During the early eighties, the University was successful in negotiating with the State of Washington to change the way in which the F&A cost funds received by the University were handled. Until that point, the F&A cost funds basically reverted to the State. In return, the State made an off-setting adjustment in the University's budget based on a forecasted amount (invariably too low) for such costs. Even if the UW subsequently generated more F&A cost reimbursement, it usually did not have access to the excess.
In 1983, the State and the University agreed to a revenue-neutral transfer of authority for the F&A cost component of the budget. In other words, the State agreed to allow the University to retain its F&A cost reimbursements as received, and discontinued the off-setting adjustment. From that year forward, any increases in F&A cost reimbursement received by the University have accrued, in essence, to the institution. This approach provides the University greater flexibility and increased incentive to recover a more realistic portion of the F&A costs from the federal government. As Chart VI shows, the F&A cost rate has gradually increased during the 1980s, reflecting increased costs and an effort to recover sums that more nearly approximate the University's actual expenditures. The present rate is 52%.
The F&A rate was fairly stable overall during the period from 1990-2000, averaging about 51%. The rate dropped by 3 points in 1993 due to the effects of a 1991 revision of Circular A-21, which capped the administrative components. The rate gradually increased again in the late 1990s, resulting from a major capital construction program. The program was undertaken both to support the graduate and research activities on campus, and to bring undergraduate teaching laboratories and facilities up to modern standards. The new building program added to the Buildings and Improvements cost pool, which is a component of the Facilities costs.
