cost sharing: yours, mine, ours randi wasik university of washington urmila bajaj california...
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Cost Sharing: Yours, Mine, Ours
Randi WasikUniversity of Washington
Urmila BajajCalifornia Institute of Technology
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• Cost Sharing Compliance– Definitions, Regulations, and Types (pre and
post 12.26.14) • Roles and Responsibilities
-PI, Pre-Award and Post-Award Group• Case Studies
Discussion Outline
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Definition per Federal Guidelines
• OMB Circular A-110 defines cost sharing as– Project costs not borne by the sponsors but supported by contributions
from the recipient and third parties, both cash and in-kind. • 2CFR 200 (Uniform Guidance) defines cost sharing or matching as
– Portion of project costs not paid by Federal funds (unless otherwise authorized by Federal statute)
References:OMB Circular A-110, Subpart C.23. Uniform Administrative Requirements for Grants and Other
Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations2CFR 200.29. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards
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Definition in General Terms
• Portion of research costs that are not covered by the sponsor– Primarily required by federal sponsors– Pledge can be a % of total project costs or a fixed
amount– Obligation must come from non federal funds
• Careful about:– federal flow through awards – non-federal sponsors may require prior approval
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Federal Requirements Applicable to Cost Sharing
Cost shared expenditures are:•included in the approved budget•verifiable from the recipient’s records•not included as contributions for other federal projects•necessary and reasonable for project objectives (allocable)•allowable under applicable cost principles•not paid by the Federal Government under another award unless approved•approved by federal agency when unrecovered F&A is used
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Cost Sharing Funding Source-Cash
Cash
General Budget
Gift
Non-federal Grant
Other Institutional
Funds
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
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Cost Sharing Funding Source-Non Cash
Unfunded effort of key personnel –
from collaborators
Donated property,
certification for the value of donation
Sub-awardee
cost sharing
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
In-kind Contributions
• Unrecovered indirect costs-requires prior approval from the agency• Donated property-requires prior approval, valuation for cost sharing has to follow
federal guidelines (value of remaining life or current fair market value, whichever is lesser unless approved by the agency)
• Volunteer services by third party professionals-rates must be consistent with those paid for similar work, may be able to include paid fringe benefits
• Services of an employee of a third party-valued at employee’s regular rate of pay, fringe benefits and indirect costs at the third party organization
• Equipment, research supplies, etc. donated by a third party-valued at fair market price at the time of donation
Finally, for third-party in-kind contributions, the fair market value of goods and services must be documented and to the extent feasible supported by the same methods used internally by the non-Federal entity. (2CFR 200.306)
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Common Traits Observed with Cost Sharing
Generally federal sponsors require cost sharing-more common in grants than contracts
Not common with industrial sponsors
States typically decline to pay full overhead
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
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Types of Cost Sharing
Mandatory
• Award eligibility criteria• Sponsor imposed cap on salary
Voluntary
• Committed• PI offered in proposal (pre 12.26.14) and in proposal budget (post 12.26.14)
• Uncommitted• PI did not quantify in proposal
References:
• OMB, M-01-06, Memorandum for The Heads of Executive Departments And Establishments, Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs• http://www.whitehouse.gov/omb/memoranda/m01-06.html
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
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Clarifications in 2CFR 200 (Uniform Guidance)
• 2CFR 200.306 (to be implemented)– voluntary committed cost sharing is not expected in
federal proposals– Federal agencies cannot use voluntary committed cost
sharing as a factor during the merit review of proposals– Cost sharing requirement needs to be included in FOAs– Only mandatory or cost sharing specifically committed
in the project budget must be included in the or base for computing F&A rate
• Office of Sponsored Research & PI/Department– Proposal phase
• Review sponsor guidelines for proposal format• Prepare budgets and justifications including cost
sharing budgets• Identify cost share funding sources• Obtain approval from department chair or dean• Obtain letter of commitment from sub-awardees, third
parties
Roles and Responsibilities
• Office of Sponsored Research & PI/Department– Award phase
• Review awarded budgets• Set up companion accounts
– Provide OSP with cost share funding source information
• Record PI and key personnel %s of committed effort • Confirm cost share requirements are flown down to
the sub-awardees or collaborators
Roles and Responsibilities
Roles and Responsibilities
Sponsored Projects Accounting OfficeAward phase
Review award budget, terms and conditionsEnsure companion account linked to main awardMonitor cost shared expenditures throughout the life of the awardDocument cost sharingCollect certifications from third party contributions
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If effort is in the proposal = formal commitment
If original effort commitment is met and charged to the grant = no cost sharing
If original effort commitment is met, but not charged to the grant= voluntary committed cost sharing (NSF disallows voluntary committed cost sharing)
If higher effort is spent than committed, but not charged to the grant=voluntary uncommitted cost sharing
Relationship Between Proposed Budget, PI Effort and Cost Sharing
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Effect of Increased Cost Sharing on F&A Rate
Cost shared expenditures are supported by general budget or non sponsored accounts, but are considered research costs and included in the University’s Organized Research (OR) base
When OR base increases, the F&A rate decreases
Voluntary committed cost sharing increases the OR base used for determining the F&A rate
Institutions discourage PIs to offer voluntary cost sharing
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Proposal Submission, a Collaborative Effort
• Program solicitation requires cost sharing
• Cost sharing funding source is identified• Appropriate approval from Dean,
Division Chair, Provost, etc. is obtained• Third party contributions are
documented via letters of intent
Principal Investigator Confirms that….
