Transcript Cost Sharing on Sponsored Projects

COST SHARING ON A GRANT:
What Do I Do Now?
PROCEDURES FOR DOCUMENTING
COST SHARING FOR GRANT &
CONTRACT ACCOUNTS
CSBA January 11, 2007
1
Outline of Session
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
Definition of cost sharing
Federal guidelines & requirements
Forms of cost sharing
Documenting cost sharing
Cost Sharing and F&A Rate
Federal Agency expectations/policy
Problems and challenges
Resources and examples
2
I. Cost Sharing on Sponsored Projects


Definition: Cost sharing is the portion of
the total project costs of any sponsored
agreement that is not provided by the
sponsor and not charged to the
sponsored project account.
These are real costs and dollars. This is
not Monopoly money!
3
Types of Cost Sharing



Mandatory
•
Required by the sponsor for the award
Voluntary Committed
•
Not required by the sponsor but voluntarily offered in
the proposal to the sponsor
Voluntary Uncommitted (VUCS)
•
•
•
Not required by the sponsor as a condition of the
award
Internally committed cost share that did not have a
quantifiable commitment in the proposal narrative,
budget, or budget justification
Not reported to the sponsor
4
Voluntary Cost Sharing
Becomes Mandatory When:
 “Voluntary” cost sharing may become
“mandatory!”
 NOTE: Even if a sponsor does not
require cost sharing, if it is offered in a
proposal to the sponsor (either in the
budget or quantified in the narrative)
and the proposal is accepted, then the
cost share becomes “mandatory” to
track.
5
When should we cost share?

Cost sharing should only be offered when:
1. Mandated by the sponsor
2. Needed to accurately reflect the level
of effort required to conduct the
project,
3. Needed due to the competitive nature
of the award
6
II. Federal Guidelines

OMB Circular A-21 – Cost Principles for
Educational Institutions
• Allowable costs under OMB A-21 and the terms of
•
•
the sponsored agreement..
Section J. “General Provisions for Selected Items
of Cost” for a discussion of allowable costs by
categories
http://www.whitehouse.gov/omb/circulars/a021
/a21_2004.html
7
Federal Guidelines

OMB – A-110 “Uniform Requirements for
Grants and Other Agreements With
Institutions of Higher Education,
Hospitals, and Other Non-Profit
Organizations”
• Sub-Part C – Post Award Requirements, section
•
.23 Cost sharing or matching
http://www.whitehouse.gov/omb/circulars/a110
/a110.html
8
A-110 Cost Share Requirements

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Costs are needed and directly related to the
project objectives and scope of work
Must represent costs incurred during the
project period of the grant or agreement
Costs can be verified through payroll effort
reporting or other appropriate documentation
(timesheets, EPA’s (electronic payroll action),
copies of invoices, campus billings)
If cost sharing is required or intended, it should
be identified in the proposed budget to the
sponsor.
9
A-110 Restrictions on Cost Sharing

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Should not be included as cost sharing for any
other project
Should not be paid by the sponsor under
another award. Federal funds may not be used
as cost sharing on another federal project
without prior approval, of the sponsor and
University.
Cannot cost share unallowable costs such as
alcohol, entertainment, lobbying costs
Can’t cost share expenditures normally treated
as F&A, unless approved by the sponsor.
10
III. Forms of Cost Sharing

Direct expenses incurred by University
• Personnel costs (salaries, wages, fringe benefits)
• Tuition, fees, payroll related to work performed by
•
•
•


graduate students on sponsored agreements
Equipment purchased for the project
Supplies, materials, travel
Other cost necessary to complete the project
Indirect Costs or F&A Costs; waived F&A
Third-Party Contribution
11
Unrecovered or waived indirect
costs used as cost sharing



Make every effort to recover full indirect costs, i.e.,
avoid waivers.
If an award includes mandatory cost sharing
requirement AND the sponsor is not fully
reimbursing the institution’s indirect costs,
unrecovered indirect costs could serve as another
way to meet mandatory cost sharing requirement.
Remember, indirect costs are real costs and to
cost share indirect costs is not “free.” All cost
sharing – direct and indirect – costs the
institution.
12
Waived Indirect Costs Calculation

