F&A Booklet
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5. How are F&A cost components calculated?
Circular A-21 spells out in considerable detail the data that must be collected for calculating the F&A cost rate. The financial basis for the F&A cost calculation is the set of audited data from the University’s previously audited financial reports. The nine cost pools are classified within two broad categories-—”Facilities” and “Administration”—with the F&A costs for the latter category capped at 26 percent. Chart II (see page 5) is a percentage breakdown of the University’s on-campus research rate for Fiscal Year 2002. The chart suggests that for each $100,000 allowed for MTDC, the 2002 WSU rate recovers an additional $3,300 for building and improvement costs, $6,100 for equipment, and so on. Below is also a breakdown of the cost components:
| Cost Component: | Rate: |
|
Buildings and Improvements |
3.3% |
| Interest | 0.9% |
| Equipment | 6.1% |
| Operations and Maintenance | 9.0% |
| Library | 1.5% |
| General Administration | 6.3% |
| Departmental Administration | 16.8% |
| Sponsored Projects Administration | 2.9% |
| Student Services Administration | 0.0% |
| Total | 46.8% |
Chart I
The F&A Cost Rate Formula
|
PROPOSED F&A COST RATE = |
(TFAC) (MTDC) |
F&A Cost Definitions
|
TFAC = (Total F&A Costs) |
Total amount of the nine specific indirect cost
pools assigned to organized, sponsored
research |
|
MTDC = (Modified Total Direct Costs) |
(Direct Salaries and Wages) plus (All Other Direct Costs) minus (Equipment over $5,000, renovation costs, patient care, off-campus building rental and utilities, training stipends, tuition, and the portion of each subcontract in excess of $25,000) |
- The Buildings and Improvements cost pool (the first of nine cost pools) contains three major types of costs. The first and largest segment is the building depreciation. Depreciation is calculated on a straight-line basis of 50 years resulting in a two percent depreciation expense. Building costs paid from federal funding are not included in the depreciation calculation. Based on an extensive “space study” carried out by the University, an estimate is made of the fraction of building use which can be attributed to the research effort. The building cost pool also allows for the cost of land improvements (such as sidewalks, exterior lighting, landscaping), and the cost of off-campus rental space (if not charged to a grant directly). Chart III (see page 6) is a list of some of the major research buildings that are included in the space survey.
- The Interest cost pool includes interest on debt associated with certain buildings, equipment and capital improvements. These costs are assigned to research projects proportionally in the same manner as the depreciation or use allowance on the items (buildings, equipment and capital improvements) for which interest is paid.
- The Equipment cost pool includes items of equipment not purchased with federal funds. An annual depreciation amount is computed on each equipment item using “useful life” periods established by the State of Washington. If the equipment is located in a room identified in the University’s space study as research space, the corresponding equipment depreciation amount is considered an F&A cost of the research carried out in that room. With the increase of capitalization to $5000, personal computers are seldom capitalized or depreciated.
- The Operations and Maintenance cost pool includes physical plant operations and maintenance expenses. This category recovers the cost of utilities, maintenance, custodial services, environmental health and safety, transportation services, campus security, and facilities management associated with organized research. The University’s space study is used to apportion the majority of these expenses to research, instruction, and other activities.
- The Library cost pool recovers
centralized library costs incurred, as well as newer
campus libraries. Recoverable operating costs include
administration, book acquisitions, and the cost of
periodicals. Libraries operated by academic departments
are considered departmental administration costs, and are
recoverable through that cost pool. The various groups
utilizing library services must be identified and
assigned a portion of library costs when establishing
what fraction of the total cost of the library enterprise
is attributable to the research activities of the
university.
Chart II
Washington State University F&A Cost Components and their Percentage of Modified Total Direct Costs
Rate Component |
Percentage |
Facilities |
|
| Buildings and Improvements | 3.3% |
| Interest | 0.9% |
| Equipment | 6.1% |
| Operations and Maintenance | 9.0% |
| Library |
1.5% |
| Subtotal Facilities |
20.8% |
Administration |
|
|
General Administration |
6.3% |
| Departmental Administration |
16.8% |
| Sponsored Projects Administration | 2.9% |
| Student Services Administration | 0.0% |
| Subtotal Administration | 26.0% |
|
On-Campus OrganizedF&A Cost Research
Rate for WSU (FY 2002) |
46.8 |
- The General Administration cost pool includes expenses for general executive and administrative offices, which provide services to all activities of the university. This category encompasses personnel, payroll, and purchasing services, financial management, and a variety of other central administrative functions. In addition, expenses in the Offices of the president and the provost are included in this cost pool. These expenses are distributed proportionally in relation to the many other activities conducted at an educational -institution.
