1. The F&A Humpty Dumpty – Putting the Pieces Together ( Insights for the Departmental Administrator ) National Council of University Research Administrators Region VI-VII Meeting April 2005

2. Session Panelists Gary Chaffins - Director, Office of Research Services & Administration, University of Oregon Stuart Laing – Manager, Cost Analysis Office for Research and Sponsored Projects Administration, Arizona State University

3. Facilities & Administrative Costs Topics F & A rates - Huh? Departmental Involvement - You mean I’m involved? F&A Recovery – Is it worth the effort?

4. F & A Rates What are they?

5. Facilities & Administrative Costs The “Rate” is really multiple rates added together; example: –Research rate components: On Campus Off Building use 2.7 points Equipment use 3.6 points Operations & Maintenance 15.3 points Library 2.4 points General Administration 6.2 points * 6.2 Department Administration 14.9 points * 14.9 Sponsored Project Administration 4.4 points * 4.4 Student Services Administration.5 points *.5 Total 50.0 points ** 26.0 * Administration components are “capped” at 26%. ** Points a.k.a. percent.

6. Geez… this session is going to be worse than I thought!

7. Facilities & Administrative Costs Key “Rate” Components Heavily Dependent on Department Information. –Research rate components: On Campus Off Building use 2.7 points Equipment use 3.6 points Operations & Maintenance 15.3 points Library 2.4 points General Administration 6.2 points * 6.2 Department Administration 14.9 points * 14.9 Sponsored Project Administration 4.4 points * 4.4 Student Services Administration.5 points *.5 Total 50.0 points ** 26.0 Total from Key Department data36.5 points 14.9

8. Is it getting Better?

9. FACILITIES & ADMINISTRATIVE COST CALCULATION – OVERVIEW Space MTC Cross Allocations Building and Equipment Depreciation Building and Equipment Depreciation Interest Operations and Maintenance Operations and Maintenance General Administration General Administration Department Administration Department Administration Sponsored Projects Administration Sponsored Projects Administration Library 1 Student Services 2 F&A Cost Pools Other Sponsored Activities Other Sponsored Activities Instruction and Departmental Research Instruction and Departmental Research Organized Research Organized Research Other Institutional Activities Other Institutional Activities F&A Costs Allocated To MTDC Other Sponsored Activities MTDC Other Sponsored Activities MTDC Instruction and Departmental Research MTDC Instruction and Departmental Research MTDC Organized Research MTDC Organized Research Distribution Base % % % % % % F&A Cost Rates Allocation Bases Space MTC MTDC Pop/FTE Instruc = = = 1 Population including students/FTE of employees 2 Generally allocated to the Instruction function 1 Population including students/FTE of employees 2 Generally allocated to the Instruction function / / /

10. Nope…

11. Departmental Involvement and Impact

12. Department personnel usually provide basic data for Rate preparation through: –Space utilization reports –Equipment inventories –Expense classification/allocation –Activity/Effort Report processing

13. Space Utilization Reports Space is not the final frontier, but probably the most important statistic used in the F&A rate. –The following cost pools use space as their allocation method. Building Depreciation Equipment Depreciation Operations and Maintenance Interest

14. Are you lost yet????

15. Space Utilization Reports It is critical that the departmental space coordinator know their department space, how generally how it’s used, and how it should be coded. No single person should decide how each room is being used, but the space coordinator should walk the space and talk to the occupant.

16. Space Utilization Reports A room that is 100% Organized Research (OR) with 1,000 square feet would equate to 1,000 square feet of OR space. Care should be taken not to code rooms incorrectly, one issue - 100% Organized Research Labs. Instruction does go on in labs.

17. Equipment Inventories Equipment used by the university is depreciated depending on the capitalization threshold. Equipment being depreciated is calculated into the F&A rate proposal. It is critical that each piece of equipment be mapped to a room, so depreciation can be allocated to the activities conducted in that room.

18. Expense classification/allocation How can you assist in this process? Each expense during a “Base Year” is used to calculate the F&A rate. It is critical that each expense be coded correctly in your financial system. Cost transfers must be completed by June, 30. Critical correct cost on correct account.

19. Activity/Effort Reporting Not only is this a hot topic in the eyes of A- 133 Auditors and Federal Sponsors, but it is used in the F&A rate. You must include in the base (OR, Instruction, Other) all the MTDC Expenditures and Cost Share. PI Effort used as Cost Share is documented on the Effort Reports.

20. Activity/Effort Reporting Certifying Effort validates the expense to the sponsored account. Some Institutions still use Effort reports as a method to calculate the DA cost pool. You might think of switching to the DCE

21. Any questions so far?

22. F&A Recovery – Is it worth the effort?

23. Simple Answer….. YES!!

24. A Point is a Point A point is a percent of the F&A rate. So 50% is 50 points. A point to a University can range from $200K to well over $1M per year worth of recovery.

25. F&A Recovery Institutions have unrestricted use of F&A recovery (except those listed in Exhibit A of A-21). Pay for Buildings, Equipment, Cost Share etc. Return portions to the Colleges and Departments to help cover Administrative costs.

26. The Problem: Identify the Direct and the F&A Costs Expense type: Salaries & Wages Fringe benefits Services Supplies Travel Equipment Subcontracts Interest Rent Utilities DirectF&A X X X X

27. Facilities & Administrative Costs (Order of Distribution) Depreciation and Use Allowances Operation and Maintenance Expenses General Administration & Expense Departmental Administration Sponsored Projects Administration Student Administration and Services Library Instruction Organized Research Other Sponsored Programs Other Institutional Activities

28. F&A Recovery- The Institutional Perspective

29. Now’s The Time For Some Real Discussion…...