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2Proposal Proposal Preparation and Preparation and SubmissionSubmissionModule 3BModule 3BFacilities and Facilities and Administrative CostsAdministrative Costs© Copyright UC Regents 2008 - All Rights ReservedWelcome to Module 3B – Facilities and Administrative Costs. F&A is probably the most misunderstood and the single most problematic area when it comes to preparing proposal budgets. So, in this module you will learn what Facilities and Administrative Costs are, and guidance on how to calculate them. You’ll want to have your calculator handy for the practice exercises coming up.3THE TWO PRIMARY BUDGETCATEGORIESIf you recall in the Budget Basics module, OMB Circular A-21, Cost Principles for Educational Institutions, defines two basic budget categories – Direct and Indirect -the latter recently redefined by A-21 as “Facilities and Administrative” costs.4DIRECTCOSTSF&A CostsSecretary Adm. Asst. SalaryORAOfficeComputerWater & Power LibraryCustodialServicesOfficePhoneBuilding Maintenance FringeBenefitsTravelConsumableSuppliesGSR TuitionRemissionOther Direct CostsEquipmentServices(Recharge Units)Patient CareCostsSalariesThis illustration bears examining again, as it is a good visual of what type of costs constitute direct costs, and what type of costs constitute F&A costs.5The many terms for Facilities and Administrative CostsThrough the years there have been many names for F&A. It has, and is still often called, overhead or indirect costs. On occasion a program announcement will call the costs to support the infrastructure of the research “Institutional Allowance.”OMB circular A-21 fairly recently renamed these costs “Facilities and Administrative costs”; because the name implies what the costs support, “Facilities” and “Administration.” Do you recall the A-21 definition of F&A costs?6A-21 Definition of F&A CostsCosts that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity, or other institutional activityHere it is…7Some think of F&A as expenses that are restricting the scope of the work they could accomplish if they were able to use all available dollars to fund direct costs…54% for F&A? There is a general resistance to F&A costs. Actually, UCLA’s F&A rate is one of the lower rates. Some institution’s F&A rate exceeds 70%.8…but in reality, the recovered indirect costs are a pool that cover the full research costs of the University – to reinvest in research and faculty supportQuoting from the UC Regent’s policy concerning F&A, “The Regents' policy on full cost recovery imposes a duty on all University administrators and Principal Investigators to perform sponsored projects on a full cost recovery basis. Administrators and Principal Investigators are obligated to ask for and recover indirect costs from all sponsors. In fairness to all faculty and researchers, the full cost burden should be shared equally. Full cost recovery is necessary to support the University's physical and administrative capacity to perform extramural projects.”A link to the UCOP Contract and Grant Manual, Chapter 8, Indirect Costs, is available in the resources tab. It is an excellent resource to bookmark.9What do F&A costs include?Depreciation and Use Allowance (F-2 of A-21):– Costs associated with the use of an institution's buildings, capital improvements to land and buildings, and equipmentInterest (F-3 of A-21):– Interest on debt associated with certain buildings, equipment, and capital improvementsOperation and Maintenance (F-4 of A-21)– Costs associated with the administration, supervision, maintenance, preservation, protection, and operation of the institution's physical plantWithin the two major categories of F&A, (facilities and administration), indirect cost components are identified and allocated to subcategories shown in the next few slides. This is a general summary. Details on the subcategories can be found in OMB Circular A-21, the specific references provided here.10General Administration (F-5 of A-21): – Costs associated with the overall administration of the institution, and not related solely to any major function– Does not include expenses incurred within deans’ offices, academic departments, or organized research units What do F&A costs include?11 Departmental Administration (F-6 of A-21): – Costs associated with the administrative duties of personnel in deans’ offices, academic departments, and organized research units Sponsored Projects Administration (F-7 of A-21): – Costs associated with the administration of sponsored projects are allocable to this component  Library Expenses (F-8 of A-21): – Costs associated with the operation of the institution's libraries Student Administration and Services (F-9 of A-21):– Costs associated with the administration of student affairs and the provision of services to students (including student health)What do F&A costs include?Expenses for sponsored projects administration consist of the expenses of separate departments or organizations whose sole function is the administration of sponsored projects. These are typically units in the central campus administration such as Contracts and Grants and Extramural Funds Offices. With limited exceptions, sponsored project administration in a department is normally viewed as departmental administration.12UCLA Rate AgreementUCLA’s federally negotiated on-campus F&A rate is currently 54.0% of Modified Total Direct Costs (MTDC) - 26% MTDC off-campusMTDC = Total direct cost minus:Total UC subaward (UC policy)GSR Fee and Tuition RemissionBalance of each Subaward in excess of $25KPatient CareFellowships, ScholarshipsAlterations and RenovationsSpace Rental CostsEquipmentBookmark On February 28, 2007, the University of California and the United States Department of Health and Human Services (DHHS - the responsible Federal audit agency) entered into a new F&A cost rate agreement for UCLA. This agreement establishes the F&A cost rates for the period July 1, 2007, through June 30, 2010. These rates are recognized by all other federal agencies and applied to all projects regardless of the sponsor unless the UC Office of the President has approved an F&A cost waiver. More on waivers later. For now we are going to look a bit closer at this Rate Agreement.Participant support costs used to be an item exempt


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