1. © Huron Consulting Services LLC. All rights reserved. © Huron Consulting Group Inc. All rights reserved. Neither Huron Consulting Group Inc. nor any of its affiliates is a CPA firm. East Carolina University April 20, 2010

2. © Huron Consulting Services LLC. All rights reserved. Agenda 1.Introduction 2.Background for Preparing a F&A Cost Rate Proposal 3.Overview of the F&A Cost Rate Proposal Process 4.Space Inventory 5.The F&A Cost Rate Proposal 6.Components of the F&A Cost Rate 7.Questions and Answers For additional information about the ECU F&A proposal process – Please contact Kathleen Hall, Office of Grants & Contracts, hallka@ecu.eduhallka@ecu.edu 2

3. © Huron Consulting Services LLC. All rights reserved. Current Status ECU needs to submit its F&A cost rate to be submitted to the Division of Cost Allocation, Department of Health and Human Services by December 31, 2010. Current negotiated rates: –Organized Research 43.5% –Organized Research – Off Campus26.0% –Vicinity27.7% –Instruction48.0% –Other Sponsored Activities: 43.5%

4. © Huron Consulting Services LLC. All rights reserved. Rate Goals/Objectives What’s your rate and where does it need to be? What is the rate impact? What’s your effective recovery rate? Will current costs support your current rate? DCA rate thresholds (regional) How many years?

5. © Huron Consulting Services LLC. All rights reserved. Universities are Complex Large very complex billion dollar organizations –Highly regulated –Highly competitive –Diverse priorities Different types of businesses –Retail Operations –Landlords –Basic Research –Education –Health Care –Welfare agency (financial aid) –Banking –Professional and Amateur sports - not for profit Sophisticated systems are needed to manage the business 5

6. © Huron Consulting Services LLC. All rights reserved. General Support Partners The Players –Provost/Dean –VP for Finance –VP for Research –Director of Sponsored Programs –Budget Committee –Director of Facilities/Facilities Planning –Director of IT –Department Administrators Huron Consulting Group –Space survey –Final space review –Calculate and Submit F&A cost rate proposal –Provide Negotiation Assistance –Periodic analysis during proposal preparation –Additional resources Senior Management –Top level support throughout the process is best practice –Proposal is challenging and time- consuming—should be an institution-wide priority –Requires participation and input from all levels of the organization 6

7. © Huron Consulting Services LLC. All rights reserved. Essential Data Elements for FY2010* Financial –All financial activity by fund, org/dept, program, account, amount –Additional information – grant title, agency, F&A Rate, on/off campus designation –Financial statement classification Payroll –Entire payroll activity by person, title, employee class, fund, org/dept, program, account, amount –FTE (if available) Fixed Asset –Building/Infrastructure – bldg number/name, total cost, annual deprecation amount, fund, org/dept, sponsor –Equipment – asset tag, annual depreciation, fund, org/dept, room, sponsor Space –Physical data – bldg number/name, dept number/name, room type code, room type, assignable square feet, floor plans *sample list of requested data elements 7

8. © Huron Consulting Services LLC. All rights reserved. Negotiation Submit F&A Cost Rate Calculate F&A Cost Rate Space Inventory April/MayJune - December December 31, 2010 TBD ~ 6-9 months Space Inventory –Conduct interviews of personnel in research-intensive areas –Document and record results of space usage for research rooms –Obtain results of space survey on remaining rooms Calculate and submit the F&A rate proposal –Gather data required; incorporate into cost model –Prepare draft F&A rate proposal –Review draft proposal with ECU management –Finalize and submit proposal Overview of the F&A Cost Rate Proposal Process 8

9. © Huron Consulting Services LLC. All rights reserved. Negotiation Submit F&A Cost Rate Calculate F&A Cost Rate Space Inventory April/MayJune - December December 31, 2010 TBD ~ 6-9 months Provide Negotiation and Audit Support –Prepare negotiation strategy –Prepare for DCA site visit, if necessary –Support the negotiation of F&A rates Overview of the F&A Cost Rate Proposal Process 9

10. © Huron Consulting Services LLC. All rights reserved. 10 What is the purpose of the study? The space survey is used to help develop ECU’s facilities and administrative (F&A) cost rate proposal. This rate is negotiated with the federal government and allows ECU to recover the costs associated with supporting the research mission. The space survey classifies rooms based on the activities performed in the rooms. Space surveys are used to allocate the following F&A costs to research, instruction, and other functions: –Operations and Maintenance (utilities, maintenance, etc.) –Building Depreciation –Interest –Equipment Depreciation

11. © Huron Consulting Services LLC. All rights reserved. “Let’s see now, what can I do to get this rate to what I think it should be.” The F&A Cost Rate

12. © Huron Consulting Services LLC. All rights reserved. FACILITIES & ADMINISTRATIVE COST CALCULATION – OVERVIEW Space MTC Cross Allocations Building and Equipment Depreciation Building and Equipment Depreciation Interest Operations and Maintenance Operations and Maintenance General Administration General Administration Department Administration Department Administration Sponsored Projects Administration Sponsored Projects Administration Library 1 Student Services 2 F&A Cost Pools Other Sponsored Activities Other Sponsored Activities Instruction and Departmental Research Instruction and Departmental Research Organized Research Organized Research Other Institutional Activities Other Institutional Activities F&A Costs Allocated To MTDC Other Sponsored Activities MTDC Other Sponsored Activities MTDC Instruction and Departmental Research MTDC Instruction and Departmental Research MTDC Organized Research MTDC Organized Research Distribution Base % % % % % % F&A Cost Rates Allocation Bases Space MTC MTDC Pop/FTE Instr = = = 1 Population including students/FTE of employees 2 Generally allocated to the Instruction function 1 Population including students/FTE of employees 2 Generally allocated to the Instruction function / / /

13. © Huron Consulting Services LLC. All rights reserved. Facilities costs: Relate to the space in which the awards take place. –Cost to Construct Building –Cost to operate building (ex- heat, power, custodial, repair, etc.) –Interest expense –Library –Equipment –Campus Infrastructure Administrative costs: Include the expenses associated with the overall administration on campus as well as the costs of administering sponsored projects. –President’s Office –Legal –Human Resources –Sponsored Programs –Pre-award and Post-award Staff –Department Administrators –Financial Officers –Clerical and Support Staff –Data Management Professionals –Faculty Allowance Capped at 26% of MTDC (G.8) Facilities and Administrative Costs

14. © Huron Consulting Services LLC. All rights reserved. Facilities cost pools: –Building Depreciation –Interest Expense –Equipment Depreciation –Operations & Maintenance –Library Administrative cost pools: –General Administration –Departmental Administration –Sponsored Projects Administration –Student Services Administration Facilities and Administrative Costs