund 221 – Research based capacity funds
Hatch Regular
Hatch Multistate
McIntire-Stennis
Animal Health
Fund 222 – Extension based capacity funds
Smith-Lever
Expanded Food & Nutrition Education Program (EFNEP)
Renewable Resources Extension Act (RREA)
Civil Service Retirement System (CSRS)

19. (FGO) Issued with deadline to submit application
Funding Grant Opportunity
Submit Application (via Cayuse) to Grants.Gov
Award Face Sheet is issued to UF

20. Capacity Funds– new Uniform Guidance (A-81)
2 CFR Part 200 – Uniform Guidance
Subpart A – Acronyms and Definitions
Subpart B – General Provisions (200.1xx)
Subpart C – Pre Award Requirements (200.2xx)
Subpart D – Post Award Requirements (200.3xx)
This was OMB Circular A-110 Administrative Requirements
Subpart E – Cost Principles (200.4xx)
This was OMB Circular A-21 Cost Principles
Subpart F– Audit Requirements (200.5xx)
This was OMB Circular A-133 Audit Requirements

21. Terms and Conditions Office of Management and Budget
This Award incorporates the following:
1. Application in response to FY 2015 RFA.
2. Formula Grants Terms and Conditions,
3. General Provisions, 2 CFR Part 400, Uniform Administrative Requirements, Cost Principles, and Audit Requirements adopts 2 CFR
Part incorporated by reference. 2 CFR Part adopts subparts A through F of 2 CFR Part 200; and 2 CFR Part includes USDA department-wide conflict of interest policy in compliance with 2 CFR Part
4. Administrative Manual for Hatch Act Funds
5. Administrative Guidance for Multistate Extension and Integrated Activities
6. Guidelines for State Plans of Work
7. Stakeholder Input Regulation (7 CFR 3418)
8. This award will reach the statutory time limitation on 09/30/2016, the end date of this project. No-cost extensions of time will not be possible.
9. One hundred percent matching is required for this award. All matching must directly benefit and be specifically identifiable with approved project objectives. The awardee is required to maintain complete, accurate, up-to-date records to support all matching activities under the award. Matching requirements may not be satisfied with Federal funds or with property or services provided under another Federal assistance award.
Terms and Conditions
Office of Management and Budget
2 CFR Chapter I, Chapter II, Part 200, et al.
Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards; Final Rule

23. Big Picture – Key Concepts for Spending
Expense must be:
Allowability ( )
Reasonable and Necessary for the performance of the project ( )
Allocable to the project ( )

24. Big Picture – Key Concepts for Spending
What is Allowable?
Must be necessary and reasonable for the performance
Consistently treated expense in like circumstance
Cannot be included as a cost to meet cost sharing or matching of any other federal award
For RESEARCH capacity funds – must have an active REEport project too!

25. Big Picture – Key Concepts for Spending
What is Reasonable & Necessary?
Regulations tell us that a cost is reasonable and necessary if the expense doesn’t exceed that cost incurred by a “prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”
Generally recognized as ordinary and necessary
Use “market prices for comparable goods or services in the geographic area”

26. Big Picture – Key Concepts for Spending
Is the expense Allocable? Is the expense assignable to this award in accordance with the relative benefits received?
(c) Any cost allocable to a particular Federal award under the principles provided for in this part may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by Federal statutes, regulations, or terms and conditions of the Federal awards, or for other reasons
(d) Direct cost allocation principles. If a cost benefits two or more projects or activities in proportions that can be determined without undue effort or cost, the cost must be allocated to the projects based on the proportional benefit. If a cost benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, then, notwithstanding paragraph (c) of this section, the costs may be allocated or transferred to benefitted projects on any reasonable documented basis.
Determining that methodology is the key!

27. Capacity Funds– Management within IFAS
Block Tuition Remission – prohibited
Require REEport project (CRIS) value for each expense in the Research Capacity Funds
CAS Exemptions will not be requested from the Division of Sponsored Programs (DSP)
Effort reported is aligned to salary charged on Capacity Funds
Working on fine tuning Cost Sharing to ensure detailed tracking

28. Questions & Comments?