Facilities & Administrative (F&A) Costs

1. Facilities & Administrative (F&A) Costs Certified Approver Continuing Ed Chris Larson F&A Analyst Sponsored Projects Administration

2. What You Should Know About F&A • What is F&A? • Why is F&A Important? • How is the F&A Rate Developed? • How is F&A Processed? • How do I budget for F&A? • Questions Sponsored Projects Administration

3. What is F&A? • Institution-wide and/or Department Overhead expenses which cannot be specifically identified to a project /activity (instruction, research, or public service) • Real costs incurred to support performance of sponsored agreements • Costs that sponsors will reimburse based on a calculated average rate developed and negotiated in accordance with OMB Circular A-21 • Cost Recovery Mechanism - NOT a “Tax” on Grants Sponsored Projects Administration

4. What is F&A? F&A Rate ComponentExamples General Administrative Costs Central administrative offices (Payroll, accounting, purchasing) Department Administration Academic Departments/Colleges Sponsored Administration SPA, SFR, OVPR, IRB, IACUC Operation & Maintenance Repair & maintenance, utilities, grounds, police Building and Equipment Depreciation Standardized asset classifications and lives (1200 buildings) Interest Costs on Building & Equipment Third Party Interest Costs State & U of M Libraries Central/Campus Libraries (including BioMedical and Law Libraries) Administrative Facilities Sponsored Projects Administration

5. Why is F&A Important? • F&A Rates are applied to sponsored projects to generate $ reimbursements to the University for costs it incurs to support the research infrastructure. 44% Increase over 6 Years ! Sponsored Projects Administration

6. Why is F&A Important? • 100% returned to the RRC that generates the F&A revenue! • Provides colleges funding towards the portion of their departmental expenses related to sponsored projects. Sponsored Projects Administration

7. How is the F&A Rate Developed? • Differentiate Direct vs. F&A costs • Function codes, Object/Revenue codes, Area codes, Fund codes • 40,000+ CUFS accounts for $2+ Billion in Operating Expenses • Depreciation • 1,200 Buildings • 50K Equipment items • Space of 24M Square Feet • Payroll • FTE/FYE Sponsored Projects Administration

8. How is the F&A Rate Developed? A-21 Classifications • Instruction/Departmental Research • Organized Research • Other Sponsored Activities • Other institutional Activities • General Administration • Departmental Administration • Sponsored Projects Administration • Student Services • Operations & Maintenance • Libraries • Interest • Depreciation NACUBO Classifications • Instruction • Research • Public Service • Academic Support • Institutional Support • Student Services • Operations & Maintenance • Scholarships & Fellowships • Auxiliaries • Depreciation Exclusions Direct Indirect Sponsored Projects Administration

9. Accumulation of F&A Costs by “Function” (Base year 2003) Allowable Facilities Related Indirect Costs $279M Allowable Administrative Indirect Costs $257M space allocations MTDC allocations $134M $243M $17M $142M Instruction $486M MTDC Organized Research $271M MTDC Public Service & Outreach $55M MTDC Other Institutional Activities $272M MTDC Sponsored Projects Administration Slide provided by Arthur Andersen

10. How is the F&A Rate Developed? Allocated Organized Research F&A Costs ($134M) Organized Research Direct Costs (“BASE”) ($271M) 49.50% Research Rate = Sponsored Projects Administration

11. How is the F&A Rate Developed? Sponsored Projects Administration

12. How is the F&A Rate Developed? Sponsored Projects Administration

13. How is F&A Processed? • CUFS (GDES) Sponsored Projects Administration

14. How is F&A Processed? • CUFS (AUTO) Sponsored Projects Administration

15. How is F&A Processed? • CUFS (AEXC) Sponsored Projects Administration

16. How is F&A Processed? • Peoplesoft Financials Sponsored Projects Administration

17. How is F&A Processed? • Peoplesoft Financials Sponsored Projects Administration

18. How is F&A Processed? • Peoplesoft Financials Sponsored Projects Administration

19. How is F&A Processed? • Peoplesoft Financials Sponsored Projects Administration

20. How is F&A Processed? • Peoplesoft Financials Sponsored Projects Administration

21. How is F&A Processed? • Peoplesoft Financials Sponsored Projects Administration

22. How do I budget for F&A? It’s all about algebra! Exempt Amount Non-Exempt Amount Non-Exempt Amount = + (Rate) F&A Adjustment Where (Rate) = F&A Rate of project Sponsored Projects Administration

23. How do I budget for F&A? The Analysis of Bike Safety Needs project has requested and received permission to contract with a data tabulation company (professional service provider – object 7201). The contractor will assist with data input at a cost of $3,000. Funding for this expense will come from the funds that were originally budgeted to pay fringe for an unfilled graduate research assistant position (object 7102). Courtesy of Training Services Sponsored Projects Administration

24. How do I budget for F&A? Series Code = 803 F&A Rate = 40% Object 7102 (Grad Fringe) is Exempt From GDES From AUTO From AEXC Exempt = non-Exempt + (Rate)non-Exempt Exempt = $3,000 + (40%)$3,000 Exempt = $3,000 + $1,200 Exempt = $4,200 F&A Adjustment = (40%)$3,000 = $1,200 Solution Sponsored Projects Administration

25. How do I budget for F&A? Charlene Mills, principal investigator of the Analysis of Bike Safety Needs project, requested and received sponsor approval to purchase an item of equipment that will be key to the analysis of the project’s data. The cost for the equipment (object 8200) will be $3,500. The PI wants the funding for this expense to come from two sources: the budgeted conference (object 7600) that was cancelled and the computer software (object 7330) that will no longer be needed as a result of the purchase of this new equipment. Courtesy of Training Services Sponsored Projects Administration

26. How do I budget for F&A? Series Code = 803 F&A Rate = 40% Object 8200 (Equipment) is Exempt From GDES From AUTO From AEXC Exempt = non-Exempt + (Rate)non-Exempt $3,500 = non-Exempt + (40%)non-Exempt $3,500 = (140%)non-Exempt Non-Exempt = $3,500/140% Non-Exempt = $2,500 F&A Adjustment = (40%)$2,500 = $1,000 Solution Sponsored Projects Administration

27. How do I budget for F&A? • Effect on re-budgeting • Impact on financial reporting Sponsored Projects Administration

28. Questions? David Hagen Assistant Director – F&A and Effort Certification hagen027@umn.edu phone: 626-9895 F&A Analysts Vern Kleinsasser klein110@umn.edu ph. 624-1059 Holly Schuveiller schuv004@umn.edu ph. 625-8017 Chris Larson larso169@umn.edu ph. 624-4542 Sponsored Projects Administration