Waived indirect costs are calculated as
the difference between the applicable
negotiated F&A rate and the amount of
F&A costs awarded by the sponsor. See
example:
• $100,000 total direct project costs
• Sponsor has allowed 0% indirect costs
• Waived indirect costs = $45,500 or ($100,000
times 45.5%)
13
Note of Caution – Waived
Indirect Costs


Some agencies that do not reimburse full
indirect costs will also not permit unrecovered
or waived indirect costs to be used to meet
mandatory cost sharing requirement. You must
consult the sponsor’s guidelines.
OMB Circular A-110 states that unreimbursed
or waived indirect costs may be included to
meet a cost sharing requirement, but only with
prior approval from the awarding agency.
14
Sample Budget No. 1

The following budget is an example of
the traditional presentation of cost
sharing associated with a proposed
grant. Funds requested from the
sponsoring agency and those to be
provided by the grantee are clearly
identified.
15
Sample Budget No. 1 –
Continued
I.
A.
B.
C.
D.
E.
II.
III.
Direct Costs
Salaries & Wages
Fringe Benefits
Supplies
Travel
Equipment - Capital
Total Direct Costs
Agency
80,000
20,000
5,000
4,000
7,000
116,000
Grantee
10,000
2,500
49,595
5,688
Total Costs
165,595
18,188
Agency
Grantee
Total
165,595
18,188
183,783
90%
10%
100%
Indirect Costs
45.5% MTDC
12,500
Project Costs
MTDC = Modified Total Direct Costs
16
Other Forms of Cost Sharing


Third party cost sharing: The term “third party”
refers to an organization other than the prime
recipient (Texas A & M) that is participating in the
costs of the project.
Cost sharing provided by another external entity such
as a private company, non-profit organization, other
university.
• Cash contributions – Can use gift funds for cost
sharing.
• In kind contribution – Third party may provide TAMU
office space, use of equipment
• Donated equipment
17
Common Instance of “Third
Party” Contributions

The most common instance of third party
contributions would occur when a
university receives a grant with cost
sharing requirements and also
subcontracts a portion to another
university or System part that is also
required to make cost sharing
contributions.
18
Sample Budget No. 2 – With
Third Party
I.
Direct Costs
Grantee
Third Party
A.
Salaries & Wages
60,000
30,000
12,500
B.
Fringe Benefits
15,000
7,500
3,125
C.
Supplies
32,000
15,000
2,000
D.
Travel
5,000
2,500
2,000
E.
Equipment - Capital
10,000
6,000
0
122,000
61,000
19,625
16,800
8,250
2,944
138,800
69,250
22,569
Total Direct Costs
II.
Agency
Indirect Costs
15%
(excluding Cap. Equip.)
III.
Total Costs
Project Costs
Agency
138,800
60%
Grantee
91,819
40%
230,619
100%
Total
NOTE: Agency does not allow University to claim w aived indirect costs exceeding 15%.
19
IV. Documentation for Cost Sharing
All types of cost sharing are to be
documented and identifiable in the
University’s accounting system.
 Accurate records must be
maintained to verify that the cost
sharing has been provided.
 Should use separate accounts for
cost sharing

20
Current Practice For TAMU Projects
(administered by TAMU)


At TAMU, we request that departments use
separate accounts or support accounts attached
to an established account for cost sharing. This
is commonly done for cost sharing of salaries
from a state, designated, or gift source account.
Sponsored Project Administration creates the
necessary support account. Electronic Payroll
Action form – EPA must be coded with the
appropriate support account number.
21
Documenting Waived Indirect Costs &
Third Party Cost Sharing

Sponsored Project Administration utilizes the
SPR module in FAMIS to record cost share
requirements for each project.
•
•
•

Calculates unrecovered indirect cost every month
Tracks costs charged to TAMU accounts as cost
sharing
Records third party cost share contributions
If third party cost sharing is provided, we ask
the department to obtain documentation from
the third party for the amount provided.
22
What about projects administered by another
System component or the Research
Foundation?

