Facilities

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Facilities Administrative (FA) Cost Recovery
ReportApril 22, 2009Carol Hollingsworth,
Director, Grants Contracts Financial Services
Janet Parker, Associate Vice President,
Financial Affairs

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What is FA?

• OMB Circular A-21 term for what was formerly
  referred to as indirect cost recovery.
• Also known as overhead
• Cost recovery mechanism not a tax

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What is FA?

• Facilities Administrative (FA) costs are
• Costs incurred for common or joint objectives
  and, therefore cannot be identified readily and
  specifically with a particular sponsored project,
  an instructional activity, or any other
  institutional activity.
• Not Direct Costs direct costs are specifically
  identified to individual research projects,
  instructional programs or other major functions.
• Examples Salaries, fringe benefits, travel
  related to project, lab supplies, subcontracts,
  etc.

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FA Cost Basis

• Universities that receive 10M from federal
  sources must use a modified total direct cost
  (MTDC) basis for calculating FA.
• MTDC includes all project costs except equipment,
  renovations, subcontract costs in excess of the
  first 25,000, rent, scholarships, fellowships,
  tuition.
• FA is recovered as the sponsors funds are
  expended (and billed) for direct cost items
  allowed per the project budget.

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FA Rates

• FA Costs are recovered based on FA Rates
• Rates are developed based on cost studies.
• UTSA contracted with Huron Consulting Group to
  develop our most recent cost study.
• Significant effort.
• Proposals are submitted to cognizant federal
  agency for review, audit, negotiation approval.
• Once approved, rates are applied to each grant
  contract to determine the amount of indirect
  costs to be charged/recovered.

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FA Cost Rate Agreement

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FA Cost Rate Agreement
Recent COGR survey FA rates have held
relatively constant at 51 for the past 6 yrs!
FA payments as a of total NIH awards was
stable at 28.5 for FY03-05 accdg to GAO.

FY06 NSF survey showed that universities
contribute more than 9B of their own funds to
support RD activities or nearly 20 of total RD
expenditures.
2000 Rand study estimated that universities were
subsidizing between 700M and 1.5B of FA
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FA Rate-Actual vs. Negotiated
Actual Negotiated

General Administrative 13.9 9.6
Departmental Administration 13.7 9.6
Sponsored Projects Administration 9.8 6.8
Administrative Subtotal 37.4 26.0

Building Depreciation 12.2 4.0
Equipment Depreciation 5.6 3.0
Interest 5.0 2.0
Operations Maintenance 14.9 9.0
Library 0.5 0.5
Facilities Subtotal 38.2 18.5

On Campus Rate (FY 2007 Cost Study) 75.6 44.5

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Net Effective FA Rate

• The net effective FA rate is computed
• as follows
• TOTAL FA Recovery Revenue
• divided by
• Restricted Sponsored Program
  Expenditures (Net of FA)

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FA Net Effective Rate
Includes all NACUBO Programs FY 07 Basis Net Effective Rate FY 08 Basis Net Effective Rate
All Restricted 5,703,051 / 31,442,181 18.1 6,055,402 / 34,035,958 17.8
Restricted Federal 5,404,985 / 26,194,640 20.6 5,753,973 / 27,725,858 20.8
Restricted Non-Federal 298,066 / 5,247,542 5.7 301,429 / 6,310,100 4.8
Restricted Research Only 4,973,465 / 20,283,600 24.5 5,188,035/ 21,908,637 23.7

We are subsidizing 50 of the negotiated cost of
overhead for restricted research (69 of cost
study developed costs)
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Why is FA Recovery Important?

• Supports the cost of conducting research
• If sponsors dont pay, someone else must
• Important new revenue source to UTSA

UTSA FA Revenue - 5 Year History
6,055,402
7,000,000
5,703,051
6,000,000
5,201,496
5,000,000
3,933,801
4,000,000
2,978,543
3,000,000
2,000,000
1,000,000
-
FY 04
FY 05
FY 06
FY 07
FY 08
FA revenue grew by 3.1M over the last 5 years,
an increase of 103
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FA Revenue Recovery by Source
FY 04 FY 05 FY 06 FY07 FY08
Federal 2,872,068 3,781,347 5,032,063 5,404,985 5,753,973
State 31,627 68,132 52,261 65,799 65,992
Local 16,321 17,805 30,175 22,842 37,325
Private 58,527 66,517 86,997 209,425 198,112
TOTALS 2,978,543 3,933,801 5,201,496 5,703,051 6,055,402

95 of FA is from federally sponsored
activities.
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Sources of FA FY07 Revenue

Federal 94.8
State 1.2
Local 0.4
Private 3.7
TOTAL 100
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Sources of FA FY08 Revenue

Federal 95
State 1.1
Local 0.6
Private 3.3
TOTAL 100
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FY08 FA (Federal) Sources
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FA Recovery by Area
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FA Recovery by Area
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How is FA Allocated?

• In FY07, the VPs for Research, Business Affairs
  and Academic Affairs entered into a formal
  Memorandum of Understanding (MOU) to document the
  allocation of FA.
• The MOU is
• Flexible - has been amended twice with another
  change pending.
• Transparent

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Allocations to Generating Units

• The MOU currently allocates 10 of actual FA
  recovery to PIs, Colleges, Centers and
  Institutes based on prior year actual earnings.
• These funds are allocated on a one-time basis
• Not part of the recipients base budget due to
  year-to-year fluctuations in earnings.
• Funds are currently treated as discretionary
  incentive.
• Provost VPR are reviewing alternate models to
  assure strategic usage of the funds.

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Debt Service

• A significant amount of FA recovery is pledged
• towards servicing debt
• Renovations to West Campus (Margaret Tobin) Lab
  Facility financed through bond series 2006B
• will be retired August 15, 2036
• FY07 debt service paid 665,350
• FY08 debt service paid 667,600
• FY09 payment due 666,000

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Debt Service

• Faculty Start-Up Costs
• Beginning FY04, faculty start-up costs were
  financed with FA to service the debt.
• All debt under this program will be retired
  August 31, 2012.
• Estimated remaining payments are
• FY09 1,383,495
• FY10 1,251,908
• FY11 924,722
• FY12 34,795

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Building Maintenance, Leases Capital
Improvements

• Reserve for capital requirements, leases and
  building maintenance for research related
  facilities.
• In FY08, funds were used for previously pledged
  faculty start-up costs to forego incurring
  additional debt.
• Unused balances roll forward to reserves.

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VP Administrative Overhead

• The following VPs receive a base budget
  allocation to support salaries related
  administrative overhead in support of research
• Academic Affairs
• Research
• Business Affairs

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FY 10 Budget Outlook

• FY10 Budget will be set 2.5 higher than FY09
  (1.6 higher than FY08 actual recovery)
• New allocation will cover a portion of the
  estimated utility costs for the new Engineering
  building.
• Each VP area will receive an increased base
  budget allocation
• VPR 95,000
• Academic Affairs 100,000
• Business Affairs 60,000

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