Facilities and Administration Costs UPPS No. 03.04.05

(F&A or Indirect) Issue No. 4

Effective Date: 06/29/2011

Review: September 1 EY

01. POLICY STATEMENTS

01.01 The purpose of this UPPS is to establish guidelines covering the allocation, management, budgeting, expenditures and related restrictions associated with facilities and administration (F&A) costs from sponsored programs. The Office of Management and Budget (OMB) is responsible for establishing policies for F&A costs under federal grants and contracts. Please refer to OMB Circular A-21 at: http://www.whitehouse.gov/omb/circulars/index.html.

Generally, the university follows the OMB guidelines for all sponsored projects, regardless of the funding source.

01.02 Facilities and administrative rates are established by the university’s cognizant agency, the Department of Health and Human Services. The university posted a listing of the most recent rates at: http://www.txstate.edu/research.

02. BACKGROUND

02.01 Most funding sources allow Texas State University-San Marcos to charge to sponsored programs its federally approved facilities and administrative rate. Many of the allowed F&A expenses are paid directly from the university’s educational and general (E&G) funds; thus, it is appropriate for the funding source to reimburse Texas State for the portion of those costs associated with sponsored programs. The principal investigator (PI), the department chair or school director, the dean, and the associate vice president for Research (AVPR) must make every effort to recover as much of the F&A costs as possible for each sponsored program.

03. DEFINITIONS

03.01 Facilities and Administration Costs – The term “facilities and administration” refers to those costs that the university cannot charge to a grant or contract as a direct cost. These are the “overhead” or “indirect” costs for operating the university that include, but are not limited to:

a. Electricity, water, natural gas, and other utilities;

b. Payroll processing, accounts payable, human resources and other support services;

c. Depreciation and use allowances;

d. General administration and general expenses;

e. Sponsored projects administration expenses;

f. Operation and maintenance expenses;

g. Library expenses, departmental administration expenses and student administration expenses; and

h. Use of office space, research labs, and other rooms.

03.02 Recovered F&A Costs – F&A costs that have been collected by the university from funding sources, excluding amounts billed, but uncollected.

03.03 F&A Revenues – For purposes of this policy, F&A revenues are local university revenues equal to the total F&A costs billed during a fiscal year including amounts uncollected.

03.04 Institutes and Centers – The university may establish institutes or centers at the department or school, college, or university level in accordance with Academic Affairs PPS 1.14, Establishment and Review of Centers, Institutes, and Academies. For purposes of this UPPS, only those institutes or centers that are formally established and approved by current Texas State policy as “university-level” are qualified to directly receive F&A revenue. The current list of university-level centers and institutes are listed on the Research homepage at: http://www.txstate.edu/research.

03.05 Commercialization – The act of taking discoveries made during the conduct of sponsored programs to a successful commercial venture.

04. PROCEDURES FOR DISTRIBUTION OF F&A REVENUE

04.01 Each year, as part of the budget development process, the director of Budgeting, with the assistance of the associate vice president for Research and the director of Sponsored Programs, will estimate F&A costs recoverable in the coming fiscal year. The estimate will take into account F&A revenue in the current fiscal year as well as trends in grants and contracts activity. The annual operating budget will include this estimate as revenue.

04.02 The Designated Fund group in the annual operating budget will include F&A revenue expenditures in a total amount equal to the estimate of F&A revenue included in the annual operating budget.

04.03 The college, department or school, and principal investigators will receive 25% of total F&A revenue as follows:

a. When a single investigator, department or school, and college are involved:

1) 30% to the college (7.5% of total revenue)

2) 30% to the department or school (7.5% of total revenue)

3) 40% to the PI (10% of total revenue)

b. When multiple investigators, departments or schools, and colleges are involved:

1) 30% to the colleges on a pro rata basis determined at time of proposal submittal (7.5% of total revenue)

2) 30% to the departments or schools on a pro rata basis determined at time of proposal submittal (7.5% of total revenue)

3) 40% to the principal investigators on a pro rata basis determined at time of proposal submittal (10% of total revenue)

c. When a university-level center or institute is the generating unit:

1) 25% to the center or institute (6.25% of total revenue)

2) 25% to the PI (6.25% of total revenue)

3) 25% to the college (6.25% of total revenue), if applicable; if not, distributed equally to PI and center or institute; the PI must indicate to Office of Sponsored Programs (OSP) that the appropriate dean was included in the F&A revenues decision-making process.

4) 25% to the department or school (6.25% of total revenue), if applicable; if not, distributed equally to PI and center or institute; the PI must indicate to OSP that the appropriate chair or director was included in the F&A revenues decision-making process.

NOTE: Distribution of 25% of the F&A revenue for non-academic grants is handled on a case-by-case basis.

d. When a university chair is the single investigator, or when multiple investigators including a university chair, departments or schools, and colleges are involved:

1) 10% to the college (2.5% of total revenue)

2) 10% to the department or school (2.5% of total revenue)

3) 80% to the PI (20% of total revenue)

NOTE: Those receiving returned F&A revenue should use a portion of the funds for clerical support.

04.04 The provost and vice president for Academic Affairs will receive 75% of total F&A revenue to facilitate the growth and development of Texas State’s research enterprise. Examples of how the provost might use such funds include: start up funds, proposal development, cost sharing, faculty incentive grants, etc.

04.05 Indirect Cost Recoveries from Sponsors of Commercial Activities – Each fall, OSP will provide a report of all private, non-foundation sponsors to the AVPR. The AVPR shall edit the report to include only those projects which fund commercialization activities. OSP will then distribute from university F&A funds, 75% of the total recovered indirect cost from those sponsors to an account approved by the AVPR, who will limit their use to the support of university commercialization and related research activities.

05. ACCEPTABLE USE OF DISTRIBUTED F&A REVENUE

05.01 It is Texas State’s intent to expend 100% of F&A revenue funds to further the university’s research and sponsored program efforts, which may include the following valid business purposes:

a. Conducting pre-grant feasibility studies;

b. Preparing competitive proposals for sponsored programs;

c. Providing carry-over funding for research efforts to provide continuity between externally-funded projects;

d. Supporting new researchers pending external funding;

e. Purchasing capital equipment directly related to expanding the research capability of the institution;

f. Research administrative costs;

g. Commercialization activities; and

h. Proposal support.

05.02 A sponsored program account may not accept expenditures previously made under Section 05.01 d. above. Contact the Office of Sponsored Programs (grants@txstate.edu) for establishment of a “provisional” account for unusual situations which require expenditures prior to formal approval of an award.

06. REPORTING PROCEDURES

06.01 Each unit (PI, chair or director, and dean) that received F&A revenue will annually submit a written report to the associate vice president for Research, due October 30, one year after the funds’ receipt. The report will briefly describe how funds were used and how this funding has benefited research at Texas State. The AVPR will make this information available for campus-wide review via a report posted to the Research Web site (http://www.txstate.edu/research) by December 31.

06.02 Failure to provide required reports may result in non-allocation of future F&A revenue.

07. RESPONSIBILITIES

07.01 Responsibilities associated with F&A revenue and F&A costs are as follows:

a. Principal investigators:

1) Developing proposals which include budgets for the recovery of F&A costs at the rate approved by the university’s cognizant federal agency.

2) Obtaining prior written approval from the associate vice president for Research for F&A rates that are lower than the federally-approved rate. Refer to UPPS No. 02.02.01, Section 03.05 d. 1), Applying for Sponsored Programs.

3) Assuring that F&A revenue allocated to them under this policy are expended in accordance with state, The Texas State University System (TSUS), and university requirements.

b. Deans, department chairs or school directors, and other administrators:

1) Assuring that F&A revenue allocated to them under this policy are expended in accordance with state, TSUS, and university requirements.

2) Providing oversight to ensure that all sponsored projects include the maximum allowable amount of F&A costs.

c. Office of Sponsored Programs (OSP)

1) Assuring that F&A revenue is maximized. Interest earnings will accrue to the university for cash balances of sponsored programs that do not earn the full federal F&A costs.

2) Approving F&A rates that differ from the federally-approved rates.

3) Distributing F&A revenue in accordance with this policy.

4) Reviewing reports (per Section 06.) to assure F&A revenue is expended in accordance with applicable policies and regulations and determination of appropriate actions if reports are not provided.

5) Assuring that sponsored program expenditures are recorded correctly, so as to achieve full and accurate recovery of F&A costs. This includes some primary review of expenditures, as well as coordination with other departments or schools to assure proper coding.

6) Assuring that F&A costs are billed accurately to the funding source and are collected, deposited, and recorded on a timely basis.

7) Working to distribute F&A revenue.

8) Coordinating with the Budget Office to prepare budgeted F&A cost revenues for the annual university budget.

9) Preparing (with input from appropriate offices) the F&A rate proposal for submission to cognizant agency.

d. Budget Office

1) Budgeting F&A revenue and associated expenditures in the annual university budget.

08. REVIEWERS OF THIS UPPS

08.01 Reviewers of this UPPS include the following:

Position Date

Associate Vice President for Research September 1 EY

& Director of Federal Relations

Associate Vice President for September 1 EY

Financial Services

Director, Budget Office September 1 EY

Director, Office of Sponsored September 1 EY

Programs

09. CERTIFICATION STATEMENT

This UPPS has been approved by the following individuals in their official capacities and represents Texas State policy and procedure from the date of this document until superseded.

Associate Vice President for Research & Director of Federal Relations; senior reviewer of this UPPS

Provost and Vice President for Academic Affairs

President