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Indirect Cost Distribution

University of Baltimore Indirect Costs Policy
Sponsored and Special Programs
Fiscal Year 2014

Approved by President Bogomolny 11/7/2013

Overview

Research and other sponsored activities, as well as other special program initiatives, are an integral part of the University of Baltimore’s institutional mission. Funding sources for such programs are the federal government, state and local governments and private entities. Furthermore, to be responsive to the dynamic and changing needs of Maryland citizens, businesses and other organizations, the University must be able to offer a variety of special training and instructional programs. To reflect the total operational cost of such activities, approved grants, contracts and special programs must fully reflect the direct and indirect costs that are incurred by the University.

Direct Costs
Direct costs are all costs explicitly identified with delivery of the program. Typically, but not exclusively, such costs include:
Salaries and Wages Equipment Space Lease/Rental
Fringe Benefits Maintenance/Repair Subcontracts
Consultants Printing and Publishing Insurance
Capital Equipment Photocopying Recruitment
Travel Telephones Remitted Tuition
Consumable Supplies Postage Scholarships
Computer Software Conferences  

Salary and wages may include vacation pay, holiday pay, sick leave pay and other paid absences

Fringe benefits are charged at actual fringe rates. For budgeting purposes, actual salary and fringe rates should be used; however, if a position is filled by an employee whose fringe rates are not yet determined, the following composite fringe rates should be applied. Composite rates should be charged for faculty buyouts.

Faculty 28.1%
Managerial 32.1%
Administrative/Support Staff 51.3%
Maintenance 51.3%
Part-Time Employees 8
% of Full-Time/Visiting Specialist 28.1%

The costs of the following benefits may be included in the full-time employees' fringe benefit rate:

FICA (social security)
Medicare/Medicaid
Unemployment compensation
Health insurance
Retirement
Tuition Remission
Life insurance/Disability insurance
Workers compensation1

1 Accounted for centrally and not charged back to home departments, therefore not an applicable direct costs

The costs of the following benefits are included in the part-time employees' fringe benefits rate:

FICA (social security)
Medicare/Medicaid
Unemployment compensation
Tuition Remission
 

Indirect Costs
Indirect costs are those incurred by the University to support sponsored or special programs but that cannot be directly traced and charged to a specific program. A non-exhaustive list of indirect costs includes:

Operation and Maintenance of Facilities
Security and Safety
Financial/Accounting and Human Resource Services
Sponsored Research Services
Procurement Services
General Maintenance of University Equipment
General University and Departmental Administrative Expenses
Use of Computing Resources
Library
Equipment and facilities use allowance (depreciation)
Technology Services


Cost Sharing for Sponsored Programs

Occasionally, grantors/sponsors require the University to make a contribution toward a project's total cost. Cost sharing represents a real and quantifiable direct cost that must have the approval of the initiating department/center/unit head during the proposal routing process. Approvals also must be given by the appropriate school/college dean and the Provost for academic departments and the divisional Senior Vice President for non-academic administrative departments. Initiating units should identify existing financial resources for cost sharing or request funding from other sources, such as the appropriate school/college dean and/or the Provost or vice president. If the required cost sharing resources are not available through the Provost or appropriate vice president, a supplemental budget request should be submitted to the President for approval, with a copy to the Office of the Senior Vice President for Administration and Finance. Approvals for cost sharing must be secured prior to proposal submission. Since cost sharing is examined and audited by the sponsoring organizations (OMB Circular A-110 requires that cost sharing contributions are verifiable in recipients’ records) and the University’s independent auditor, the budget proposal must specify the exact amount of contributions anticipated and cost sharing expenditures must be accounted for in accordance with applicable grant and University guidelines.

Indirect Cost Rates and Modified Total Direct Cost (MTDC)
The University strives to recover all support costs by applying an appropriate indirect cost rate to each sponsored or special program. An appropriate indirect cost rate is applied to Modified Total Direct Costs (MTDC) for non-federally sponsored projects and to Salaries and Wages for federally sponsored projects.

Modified Total Direct Costs (MTDC) are calculated as Direct Costs less equipment, capital expenditures, scholarships, fellowships, remitted tuition, rental costs, and the portion of subcontracts in excess of $25,000 (as per the federal OMB Circular A-21). Salaries and wage expenses should include provisions for vacations, holidays, sick time and other paid absences.

Administrative Responsibilities
The Provost or his designee approves proposals for sponsored research, special contracts, certificates, and other continuing education programs (credit and non-credit) and ensures application of the University’s authorized indirect cost rates. Some grantors/sponsors may require the application of different indirect cost rates, or a complete waiver. Where it is in the interest of the University, particular special contracts, certificates or other continuing education programs may also warrant application of different indirect cost rates. Under such circumstances, the Provost or his designee may propose modification of the University’s indirect cost rates. Final program approval is required from the Provost or appropriate vice president.

