it’s all about space – maximizing the “ f ” in your f&a rate

It’s All About Space – Maximizing the “F” in your F&A Rate

Presenters:• Steve Cofield:– Manager of Cost Analysis, Oregon Health Sciences

University• Deston Halverson:– Director, Huron Consulting Group

• Josh Rosenberg:– Director of Cost Studies, Emory University

AGENDA:• Role of space in the F&A proposal• University processes for managing space• Options for space surveys• Maximizing the “F”• Be Aware!• Closing

The Role of Space in the F&A Proposal• The pools in F that are driven by space– Building Depreciation– Equipment Depreciation– Interest– Operations & Maintenance (O&M)

• In other words, around 90% or more of your F!

The Role of Space in the F&A Proposal• The other pools:– Library (the “other” F pool)• Driven by FTEs, typically a very small F pool

– Administration pools• Driven by MTDC/MTC• 26% cap prevents growth.

The bottom line: Space is where the growth is!

The University Process• Timelines (proposal v. space)– Your proposal is due Dec. 31, 2014.– The following timeline is recommended (Add

dates):• Educate community (Date)• Meet with departments• Survey• Review of survey by department

The University Process• Who at the university is involved?– Facilities Management/Campus Services– Cost Studies – Post-Award Office– Individuals in schools/depts. who complete the

survey

The University Process• Education

– Executive Administration:• What they are saying: We have brand new “research” buildings. • What they are thinking: 100% of the building is research, that will really

help our F&A rate.• What YOU are thinking: I bet the real percentage coded to research is less

than 50%!

– Those who fill out the survey• The importance of accuracy• Who occupies what rooms and how are they funded• Watch out for over AND undercoding.

– Overcoding: The room is 100% research!– Undercoding: Don’t make it a S&W model.

Space Survey Options• Full space survey (all departments, all room

types)– Provides very useful data to executive

management– Helpful for external reports/surveys– Very thorough but…..– Extremely time consuming and labor intensive

Space Survey Options• Partial space survey (research intensive

departments, specific room types)– Less time intensive– Allows you to focus on research space only– Incomplete

Space Survey Options• Salaries and wages model– Feds may ask for this as a baseline.– Undercodes labs and other research space which

is typically costlier (and helps us more in the proposal)

Maximizing the “F”• Newer buildings– They cost more to build –> more costs in the pool– Take awhile to occupy fully.– The more pure research in there, the better

Maximizing the “F”• Bigger labs– The bigger the square footage, the costlier the

room is to run….and the bigger the contribution to the pools.

Maximizing the “F”• Faculty placement– Put your more heavily funded faculty in the larger

labs. Better justification for higher research percentage.

Maximizing the “F”• Debt Financing– Issue bonds to cover some of the construction

costs.– Goes into the Interest pool. Let indirect cost

recovery pay for your debt financing costs.

Maximizing the “F”• Tying equipment to a room.– Scientific equipment, annual depreciation expense:

$10,000. • By Room: Equipment in a lab coded 90% to research…..$9,000

depreciation in the pool.• By Building: Building is coded 40% to research….$4,000

depreciation in the pool.• By Department: Dept. is (S&W) 20% research….$2,000

depreciation in the pool.• Bottom line: KNOW WHERE YOUR EQUIPMENT IS (ESPECIALLY

YOUR SCIENTIFIC, EXPENSIVE EQUIPMENT)!

Maximizing the “F”• Componentization– Components of a building have a shorter useful

life than standard straight line. – Lower useful life = more depreciation expense

each year = bigger Building Depreciation pool.

Maximizing the “F”• Coding of service center space– Look at functional coding of user accounts

charged. – Allocate based on functional revenues, which

means picking up research square footage.

Be aware of:• Space to Base Ratios– Examples:• University average: $150/1 ($150 in on-campus S&W

per 1 research square foot)• Economics Dept: $374/1• Physics Dept: $58/1• Govt: Drop Physics to University Average, Keep

Economics the same!!!

Be aware of:• Variances between relative research space

and relative research dollars• Chemistry Research Space (relative): 54%• Chemistry Research Dollars (relative): 39% • Variance: 15% (borderline)

Be aware of:• The time lag between proposal and site visit

(how this can hurt you)– Lab was occupied when you did the survey, now

vacant!

Be aware of:• Chatty Kathy, PhD, Live at the Site Visit: “I am

getting TONS of new funding in”– Why are Feds happy? More dollars in the base

(Lower F&A Rate), no space adjustment.

Be aware of:• Red Flags for Feds

– The fundamental divide:• University: We want a lower denominator (sponsored dollars) and

higher numerator (indirect costs driven largely by space).• Feds: Your space is too high; we want a higher denominator and lower

numerator.

– Departments with space to base ratios favorable to the university– “100% rooms”– Family photos in labs…so there ARE students in here!– The lights are on, nobody is home (vacant labs).– Non-lab room types with high research coding.

In closing:• Space drives 4 of the 5 F pools• Growth in your F&A rate comes from the F side, and

F is driven largely by space• Maximizing F means finding strategies to grow those

pools and paying close attention to how you code your space

Questions?

Contact information:• Steve Cofield

– 503-494-1287– cofields@ohsu.edu

• Deston Halverson– 312-912-5406– dhalverson@huronconsultinggroup.com

• Josh Rosenberg– 404-727-1677– Josh.rosenberg@emory.edu