F&A Booklet
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11. How has the F&A cost rate changed over the
years?
Chart VIII (see below ) shows how the F&A cost rate has remained relatively unchanged at Washington State University during the last two decades. In 1979 the federal government revised Circular A-21 and changed the base from salaries and wages to the MTDC approach discussed earlier. As a result, F&A cost rates at the University have been applied on an MTDC basis starting in FY 1981.
During the early 1980’s, the University was successful in negotiating with the State of Washington to change the way in which the F&A cost funds received by the University were handled. Until that point, the F&A cost funds reverted to the State. In return, the State made an offsetting adjustment in the University’s budget based on a forecasted amount (invariably too low) for such costs. Even if WSU subsequently generated more F&A cost reimbursement, it usually did not have access to the excess.
In 1983, the State and the University agreed to a revenue-neutral transfer of authority for the F&A cost component of the budget. In other words, the State agreed to allow the University to retain its F&A cost reimbursements as received, and discontinued the offsetting adjustment. From that year forward, any increases in F&A cost reimbursement received by the University have accrued, in essence, to the institution. This approach provides the University greater flexibility and increased incentive to recover a more realistic portion of the F&A costs. As Chart VIII shows, the F&A cost recovery rate has remained flat through the past decade and early part of the new millennium until just this year where the rate has increased, reflecting more costs and an effort to recover sums that more nearly approximate the University’s actual expenditures. Nevertheless, the actual recovery rate is still less than 17 percent, while the negotiated rate is 46.8 percent and the actual expenses are nearly 50 percent.
Chart VIII
Washington State University
On-Campus Federal Research F&A Cost Rate, 1980 - 2003
Click for larger chart
