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Indirect Cost Charges on Revised Budgets


Office of Sponsored Programs


February 1, 1988

SUBJECT: Indirect Cost Charges on Revised Budgets

SUPERSEDES: GIM 6, (Revised February 1983)

This memorandum updates current policies and procedures concerning postaward rebudgeting, especially as to the effect on indirect cost.

Until July 1, 1980, indirect cost reimbursement on most grant and contract awards received by the University was based on direct salary expenditures. Since then, because of changes mandated in Federal OMB Circular A-21, indirect cost reimbursement has generally been based on modified total direct cost (MTDC) which is defined as total direct costs excluding equipment, subcontracts, capitalized alterations and renovations over $25,000, hospitalization and other fees related to patient care, off-campus rental costs, stipends, and tuition.* It is necessary when rebudgeting from these excluded categories to any non-excluded direct cost category in the budget, that provision also be made for the additional indirect cost. This increase for indirect cost must be provided from funds in other direct cost categories.

The procedures above are also now applicable to all Public Health Service (PHS) research grants awarded on or after October 1, 1987. Prior to October 1, 1987, PHS policy allowed the University to request additional indirect cost funds where the increase was due to a budget revision or an increase in the indirect cost rate. Indirect cost reimbursement on PHS grants is now similar to other awarding agencies in that the award includes both direct and indirect costs and rebudgeting must be done within this total amount.

Questions concerning these matters may be directed to Office of Sponsored Programs, extension 3-4043.