Kansas State University

Updated facilities and administrative cost rates available for sponsored project budget development

Submitted by Sarah Hancock

Facilities and administrative cost rates, also known as indirect costs or overhead, apply to all sponsored research, scholarly, and creative activity and discovery projects at the university — including those from federal, nonfederal and private sponsors. F&A pays for expenses that cannot be easily assigned to a specific grant, such as electricity, heat, light, accounting services, human resources, or administrative costs such as procurement, asset management, regulatory compliance and department research administration support. The federal government's process of determining and approving F&A rates involves extensive data gathering and complicated calculations associated with institutional expenditures, RSCAD FTE and space allocations, just to name a few. The calculated rate includes building depreciation, equipment depreciation, and operations and maintenance. Administrative costs are capped at 26 percent.

The Department of Health and Human Services has approved F&A rates that will apply to sponsored project budgets with effective dates of July 1, 2016, or after. The new rates are as follows:

Please begin using the new rates immediately for sponsored project budget development purposes. Note these important points about the rates:

• Rates will increase to 52 percent retroactively to July 1, 2016, but existing grants will not be affected. In other words, previously submitted proposals that included budgets with F&A rates at the previous on-campus rates and are selected for funding at the amount proposed, without the opportunity to update budgeted facilities and administrative cost rates, will be honored at the previously submitted rate.
• Some exceptions apply; for example, the National Science Foundation prohibits "voluntary cost sharing" and will require that K-State prepare updated budgets to reflect the new F&A rate during the awarding process. Voluntary cost sharing occurs when a proposal is submitted and an award is made at rates that result in reimbursement at less than full cost recovery — i.e., 50 percent submitted rate versus 52 percent effective rate.
• Many sponsors will approach K-State to confirm current rates as part of final award negotiations. When this occurs, the facilities and administrative rate — and fringe benefit rates — will need to be updated to the current rates.

Consistent with federal regulations, current F&A rates will apply for the competitive period of currently funded grants; that is, grants will remain as originally awarded for continuing projects that are in their current competitive segment — i.e., in year 3 of a 5-year project period in which year 1 was awarded at 50 percent. When the renewal proposal budget is developed for the next competitive segment/project period, the new rates will be required.

Find a detailed rate chart and the executed federally negotiated facilities and administrative rate agreement.

Peter Dorhout, vice president for research, and Cindy Bontrager, vice president for administration and finance, said F&A, also known as sponsored research overhead, or SRO, ensures the future health of K-State research.

"Sponsored research overhead is crucial to helping us move forward as we address the increasing costs of doing business in the research enterprise," Dorhout said.

"Growth in the SRO budget will allow us to begin to address the numerous recommendations made by several task force groups to support research initiatives such as core facilities and interdisciplinary research," he said.

Bontrager noted the importance of addressing aging research spaces.

"Increasing SRO revenue provides us the opportunity to make a positive impact," Bontrager said.

"Completing the federal government's process of negotiating the F&A rate requires extensive time and effort, and I appreciate the work done by Sponsored Programs Accounting," she said.