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FISCAL MANAGEMENT OPERATIONS GUIDE

Facilities & Administrative Costs

Facilities and Administrative cost rates are determined in accordance with cost principles established by the Office of Management and Budget Circular A-21, "Cost Principles for Educational Institutions." University indirect cost rates are audited and negotiated by a federal agency. Current rates will be supplied to individuals involved with grants and contracts by the Office of Research Development.

Regents' Rules. Proposals regarding overhead rates and specialized rates for fringe benefits, computers, services, and other facilities and equipment chargeable to cost reimbursement contracts and grants shall be negotiated with the appropriate cognizant agency by the institution's chief business officer. The chief business officer shall send a copy of the final negotiated agreement to the Controller.

To the extent that individual cost recoveries from the application of overhead rates are derived from use charges for buildings, other improvements, or equipment, the funds so derived shall be designated for renewals or replacement of such buildings, improvements, or equipment or for other such purposes specified and approved in the budget processes as related to the indirect cost recoveries. Reference Regents' Rule 13.02 ( 29 Aug96 )

UTSA Budget Guideline. University policy provides that the allowable negotiated rate for facilities and administrative costs be included in all proposals submitted to prospective sponsors. Authorized exceptions to this general policy are:

• when legislation establishing the program and/or the appropriations act providing the funding prohibits or limits reimbursement for indirect costs;

• when the sponsor has a written policy governing indirect cost recovery. Verification of a funding organization's published policy regarding a limit or exclusion of indirect costs will be made by the Director of the Office of Research Development; therefore, a copy of the sponsor's policy should accompany the proposal.

If the principal investigator wishes to request a waiver of the indirect cost rate, either in whole or in part, the waiver must be justified to and approved by the Provost and Vice President for Academic Affairs or his designate and the Vice President for Business Affairs.

Allocation of F&A Costs. Initiated in Fiscal Year 1998, it is University policy to return a portion of recovered F&A costs to the University community. The allocations are 10% to principal investigators, 5% to Divisions and/or Centers, 5% to the College Deans, 4% to the Office of Research Development and 1% to the Office of Grants and Contracts Administration. The latter two allocations will be initiated with the distribution of FY 2000 funds.

• To be eligible for the F&A return, the grant or contract must recover the full F&A rate available to the University or fall within one of the authorized exceptions listed above.

• Any grants or contracts with waivers approved locally will not be eligible for the allocation of F&A costs.

• The distributed funds must be spent in support of the research effort and in a manner consistent with University regulations concerning "14" accounts.

• The distributed funds cannot be used to enhance the salaries of principal investigators.

Amendment of Facilities & Administrative (F&A) Cost Rates on Federal Programs. If the amount of F&A costs to be charged to a sponsored project changes from the amount included in the proposal and/or grant or contract award, the following guidelines apply to all types of agreements, whether cost-reimbursement or fixed price:

Fixed F&A Cost Rates on Federal Programs. In the event an increase in the negotiated fixed rate occurs during the project period, the budget for indirect costs will be adjusted upwards only if the contract or grant provides for an increase during the term of the project, and if the sponsoring agency provides additional funds for the increase. Consequently, direct costs awarded will not be reduced to fund an increase in indirect costs as a result of a rate increase. If the rate is decreased during the term of the grant or contract, depending on the requirements of the sponsor, the indirect costs funds released may be available for direct costs.

Application of F&A Cost Rate to Non-Federal Programs. Unless the current rate is negotiated as part of the award, proposals will use the indirect cost rate in effect at the time of submission for determining the indirect cost portion of the program's budget. This rate will be applied as a fixed rate for the duration of the project once the program is accepted and supported by the sponsoring agency. Proposals for supplemental funding will use the most recently negotiated rate in effect at the time of submission.

Changes in Indirect Cost and Computation. An increase in the base amount to which an indirect cost rate is applied, must be authorized by the same administrative offices which approved the original budget and/or the sponsor in accordance with the terms of the grant or contract. If the approved revision results in an increase in the allowable indirect costs recovery, the budget for indirect costs will be adjusted accordingly. A decrease in the base does not require an amendment to budgeted indirect costs unless the sponsoring agency, upon request by the University, authorizes the rebudgeting of funds from indirect costs to direct costs categories.