1. Oregon State University AN INTRODUCTION TO FACILITIES & ADMINISTRATIVE RATES November 2008

2. Outline • Definition of F&A Rate calculation • How rate is calculated • Cost components used in the calculation • How recovered indirect (F&A) monies are used • How you fit into the process • Summary

3. What are F&A Rates? • Facilities & Administrative costs = F&A • F&A = indirect cost or overhead • F&A rate allows recovery of costs incurred for common or joint use that cannot be readily identified to a specific project • The rate is applied to sponsored projects

4. Federal Involvement OMB Circular A-21 • Guides the F&A process • Stipulates the proposal format • Identifies allowable costs for both direct grants expenditures and indirect Rates are negotiated with the US Department of Health and Human Services (DHHS)-Division of Cost Analysis (DCA)

5. FACILITIES Building Depreciation Interest on debt Equipment Depreciation Operations & Maintenance Library ADMINISTRATION General Administration Departmental Administration Sponsored Projects Administration Student Services Indirect Costs are Assigned to 1 of 9 Cost Pools The Facilities Components are not subject to a cap The Administrative Components are subject to a 26% cap

6. F&A Cost Calculation

7. Computing the F&A Rates Indirect Cost Pools After Cross Allocations F&A Rate Distribution Base Functions Interest; Building & Equipment Depreciation MTDC Organized Sponsored Research Organized Sponsored Research ÷ = % Facilities Portion Operations and Maintenance MTDC Other Sponsored Activities Other Sponsored Activities % ÷ = Library General Administration Other Institutional Activities Department Administration Note: Distribution Base For Instruction and Other Institutional Activities Are Not Shown Since F&A Rates Are Neither Computed Nor Negotiated for These Functions Administrative Portion Sponsored Projects Administration Instruction Student Services

8. FY 2005 Proposal Components – Research Rate

9. How does OSU use Returned Overhead (ROH)? • OSU must use some of its F&A recoveries to improve research facilities (as described in OMB A-21, Section J.14.h) • Research facilities upkeep (BUC funds) • Research equipment (RERF fund) • The remaining $s are allocated in the OSU budget process

10. How You Fit into this Process As departmental staff, you are key to OSU’s successful preparation of the next F&A rate proposal. You are involved in: • Processing payments for goods and services • Processing payroll transactions • Completion of PAR forms

11. Choice of Index is Important Many costs can only be identified by use of indexes with specific Program or Org Codes. Example: Salary and travel account codes are not unique to any cost pool (numerator) or function (denominator). These costs must be placed in the proper index to correctly identify their purpose.

12. Choice of Index The function or purpose of an expense should dictate where the cost is recorded. Example: A department chair wants to charge travel to an FSxxxx Foundation-reimbursable index. What is the purpose of the travel? • Administration related? • Instructional support? • Fund raising, alumni, lobbying?

13. How Program Codes Relate to F&A Rates Indirect Cost Pools (Numerator) Functions (Denominator) 11xxx – Ag. Ex. Sta. Res. 12000 – FRL 13000 – Other CIPs 15xxx – Spon. Res. 17xxx – Cost Share, Res. Building & Equipment Depreciation Organized Sponsored Research Facilities Portion Operations and Maintenance 5xxxx – O&M 52500 – Facil. Maintenance Other Sponsored Activities Library 18xxx – Other Spon. Act. General Administration 01800 – Dept. Aca. Support 11200 – Ag. Exp. Sta. Admin. 30600, 30800 – Dean’s Office Other Institutional Activities Department Administration Administrative Portion 4xxxx – Auxiliaries 20600 – Services/Testing Unallowable Expenses Sponsored Projects Administration Instruction Student Services 01100—Instruction

14. Non-financial Activities You may be involved in: • Space Study – winter ‘09 (appropriate coding of space is critical) • Equipment Inventory - FY09 (identification of equipment location and condition is critical)

15. F&A Rates of Peer Institutions

16. The Next Proposal • The proposal will be based on FY09 financial data (July 2008 – June 2009) • OSU will start the F&A rate proposal at the close of FY09 (Aug 2009) • A new rate agreement should be negotiated in the spring or early summer of 2010

17. Thanks for Your Efforts—It Can’t Be Done Without You! Questions? Contact – Karen Steele 72294 or Charlotte Rooks 75422