Use separate accounts or support
accounts to track cost sharing for other
research projects administered by the
Research Foundation, TEES, TAES, or any
other component.
• Request that FMO allow support account activity
•
on existing departmental accounts. Contact
Nancy Lindahl at 845-8106 or [email protected]
Make request to create new accounts for cost
sharing to Financial Management Operations for
accounts other than “4” accounts
23
Set Screen 006 to allow SA
006 SL 6 Digit Account (FSA)

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

12/21/06 12:24
FY 2007 CC 02
Screen: ___ Account: 136353 ____ NEW FACULTY - BMEN
Account Title: NEW FACULTY - BMEN_________________
SA create enable: Y
Resp Person: 401005360 COTE, GERARD L
Old Acct: _______________
ABR Rule: 001
Map Code: 13600 Reporting Group: __
Must be
Bottom Line Cntl: Y Deflt Cat Cntl: R Deflt Cat Tol Pct: _______
set to Y
AFR Fund Group: 10 Fund Group: FG Sub Fund Group: Sub-Sub: __
Year-End Process: F Year-End Acct: __________ Function: 10 Sub-Fun: __
Default Bank: 17001 Override: Y Proj FYTD End Mo: 08 Aux Code: ___
Alternate Banks: ***** _____ _____ _____ _____ Security: ______
State Funds: Y Appropriated: _
----SA Transactions--Dept S-Dept Exec Div Coll Mail Cd Stmt
Budget Actual
Primary: BMEN_ _____ AA CD EN C3120 Y
Expense: N
B
Secondary: _____ _____
_____ _
Revenue: N
B




Fund Source: 03 136350__________________________________
Long Title: NEW FACULTY - BMEN______________________
________________________________________


Account Letter: _ Setup Date: 07/21/2003
Must be set
to B (both)
or Y (SA
only)
TRS/ORP Exempt: _
24
Use Screen 51 in FAMIS to set
up Support Account for CS
051 Support Account Attributes
Screen: ___ Account: 136353 00071
12/21/06 12:18
FY 2007 CC 02
CS - QUICK NSF 400071 (MOORE)
Account Title: CS - QUICK NSF 400071 (MOORE)______
Resp Person: 401005360 COTE, GERARD L
Bot Ln Cntl: N Deflt Cat Cntl: N Deflt Cat Tol Pct: _______
Default Bank: _____ Override: _ Delg Type: _
Alt. Banks: _____ _____ _____ _____ _____
Dept S-Dept Exec Div Coll Mail Cd Stmt
Primary: BMEN_ _____ AA CD EN C3120 Y
Secondary: _____ _____
_____ _
Sys Member: __ Off Campus: _
Start Date: 05/01/2006 End Date: 04/30/2010
Classing Cd: _
TAMRF Nbr: ___________
Long Desc: CS - MOORE - (A&M - NSF,QUICK)__________
________________________________________
Security: ______
SA Group: ______
Old Acct: _______________
Roll BBA To Base: _
Effort Cat: CSOR_
---- Indirect Cost ----Base: ________
Rate: ______
Distribution: __________
Expense Obj: ____
Revenue Obj: ____
25
Why it is necessary to use separate accounts
to document cost share expenses?




To avoid risk of audit findings by not properly
tracking total project expenditures, including cost
sharing
Compliance with existing TAMU and TAMUS
policy
For indirect cost calculation purposes—cost share
expenses on “research” projects should be
identified as “cost share – organized research.”
Effort reporting should include “total” effort,
including contributed effort.
26
V. What is relationship between cost
sharing and the indirect cost rate?


This is where cost sharing becomes a “twoedged” sword. An institution’s contribution
towards research can result in a lowering of the
indirect cost rate.
This occurs as additional costs are identified
and added to the direct cost research base (the
“denominator” in the indirect cost rate
calculation). As the denominator grows, the
rate decreases as indirect costs are distributed
over a larger base.
27
Cost Sharing & Indirect Cost Rate
Indirect Cost Rate (F&A) =
$ value of indirect costs associated with organized
research (G&A, Dept. Admin., O&M, Library
Costs, Depreciation, etc.)
_______________________________________
$ value of organized research direct costs
(including cost sharing used as direct costs or
organized research
28
Example No. 1


