Policy MS 01 93
The recovery of F&A costs are an allowable charge against contracts and grants awarded by both public and private entities. The elements of costs which are included in the definition of F&A costs vary greatly; however, the most definitive guidelines for the inclusion of costs, both direct and indirect, under contracts and grants is Circular A-21 issued by the Office of Management and Budget of the United States. The following broad elements of costs are included in F&A costs, which are recoverable under Circular A-21:
Depreciation and use allowances
Operation and maintenance of Facilities Operations
General administration of the institution
Sponsored project administration
Student administration and services
Unless specifically prohibited by the granting or contracting agency or entity or limited by statute, the rate approved by the appropriate cognizant agency, based on a computation submitted by the University, shall be reflected in all budget proposals submitted to outside funding authorities. To the extent that the amount is recoverable, it shall be included in the budget as a line item. To the extent that such costs are not recoverable, the amount shall be reflected as a footnote to the budget and shall be stated as contributed costs to the project.
Expenditure of Facilities and Administrative Costs Recovery
As a general rule, F&A costs recovered funds will be used to support the teaching and research objectives of the University. Such use might include equipment and facilities modifications, library acquisitions, research projects, etc. These funds will also be used to provide encouragement and incentive to investigators and to their departments.
At the end of each quarter, the F&A costs recovered during the preceding quarter will be allocated by the Chancellor according to these general guidelines:
The Office of Sponsored Research and Programs receives a priority distribution of ten per cent (10%) of the total amount of F&A costs funds recovered to support a position in that office. This 10% represent the amount previously transferred to the State but is now approved for University use in accordance with the spending plan filed with the Office of the President. The remaining ninety per cent (90%) is distributed as follows:
Academic Departments - having grants and contracts awarded to their area - 25% (22.5% of total earned). This money will not be used for continuing personnel costs but may be used for research-related travel, equipment, supplies, etc. It may also be used for the development of future proposals. (This information is being provided to illustrate possible uses of this funding and should not be considered as a limitation.)
Office of Sponsored Research and Programs - 43.75% (39.375% of total earned) in addition to the original 10% (together they equal 49.375% of total earned). These funds support office expenses, including staff. Additionally, if the Office of Sponsored Research and Programs writes the proposal, it will receive the 25% allocation normally given to the academic department(s).
Business Affairs - 31.25% (28.125% of total earned). These funds are used to support the administration of grants and contracts, specifically the costs associated with audit expenses.