GIM 22
Attachment A
A Primer on Facilities and Administrative Costs
10. What are the F&A cost charges to my grant actually paying
for?
Most of us seem to have little difficulty understanding (or accepting) the
reimbursement policy for travel when we use our personal vehicle to make a business
trip on behalf of the University. The reimbursement rate is typically over 30 cents
per mile even though the direct cost might only be 15 cents or less per mile. In
this case the F&A cost rate we charge the University is typically over 100%.
Generally, those driving Volkswagen "Beetles" don't protest that the rate is too
high (or those driving Corvettes that the rate is too low). And most understand that
the $80 per hour charged by a mechanic (or trades-person) is not the direct cost of
the mechanic's hourly wage.
Chart IV shows a variety of activities
and costs which are allowable components for calculating the University's overall
F&A cost rate. While central administrative expenses may be the component of F&A
costs that come most readily to mind, many institutional resources are used in
support of research. A given project will require some of the resources on the list
more than others, but most projects draw on a substantial fraction of them.
Moreover, a proposal seeking funds for a fairly small project, and the subsequent
award, may require as much administrative work to process as a grant with a million
dollar budget. Since a number of F&A cost elements that support a grant represent
fixed costs, it is sometimes argued that smaller projects should pay higher rates.
Such a variable rate structure would be quite cumbersome to apply, and inconsistent
with the government's Circular A-21 guidelines. Researchers in the humanities
typically receive smaller grants. They sometimes wonder what the F&A costs are
paying for. Anyone receiving an NEH summer research salary of $5,000 in FY 2000
would generate an additional 52% in federal funds, or $2,600 for F&A costs. They may
feel that they don't need laboratory space and expensive equipment and should
instead be assessed at a different rate. A more comprehensive look reveals that more
of the institution's resources are used than seems apparent on casual reflection
(for example, costs for maintaining the library and its collection, support of
graduate student assistants, and the cost of grant accounting and administration).
The library is a good example of a major resource necessary for research but often
taken for granted and not recognized as a component of F&A costs. The library is
used by virtually everyone engaged in scholarly activity, and the availability of
this asset depends to a significant degree on the flow of F&A cost reimbursements to
cover a portion of the costs of the University's library system.
The increasing number and complexity of requirements imposed by the federal
government to ensure compliance with various regulations also contribute to
F&A costs. Chart V lists new or
revised federal regulations that have come into effect just since 1988. They
require the University to institute new or expanded monitoring activities, to
submit certifications, and, in general, to handle a great deal more paperwork
than ever before.
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