Direct Costs for organized research =
$200,000,000
Indirect Costs associated with
organized research = $100,000,000
100,000,000
200,000,000
Indirect Cost Rate = 50%
29
Example No. 2


Direct Costs for organized research =
$250,000,000 (includes additional
$50,000,000 in cost sharing)
Indirect Costs associated with organized
research = $100,000,000
100,000,000
250,000,000
Indirect Cost Rate = 40%
30
VI. Federal Sponsor
Expectations/Policy

National Science Foundation
• Revised NSF Policy issued October 14, 2004
• NSF will no longer require cost sharing as an
•
eligibility criterion for proposals submitted in
response to a program announcement or NSF
Grant Program Guide
NSF will continue to required the statutory 1%
cost sharing requirement on all unsolicited
research proposals
31
VI. Federal Sponsor
Expectations/Policy

National Institutes of Health – NIH
• NIH recognizes that universities cost
shared before it was mandated and
universities will continue to bear a
significant part of the research costs
regardless of any federally imposed
requirement
• Cost sharing requirements are not
imposed
32
NIH Salary Cap



Is salary over the NIH cap considered
allowable cost sharing?
Is salary over the NIH cap an unallowable
cost?
How should salary over the NIH cap be
treated in the F&A base for rate calculation?
NOTE: Cap is $183,500 in 2006; $180,100 in
2005
33
Answers to NIH questions



No
Yes – It is unallowable for NIH purposes
because amount is over the salary cap
level.
Institution should still treat as part of
research base (research expenditures).
34
VII. Problems and Challenges

How do you balance proposed cost sharing versus
actual commitments?
• How much is reasonable?
• How much is possible?

When an institution reduces a faculty
member’s level of time committed to teaching
or other institutional responsibilities to shift
effort to research projects, we have made a
voluntary cost sharing commitment which
should be reflected in the payroll system.
35
Problems and Challenges


Setting a precedent on the campus and
with the sponsor
• Will amount offered as cost sharing
come to be expected?
Principal investigators assume that
increasing the cost sharing increases
the likelihood of funding.
36
Problems and Challenges

Documentation requirements
• How burdensome will documentation
requirements be? Does sponsor want
support for every cost share expenditure?
• Will you need to obtain in-kind appraisals?
• How many third parties are involved when
trying to obtain documentation for cost
sharing?
37
Problems and Challenges at the Award
Acceptance and Initiation Stage

What should you do if mandatory cost
sharing requirements cannot be met?
• Attempt to identify additional sources of
cost sharing contributed towards the
project
• Communicate with sponsor, requesting a
reduction in the cost sharing commitment
to the level of cost sharing that is actually
met
38
Consequences of an unmet cost
sharing obligation:
 May have to reduce amount of funds
received from the sponsor. If you have
already received funds from sponsor, may
have to pay a portion back.
 May have to terminate the award, with
possibility that the grantee institution will
be required to return all funds awarded by
the funding agency. This might
jeopardize future funding from sponsor.
39
VIII. Resources


15.01.01.M1.03 - Cost Sharing
Procedures at: http://rulessaps.tamu.edu/PDFs/15.01.01.M1.03
.pdf
Current TAMU procedure for
documenting cost sharing became
effective September 1, 2001.
40
System Policy on Cost Sharing

System policy requires the use of
separate accounts for cost sharing.
See SYSTEM REGULATIONS—
15.01.01 "Administration of Sponsored
Agreements-Research and Other," Part
10, http://tamus.edu/offices/policy/15-0101.pdf for requirements.
41
More Training on Cost Sharing


Attend FAMIS training on support accounts offered by
FMO. Watch for training at
http://finance.tamu.edu/fms/training.asp or email
Catherine Gibson at [email protected] for
next class.
NCURA (National Council of University
Research Administrators) Teleconference on
March 6, 2007 about “Effort Reporting” will
discuss cost sharing of salaries on grants.
Register at
http://vpfninet.tamu.edu/twa/do/events/list
42
For questions, contact:

Office of University Research Services
• Janet Killion – Sponsored Project
Administration
•Email [email protected] or call
(979) 862-2841
43