Although the F&A cost process identifies the costs incurred in supporting the research program (as outlined earlier in this document), the actual budgeting process cannot allocate funds efficiently on a simple item-for-item basis. For example, a $100,000 federal research grant may generate an F&A cost payment of roughly $30,000 (see Chart III), but it would not be practical to restrict expenditure of the $30,000 solely to the F&A costs incurred by that specific grant in that particular year. (The roof may not need to be repaired that year.) It may help to recall the definition of F&A costs as "those that are incurred for common or joint objectives, and therefore cannot be identified readily and specifically..."
In general, a much more macroscopic approach is called for when dealing with expenditures. When the University develops its budget for a particular biennium, it starts with an estimate of the total revenues available for that biennium, including State funding, tuition, F&A cost reimbursement, interest and investment income, and so on. Arrayed against this projected total income figure is the wide range of anticipated expenses that must be funded. Some expenses are relatively predictable, such as salaries, but other categories cannot be pinned down as easily in advance. Utility costs, self-insurance costs, regulatory compliance costs, responses to competitive salary offers, special matching requirements for major equipment proposals, and many other costs cannot be accurately predicted.
Just as in any budgeting process, prudent judgments must be made to try to match total projected income with total projected expenses, including planned improvements and new programs. In this process, efforts are made to relate the projected F&A cost of research and training to the estimated F&A cost reimbursements. In practice, all the previously mentioned funding sources are combined to support the total budget identified in the University's policy-based and priority-driven budget process. The expenses identified in the cost study used to justify the F&A cost rate are real expenses that have been paid for by the institution from the total pool of available fund sources.
Although there is some correspondence between F&A cost reimbursements generated and the amount spent in support of the research enterprise, it is not considered cost-effective to keep track of this correspondence in detail. Nevertheless, approximate figures for the distribution of these funds can be extracted from the University accounting data. An approximate breakdown of the F&A cost expenditures for FY 2000 is summarized in Chart XI. These F&A cost reimbursements supplement other traditional revenue sources in the various University budget categories. For example, roughly $10 million was allocated to instructional support, which corresponds to budget category 01X in the UW budget and accounting system. Most of the remaining funding for this budget category (01X) is provided by the State and student tuition revenue and pays mainly for faculty and staff salaries. F&A cost reimbursement is either allocated directly to schools and colleges or used to support research-related costs for operations and maintenance (physical plant), computing and communications, libraries, general administration, sponsored research administration, and buildings. In addition to the dollar amounts shown, Chart XI indicates the approximate percentage of the overall expenditure in several of the other major budget categories that F&A cost reimbursement represents. A more detailed analysis of Allocations to Schools/Colleges is shown in Chart XII.