Facilities & Administrative (F&A) Cost Recovery Report
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Facilities & Administrative (F&A) Cost Recovery Report April 22, 2009 Carol Hollingsworth, Director, Grants & Contracts Financial Services & Janet Parker, Associate Vice President, Financial Affairs. What is F&A?.

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Facilities & Administrative (F&A) Cost Recovery ReportApril 22, 2009Carol Hollingsworth, Director, Grants & Contracts Financial Services & Janet Parker, Associate Vice President, Financial Affairs


What is f a
What is F&A?

  • OMB Circular A-21 term for what was formerly referred to as indirect cost recovery.

    • Also known as “overhead”

    • Cost recovery mechanism – not a “tax”

1


What is f a1
What is F&A?

  • Facilities & Administrative (F&A) costs are

    • “Costs incurred for common or joint objectives and, therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.”

  • Not Direct Costs – direct costs are specifically identified to individual research projects, instructional programs or other major functions.

    • Examples: Salaries, fringe benefits, travel related to project, lab supplies, subcontracts, etc.

2


F a cost basis
F&A Cost Basis

  • Universities that receive $10M+ from federal sources must use a modified total direct cost (MTDC) basis for calculating F&A.

  • MTDC includes all project costs except equipment, renovations, subcontract costs in excess of the first $25,000, rent, scholarships, fellowships, tuition.

  • F&A is recovered as the sponsor’s funds are expended (and billed) for direct cost items allowed per the project budget.

3


4


F a rates
F&A Rates

  • F&A Costs are recovered based on F&A Rates

    • Rates are developed based on cost studies.

    • UTSA contracted with Huron Consulting Group to develop our most recent cost study.

    • Significant effort.

  • Proposals are submitted to cognizant federal agency for review, audit, negotiation & approval.

  • Once approved, rates are applied to each grant & contract to determine the amount of indirect costs to be charged/recovered.

5



F a cost rate agreement1

F&A payments as a % of total NIH awards was stable at 28.5% for FY03-05 accdg to GAO.

Recent COGR survey: F&A rates have held relatively constant at ~51% for the past 6 yrs!

F&A Cost Rate Agreement

FY06 NSF survey showed that universities contribute more than $9B of their own funds to support R&D activities or nearly 20% of total R&D expenditures.

2000 Rand study estimated that universities were subsidizing between $700M and $1.5B of F&A

7


F a rate actual vs negotiated
F&A Rate-Actual vs. Negotiated for FY03-05 accdg to GAO.

8


Net effective f a rate
Net Effective F&A Rate for FY03-05 accdg to GAO.

The net effective F&A rate is computed

as follows:

TOTAL F&A Recovery Revenue

divided by

Restricted Sponsored Program Expenditures (Net of F&A)

9


F a net effective rate
F&A Net Effective Rate for FY03-05 accdg to GAO.

We are subsidizing ~50% of the negotiated cost of overhead for restricted research (69% of cost study developed costs)

10


Why is f a recovery important
Why is F&A Recovery Important? for FY03-05 accdg to GAO.

  • Supports the cost of conducting research

  • If sponsors don’t pay, someone else must

  • Important new revenue source to UTSA

UTSA F&A Revenue - 5 Year History

$6,055,402

$7,000,000

$5,703,051

$6,000,000

$5,201,496

$5,000,000

$3,933,801

$4,000,000

$2,978,543

$3,000,000

$2,000,000

$1,000,000

$-

FY 04

FY 05

FY 06

FY 07

FY 08

F&A revenue grew by $3.1M over the last 5 years, an increase of 103%

11


F a revenue recovery by source
F&A Revenue Recovery by Source for FY03-05 accdg to GAO.

95% of F&A is from federally sponsored activities.

12


Sources of f a fy07 revenue
Sources of F&A FY07 Revenue for FY03-05 accdg to GAO.

13


Sources of f a fy08 revenue
Sources of F&A FY08 Revenue for FY03-05 accdg to GAO.

14


Fy08 f a federal sources
FY08 F&A (Federal) Sources for FY03-05 accdg to GAO.

15


F&A Recovery by Area for FY03-05 accdg to GAO.

16


F&A Recovery by Area for FY03-05 accdg to GAO.

17


How is f a allocated
How is F&A Allocated? for FY03-05 accdg to GAO.

  • In FY07, the VPs for Research, Business Affairs and Academic Affairs entered into a formal Memorandum of Understanding (MOU) to document the allocation of F&A.

  • The MOU is:

    • Flexible - has been amended twice with another change pending.

    • Transparent

18


Allocations to generating units
Allocations to Generating Units for FY03-05 accdg to GAO.

  • The MOU currently allocates 10% of actual F&A recovery to PI’s, Colleges, Centers and Institutes based on prior year actual earnings.

    • These funds are allocated on a one-time basis

      • Not part of the recipient’s base budget due to year-to-year fluctuations in earnings.

    • Funds are currently treated as discretionary incentive.

    • Provost & VPR are reviewing alternate models to assure strategic usage of the funds.

19


Debt service
Debt Service for FY03-05 accdg to GAO.

A significant amount of F&A recovery is pledged

towards servicing debt:

  • Renovations to West Campus (Margaret Tobin) Lab Facility financed through bond series 2006B

    • will be retired August 15, 2036:

      FY07 debt service paid $665,350

      FY08 debt service paid $667,600

      FY09 payment due $666,000

20


Debt service1
Debt Service for FY03-05 accdg to GAO.

Faculty Start-Up Costs

  • Beginning FY04, faculty start-up costs were financed with F&A to service the debt.

  • All debt under this program will be retired August 31, 2012.

    • Estimated remaining payments are:

      FY09 $1,383,495

      FY10 1,251,908

      FY11 924,722

      FY12 34,795

21


Building maintenance leases capital improvements
Building Maintenance, Leases & Capital Improvements for FY03-05 accdg to GAO.

  • Reserve for capital requirements, leases and building maintenance for research related facilities.

    • In FY08, funds were used for previously pledged faculty start-up costs to forego incurring additional debt.

  • Unused balances roll forward to reserves.

22


Vp administrative overhead
VP Administrative Overhead for FY03-05 accdg to GAO.

  • The following VPs receive a base budget allocation to support salaries & related administrative overhead in support of research:

    • Academic Affairs

    • Research

    • Business Affairs

23


24 for FY03-05 accdg to GAO.


25 for FY03-05 accdg to GAO.


Fy 10 budget outlook
FY 10 Budget Outlook for FY03-05 accdg to GAO.

  • FY10 Budget will be set 2.5% higher than FY09 (1.6% higher than FY08 actual recovery)

  • New allocation will cover a portion of the estimated utility costs for the new Engineering building.

  • Each VP area will receive an increased base budget allocation:

    • VPR $ 95,000

    • Academic Affairs $100,000

    • Business Affairs $ 60,000

26


27 for FY03-05 accdg to GAO.


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