The Director of Sponsored Research also is responsible for initiating annual reviews of the University’s non-negotiated indirect cost rates. The Director of Sponsored Research, with the agreement of the Offices of University Budget and the Comptroller, may make recommendations for changes to the indirect cost rates. Changes to indirect cost rates require approval of the University President. The Office of the Comptroller is responsible for negotiating the federal indirect cost rates with the federal government.

Approved Indirect Cost Rates
Different types of non-federally sponsored and special program activities require different levels of support. Consequently, the following on-campus and off-campus rates for each type of program have been established. Unless noted otherwise, the indirect cost rates are applied as a percentage of Modified Total Direct Costs (MTDC). Approved minimum rates are as follows:

Fiscal year 2014 -- Approved Indirect Cost Rates
Sponsored Research Programs On-Campus Off-Campus
Federal Grants/Contracts 55% S&W 30% S&W
Federal Training Grants/Contracts 8% 8%
State Government -- General 15% 15%
Local Government 15% 15%
Private/Corporate 50% 25%
Non-Profit/Foundations 15% 15%
Other Special Programs On-Campus Off-Campus
Instruction (credit) 50% 25%
Training (non-credit) 50% 30%
Private/Corporate 50% 25%
Non-Credit Courses 20% 20%
Other/Public Service 20% 20%

Distribution of Indirect Cost Recoveries
The Office of the Comptroller is responsible for collecting and distributing indirect cost funds recovered from all sponsored research programs and the other special programs which are established as projects, with the exception of financial aid and scholarships. Recovered overhead will be distributed according to the following schedule:

Fiscal Year 2014 – Approved Indirect Distribution Rates
General University Fund 40%
Divisional Sr. Vice President/Provost 10%
Academic Affairs Units 50%

Prior to the annual distribution of this policy, each Dean will propose a plan for the distribution of the 50% allocated to their college, according to the relative contributions of the parties involved. The proposed distribution will be reviewed and approved by the Provost on the case-by-case basis for each department or unit and may only be revised annually. As an appropriate incentive, the principal investigator or center director shall be eligible to use a minimum of 10% of the total indirect cost recovery of the program for which she/he is responsible. For non-academic projects, the Divisional Sr. Vice President will determine the annual distribution of the indirect cost recovery. Funds cannot be used to increase the principal investigator’s personal annual compensation.

Distribution of Net Income
Some special programs and sponsored research activities, but not federally sponsored research programs, may generate income in excess of direct and indirect costs. Residual balances of $5,000 or greater will be distributed in its entirety by the Office of the Comptroller according to the below schedule. If the total residual balance is less than $5,000, 100% is distributed to the center/sponsoring unit. Internal projects performed for other units at UB will be reimbursed at cost only, including indirect cost recoveries, and no residuals will be allowed.

Distribution of Net Income
General University Fund 40%
Divisional Sr. Vice President/Provost 10%
Academic Affairs Units 50%

The distribution of net income for the academic affairs units will follow the same formula approved by the Provost for indirect cost distribution. If actual revenues and expenditures are at variance with the approved budget and result in negative net income (deficit), the loss will be covered from the same sources and the same proportions as positive net income distributions.

Distribution of Indirect Cost Recovery and Net Income
Projects and Grants
Distributions of Indirect Cost Recoveries from projects and grants will be made by the Office of the Comptroller subsequent to the closing of each fiscal year. This will permit verification of projected revenues and an audit of expenditures related to each award. Net income of Sponsored Research projects and grants will be distributed following the closing of the project.

Special Programs
Distributions of Indirect Cost Recoveries from special programs will be made by the Office of the Comptroller on a monthly basis during the accounting close process throughout the year it is earned. Net income of special programs will be treated as residuals, added to the reserve balance of the academic or business unit responsible for the program, and follow the distribution outlined above.

Appropriate Use of Indirect Cost Recovery and Net Income Funds
The most important underlying purpose of indirect cost recovery and net income expenditures is, among other things, to stimulate the development of new grants, contracts, and special projects, while furthering the educational and training mission of the University.

Recovered indirect costs and net income that are distributed to principal investigators, academic departments and school/college deans may be used for any purpose for which general University funds may be expended consistent with State regulatory requirements and University policies. No commitment for multi-year expenditures may be made from these resources. Before funds from indirect cost recoveries or net income are expended by principal investigators and academic department, authorization for expenditures must be provided by the appropriate school/college dean. Expenditures by school/college deans must be approved in advance by the Provost.