F & A Frequently Asked Questions

• What are Facilities and Administrative Costs?
• How are Facilities and Administrative Costs Calculated?
• How is Your Account Charged for Facilities and Administrative Costs?
• When is the Off-site Rate Used?
• How Should Facilities and Administrative Costs be Calculated in Applications?

Q. What are Facilities and Administrative Costs?

Facilities and Administrative Costs are expenses incurred by the Center for a variety of areas wich are difficult to identify with a single project or account. For example, the Office of Sponsored Research provides support to over six hundred different project budgets and it would be extremely difficult, if not impossible, to calculate how much each of those accounts benefitted from our work. On an annual basis, costs included as indirect expenses are reviewed and approved by the Center's Board of Trustees through the Center's budget process. There are several categories of costs included in indirect costs. These are:

Administrative Services: Central administrative functions such as the Office of Sponsored Research, Accounting, Finance, Purchasing, Human Resources, Environmental Health and Safety, the Director's Office and the Institutional Review Office, are supported through Facilities and Administrative Costs.

Facilities Costs: The cost to maintain and operate the Center's facilities including the payment of all utilities, facilities maintenance expenses, facilities planning and development etc.

Divisional Support: Scientific Division Administration Offices as well as the cost of equipping and starting up new laboratories and providing temporary, interim support to approved projects facing lapses in funding.

Shared Resources: Many of the shared resources used by Center investigators are supported, to various degrees, by Facilities and Administrative Costs. For example the Library is heavily supported through Facilities and Administrative Costs. Other resources such as the Animal Facilities, Electron Microscopy, Flow Cytometry, Image Analysis, Microchemistry, and other Computing Resources receive support through this mechanism for maintenance and lease of equipment.

Q. How are Facilities and Administrative Costs Calculated?

Each year the Center negotiates an Facilities and Administrative Cost rate with the Department of Health and Human Services. In this process, the Center adds together all Facilities and Administrative Costs associated with research activities and divides this amount by the amount of direct research expenses incurred during the same period. The result is a percentage of Facilities and Administrative Costs to direct costs which is used to charge indirect expenses to each research project. Initially this rate is an estimate of what we expect to spend, much as an investigator estimates a grant budget. After the year has passed, we must report back to the government on what we actually spent in Facilities and Administrative Costs and what investigators spent for research. If the actual rate turns out to be higher or lower than the initial rate the amount that was either overcollected or undercollected is carried forward to the next rate. By adjusting the next rate up or down (depending on whether we overcollected or undercollected for Facilities and Administrative Costs) the government assures that the Center is reimbursed for actual expenses only. The government requires that each research project be charged Facilities and Administrative Costs in the same way and will not allow the government to be charged a higher rate to offset agencies that don’t pay the full rate.

Facilities and Administrative Costs are calculated by multiplying the rate noted above against the Direct Cost Base. Direct Cost Base is the Total Direct Costs less items of equipment and other capital equipment, alterations/renovations, stipends, tuition remission, protocol initiation fees, hospital and other patient care costs, and the portion of each subaward issued in excess of $25,000 during a single project period, including multiple subawards to the same institution.

Q. How is Your Account Charged for Facilities and Administrative Costs?

Facilities and Administrative Costs are charged to your account as you spend your money. The Center does not earn any Facilities and Administrative Cost money until you spend a dollar in direct costs. If you spend money in any category (except the exempt categories listed in the section "What are the Current Facilities and Administrative Cost Rates?") the Center calculates its Facilities and Administrative Cost percentage on that dollar. For example, if you buy $100 in supplies, under a rate of 76%, the Center is allowed to collect $76 to cover its actual costs of running the Center. Until you spend money, the Center cannot collect any Facilities and Administrative Costs.

Facilities and Administrative Costs are calculated by multiplying the rate noted above against the Direct Cost Base. Direct Cost Base is the Total Direct Costs less items of equipment and other capital equipment, alterations/renovations, stipends, tuition remission, protocol initiation fees, hospital and other patient care costs, and the portion of each subaward issued in excess of $25,000 during a single project period, including multiple subawards to the same institution for different scopes of work.

As of the effective date noted above, Facilities and Administrative Costs will be charged at the rate listed as long as there are sufficient funds available. In many types of awards, such as contracts, subcontracts, NIH and NSF grants, balances in direct costs may be used to fund Facilities and Administrative Costs. Direct Costs will be used for this purpose only when it is evident they will not be needed by the project during the approved funding period.

In cases of carry-forward of funds or extension of grant years, unexpended funds to be used during the carry-forward or extension period must be budgeted for both direct and Facilities and Administrative Costs. In these situations, Facilities and Administrative Costs must be covered at the full rate appropriate for the time expenses are charged to the account.

Q. When is the Off-site Rate Used?

The off-campus rate may be used when 51% of the activities of a project will be conducted in facilities not owned or leased by the Center. For questions, please contact your OSR Specialist.

Q. How Should Facilities and Administrative Costs be Calculated in Applications?

Facilities and Administrative Cost rates are set for the Center's fiscal year which runs from July to June. Since most grant years span over more than one fiscal year, the Facilities and Administrative Costs included in a proposal should be prorated for the grant year using the appropriate rates.

This page was last modified 12.11.07