- The Departmental Administration cost pool includes expenses for program support and administration that occur at both the college/school and departmental levels. This cost pool includes an allowance (3.6 percent of MTDC) for the administrative effort of faculty and other professional personnel. In addition, the Departmental Administration cost pool includes a calculation of the portion of personnel costs for non-faculty and non-professional technical and administrative staff, and for supplies, travel arrangements, telephone services, etc., which are typically paid from general operating budgets.
Chart III
WSU Buildings and Percentage Used for Research
|
BUILDING NAME |
BUILDING NUMBER |
PERCENTAGE TO RESEARCH |
|
FULMER |
0003 |
30% |
| ENGINEERING TEACHING RESEARCH LAB BLDG | 0058 |
45% |
| FOOD SCIENCE AND HUMAN NUTRITION | 0816 |
51% |
| ANIMAL SCIENCES LAB BLDG |
0100 |
64% |
|
SCIENCE HALL – ABELSON HALL |
0032 |
24% |
| CLARK HALL | 0099 |
58% |
| WEBSTER PHYSICAL SCIENCE BLDG | 0801 |
30% |
| VANCOUVER CLASS ROOM BLDG | 6502 |
20% |
| ELECTRICAL MECHANICAL ENGINEERING BLDG | 0078A |
21% |
| JOHNSON HALL |
0076 |
38% |
| WEGNER HALL |
0045 |
23% |
| EASTLICK HALL |
0082A |
15% |
| BUSTAD HALL |
0087 |
18% |
| WSU RESEARCH AND TECHNOLOGY PARK |
0820 |
56% |
| GREENHOUSE REPLACEMENTS PUYALLUP | 1034 |
53% |
| FREESTALL BARN 23 DAIRY FORAGE FACILITY |
1523 |
100% |
| MCCOY HALL |
0044 |
17% |
| DANA HALL |
0056 |
29% |
| KACKUS OFFICE LAB BLDG PUYALLUP | 1010 |
45% |
| HELD HALL |
0082 |
26% |
| EXPERIMENTAL ANIMAL LAB | 0814 |
42% |
| SLOAN HALL | 0078 |
23% |
| TROY HALL |
0036 |
32% |
| HAMILTON LAB BLDG PROSSER |
2068 |
27% |
| SWINE CENTER |
0405 |
24% |
| ALBROOK HYDRAULICS LAB |
0071 |
68% |
| IBC GREENHOUSE |
0817A |
70% |
| OVERLY LAB WENATCHEE |
3006 |
31% |
| JOHNSON TOWER |
0094 |
13% |
| VETERINARY TEACHING HOSPITAL |
0818 |
1% |
| HOP RESEARCH HEADHOUSE PROSSER |
2091A |
86% |
| HOP RESEARCH HEADHOUSE PROSSER | 2091B |
91% |
| ENSMINGER BEEF CATTLE CTR MAIN |
0404A |
38% |
| IBC PLANT GROWTH FACILITY |
0817 |
72% |
|
SHOCK PHYSICS BLDG PULLMAN |
|
100% |
| HEALTH SCIENCE BUILDING SPOKANE |
9012 |
|
| VANCOVER ENGINEERING AND LIFE SCIENCES |
6507 |
|
| PLANT GROWTH CENTER | 122 | |
| TURF RESEARCH BUILDING | 0106 | |
|
ENTOMOLOGY GREENHOUSES |
0111 | |
|
ENTOMOLOGY GREENHOUSES-SHOP/STOR BLDG |
011A | |
|
PLANT SCIENCES GREENHOUSE |
0114 |
|
| HORTICULTURE RESEARCH GREENHOUSE | 0119 |
- The Sponsored Projects Administration cost pool recovers the cost of organizational units established primarily to support the research or training effort regardless of the funding source. The primary elements in this pool are the costs associated with Business Affairs (e.g. Sponsored Programs Services) and Vice Provost for Research (e.g. Office of Grant and Research Development, Office of the Campus Veterinarian, Radiation Safety Office, and Office of Intellectual Property Administration.
- The Student Services Administration
cost pool provides for graduate student services. This
includes a portion of the costs of graduate student
counseling, health services, the Graduate Admissions
office and similar activities. However, current DHHS
practice requires the allocation of all student services
administration costs to instruction. Therefore, no
student services administration costs are included in the
existing F&A rate for research.
Once all F&A costs attributable to research are identified and calculated for a fiscal year, the sum becomes the numerator in the F&A cost rate calculation shown in Chart I. The modified total direct costs (MTDC) for the corresponding year are placed in the denominator. The resulting quotient is the proposed F&A cost rate. A component rate is calculated for each of the nine cost pools as shown in Chart II. Note that this method identifies costs associated with the facilities and administration of the university. It does not, however, dictate that the institution must actually spend recovered F&A fees according to this formula. Instead, the institution can choose to use these funds for other purposes while the institution can pay the above costs from other sources. However, it is important to note that F&A revenues typically pay for salaries, wages, benefits, goods, and services that are necessary for the completion of official university duties, as outlined in BPPM 70.03.