Facilities & Administrative Costs and Sponsored Programs at Chico State March 27, 2012

Sponsored Programs Supporting the Scholarship of Discovery

Sponsored Programs Supporting Professional Development

The Enterprise of Sponsored Research $650,000,000 in the CSU system in Supports research projects otherwise unpaid for by general fund Allows faculty to build professional development dossier, enrich teaching Engages students in real-world, hands-on learning Provides resources to campus

Supporting Sponsored Projects Prior to WWII, federal government only provided funding for the direct costs of University research Since the war, federal agencies recognize the benefit received from university research warrants supporting the F&A (indirect) on research costs Federal regulations prescribe the process for establishing the F & A rate for each university

Direct vs. F&A Costs  Direct costs are readily assignable to a specific project or activity.  F&A costs are incurred for common or joint objectives, e.g., shared services.

Examples of direct costs Salaries and fringe benefits Travel Operating expenses ◦ Materials and supplies ◦ Expendable equipment (under $5000) ◦ Postage/shipping ◦ Printing Equipment (over $5000) Subcontracts Student support: stipends or tuition

Examples of F & A costs F = Facilities Costs  Depreciation on buildings & equipment  Interest on debt  Repairs & maintenance  Utilities  Custodial costs  Library costs

Examples of F & A costs A= Administration  Institution-wide administration Business & Finance HR President Provost and Deans  Departmental administration Chairs  Sponsored projects administration RESP Foundation Administration

Who determines the federal F & A rate? Federal regulations prescribe calculations University and Foundation work together to prepare rate proposal to federal Department of Health/Human Services every 4 years to 5 years Based on audited financial statements and supporting documentation DHHS reviews proposal and negotiates rates

How does DHHS calculate the rate? F & A Rate = Facilities + Administrative Costs ÷ Modified Total Direct Costs (MTDC)

What is MTDC ? Total direct costs (TDC) less: - Equipment at $5000/item and over - Amount of subcontracts over $25,000 - Student support (i.e., stipends, scholarships, tuition remission) - Capital improvements - Off-campus rent/utilities

What was Chico’s proposal? Total F & A Costs = $70 million ◦ CSU, Chico = $66.2 million ◦ Research Foundation = $3.8 million Total MTDC = $127 million ◦ CSU, Chico = $104 million ◦ Research Foundation = $23 million

Chico’s Rate Calculation F & A= $70 Million = 55% MTDC $127 Million Eventually negotiated with DHHS 44% on campus 23% off campus

What are the current Chico State rates? Federal on-campus projects – 44% MTDC* Federal off-campus projects – 23% MTDC State/local government/NPOs – 30% MTDC Agency published rates – capped Not allowed by sponsor *MTDC = Modified Total Direct Costs

In general, proposals to for-profit entities should utilize a rate of 44% MTDC.

How much F&A is collected? Research Foundation – FY 09/10 ◦ Total grant & contract expenses = $27.5 M ◦ Total direct costs = $24.8 M ◦ Total F & A recovered = $2.7 M ◦ Average “recovery rate” = 10.8% ◦ Chico is in the lower half of CSU system for percentage of F & A recovery

CSU Auxiliary Organization Association Data Warehouse – Comparisons FY 09/10 CSU Campus On Campus Rate Off Campus Rate Base Direct Expenditures F & A Recovered Effective Rate San Jose43.40%26%MTDC$47,886,442$7,829, % San Luis Obispo40%22%MTDC$23,910,077$3,762, % San Diego49.50%26%MTDC$145,931,765$22,875, % San Marcos48%28%MTDC$6,895,092$1,040, % Long Beach44.50%26%MTDC$30,239,804$4,539, % Northridge45%26%MTDC$16,940,049$2,442, % Sonoma48%22.70%S & W$10,739,422$1,456, % San Francisco53.50%26%MTDC$48,955,137$6,397, % Monterey Bay44%26%MTDC$10,246,155$1,332, % Los Angeles45%26%MTDC$22,855,281$2,961, % Sacramento38%22%MTDC$47,130,403$5,488, % San Bernardino43%15%MTDC$25,153,064$2,757, % Chico38%18%MTDC$24,800,069$2,676, % Humboldt40%18%MTDC$13,979,379$1,404, % Pomona42%26%MTDC$13,520,263$1,292, % Fullerton35.10%14.80%MTDC$16,408,490$1,547, % Dominguez Hills42%19%MTDC$10,845,342$906, % Stanislaus47%21%S & W$5,905,727$444, % Fresno38.40%17.30%MTDC$27,955,776$1,990, % Chancellors Office17.10%8.40%MTDC$4,693,619$129, %

How is F & A Spent? Research Foundation General Fund Operations 25/35 Main Debt Service & O/M Incentive Awards to Units & PIs Capacity Awards to Units IRG Foundation Scholars Grants Outstanding Professor/Scholar Awards Emergency Equipment Fund President’s Discretionary Fund Reimbursement to Campus for Facilities Use* *Effective 7/1/12

The Research Foundation: Auxiliary with Fiduciary Responsibility Foundation Administration Office Human resources Risk management Property management Enterprise management Office of Research and Sponsored Programs Internal Research Grants Training & faculty professional development Pre-award support to Principal Investigators Contract review and negotiation Post-award management of grants/contracts Post-award audits & close outs Foundation’s cost of doing business ~17.9 %

C ost of Business vs. F & A FY 10/11 G & C direct expenditures = $24.8M G & C w F& A < 17.9% = $19.6M Only 21% of G & C expenditures recovered the Foundation’s cost of business Unrecovered F& 17.9% = $2.1 M

Resources Provided by Foundation 14 Years of Support to the Campus Summer Scholars $ 644,664 New Faculty Support $ 384,000 Unit Incentive $ 2,593,813 Unit Capacity Building $ 500,000 PI Incentive $ 918,574 Faculty Professional Development $ 277,209 Replace CSU Research & Creative Activity $ 61,829 Research Mentor Program $ 15,619 Infrastructure $ 75,604 Total $ 5,471,312

F&A Recovery at Chico State Opportunity = 44% Reality = 10.8% Minimum Goal = 18% campus average

What’s Next? As state funding for the campus continues to decline, funds from sponsored research projects is more important than ever. RESP will work in partnership with faculty and staff to help sponsors understand the importance of F & A recovery.

Questions? Comments? Handouts available at: