New F&A Waiver Strategy

Current F&A Challenges Large amounts of foregone F&A restrict institutional capabilities Institutional risk exists due to inconsistent treatment F&A Waiver process needs to be streamlined $1.87M waived in first four months of FY08 –76 requests ~50% for projects under $50K direct costs/yr –Spread across all fund sources

Peer Positions F&A Waivers not granted to for-profits (UC all campuses, Stanford, Michigan, Washington, MIT, Michigan State, Purdue) F&A Waivers not granted to foreign entities (UC all campuses, Stanford, Penn State, MIT, Michigan State, Purdue)

Minnesota F&A Rates are Competitive U of Washington56.0% UC San Diego54.5% UC San Francisco54.0% UC Los Angeles54.0% UC Berkeley53.5% U of Illinois53.0% (UIC at 57%) U of Michigan52.0% U of Minnesota51.0% Ohio State50.0% Wisconsin48.5% North Carolina46.0% (FY08 under negotiation)

SPA PI Transfers Non-profits with published policy Special governmental programs Projects which move from off-campus to on-campus. Proposed New Strategy F&A Waiver Requests Administrative Waivers Strategic Waivers Regular Waivers Deans Small Project Waiver (<$50K direct cost/yr) Other Reductions above minimums VPR Waivers or reductions below minimums Tracked

Proposed F&A Rate Minimums (awards over $50K direct costs/year) Federal ……………………………… Federally negotiated rate* Foreign government ………………... Federally negotiated rate* For-profit …………………………… 34% State of Minnesota ………………….. 0% (for now) Non-profit/foundations ……...…….. Published policy or 10% TDC** Corporate affiliate programs ……….. 10% TDC Industry-funded clinical trials …… 26% TDC * or as approved by SPA ** Use published policy if it exists, otherwise, 10% TDC

Waivers No Longer Available for: Projects that did not receive institutional endorsement prior to submission to Sponsor F&A waivers or reductions of rates negotiated by PIs with Sponsors If reduced F&A is needed in these instances, the Unit must set up a cost-sharing account to pay the difference between the Sponsor- approved rate and the federally negotiated rate or approved minimum for this type of project.

Potential Reasons to Approve Waivers Seed grants which may attract larger awards Hardship for new PI Awards which include equipment or building funds Community relations or library projects Student services projects (or increase funding to pay for students) Capped awards Department committed to undertake the research regardless of external funding (e.g., any dollar gained is better than nothing) Small cost Junior faculty or incoming faculty member Enhance cultural/artistic activities (small projects only) Only available source of funds in an area Strategic partnerships

Potential Reasons to Disapprove Waivers Precedent setting Grounds on which the waiver might be justified to other faculty whose projects carry full overhead Consistency with similar sponsors or programs Large total cost to the University Any IP rights granted to the sponsor Past history of PI requesting waivers Profit-making entities Foreign entities

F&A Waiver Process Improvements 1.Eliminate formal waiver process for projects less than $50K/year – dean’s signature on PRF will signify approval 2.SPA has created a list of agencies with pre-approved rates (based on policy); proof of agency policy is no longer required to accompany PRFs when submitting to these entities 3.SPA has new “Foregone F&A calculator” to help Deans and SPA better understand and track foregone amountsForegone F&A calculator 4.Waiver requests must be submitted in advance (4 business days for regular waivers, 7 business days for strategic waivers)  Can’t make the deadline? Submit with full F&A!

Approval Timelines Regular Waivers Day 1: Info to Dean(s) Day 2: PI notified by Dean of approval/disapproval Day 3: PI/Dept adjusts proposal if needed & submit to SPA Day 4: SPA proposal review Strategic Waivers Day 1: Info to Dean(s) Day 2-4: Dean(s), VPR, Chair, PI, SPA confer Day 5: PI notified of approval/disapproval Day 6: PI/Dept adjusts proposal if needed & submit to SPA Day 7: SPA proposal review Timeline Still under Consideration!

Proposal for New Waiver Strategy Rollout Proposed for April 1, 2008 Streamlined waiver approval process implemented Dean’s approval for small waivers implemented SPA endorsement for administrative waivers implemented No waivers granted for proposals submitted without endorsement Reductions for for-profits and foreign governments beyond pre- set minimum level requires VPR approval Other F&A minimums considered “targets” PIs informed that they may not negotiate F&A rates Proposed for January 1, 2009 F&A minimum levels for all categories implemented

Questions?