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• Program solicitation/sponsor guidance is reviewed carefully to interpret cost sharing requirements
• Appropriate approvals from division heads, collaborators have been obtained
• Letters of intent are acceptable by the University• No voluntary commitments are made inadvertently
in the proposal– Under the new Uniform Guidance 2CFR 200, the
proposal may not be peer reviewed if voluntary cost sharing is included
Pre-Award Group Confirms that….
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Voluntary Commitments in Proposals
Commitments included in the proposal budget that are not charged to the sponsor
• “Unfunded” collaborators named as key personnel• Maintenance of equipment in instrumentation grants• Supplies and materials• Travel• Waiving or charging a lower indirect cost rate
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Avoiding Voluntary Commitments
PI’s 1 calendar month effort, salary
requested $0.00
PI will be available to
provide advice
Purchase of Laser Interferometer-justified in the budget at $500K but
not included in “Equipment” line item
PI has access to laser
interferometer
Include under other support and rewrite as
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Award Acceptance & Monitoring Cost Sharing
Post-Award Group Confirms that…..
• Award is issued at the proposed budget• If award is issued at a reduced budget, cost
sharing or other commitments are modified• Award notification includes cost sharing
commitment • When appropriate, cost sharing companion
account is set up
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Post Award Office Responsibilities Continue…..
Sponsored Projects Accounting confirms
Commitment (labor and non-labor) is
entered in the Award
Management system
For cash contributions,
companion account is linked
to the main award
For Non-Cash contributions, cost
sharing certification
requirement is notified to the PI
Other Central Offices (Purchasing, Property Services,
etc.) are notified of cost sharing obligations
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
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PI and Department’s Responsibilities
PI’s Department Administrators confirm
Salaries, purchase orders and internal requisitions are set up in the system for
the sponsored award as well as the
cost sharing account
For cash contributions,
companion account is
linked to the main award
For Non-Cash contributions, the sources of cost sharing
are documented
PI understands the University’s responsibility to track and report cost sharing to
the sponsor
Sub-Awardee/s are aware of their cost sharing
commitments
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
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Important To Remember That……
Cost shared expenditures on sponsored projects are:
• subject to audit• subject to federal cost principles • easily identifiable for F&A rate proposal• part of the official record (record retention)
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
NCURA 55th Annual Meeting * August 4-7, 2013 * Washington, DC
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Monitoring Cost Sharing
Sponsored Projects Accounting and PI’s Department monitor that
• Cost sharing companion account is incurring expenditures at the same rate as the sponsored award
• Expenditures are allowable, allocable and consistent• PI effort commitment is being met by charging PI salary directly or via cost
sharing account to the project• Cost sharing certifications are received from third parties
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Examples of Cost Shared Expenditures
The test is-could the cost be directly charged to the sponsored project?
• Faculty salaries/benefits• Non faculty salaries/benefits• GRA assistantships and tuition• Equipment and M&S• Other direct costs • Program Income (with agency approval)• Unrecovered F&A (with federal agency approval)
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Examples of Expenditures that Cannot Be Cost Shared
F&A costs (without agency approval)
Costs unallowable under OMB Circular A-21 section J
Costs not allocable (benefitting the research project)
Costs not allowed on an award
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At Close Out
• Final reconciliation– Expenditures are matching commitment– Cost sharing by sub-awardees are met– Companion account is funded and closed
• Reporting to sponsors– SPA Office reports to sponsors
• SF425, SF1034 (for subawards)• NSF via research.gov
– PI reports to sponsors• Progress Reports
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What Do The Auditors Look For
• Was cost sharing commitment met?• What account was used to fund the cost
sharing?• Was agency approval received for budget
deviations?• Did the collaborators (sub-awardees) meet
their cost sharing obligations?• What kind of documentation are maintained
for in-kind cost sharing?
Conclusion
Any questions????
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Case Study #1
Department of Interior issued a solicitation that requires cost sharing, with no limit on indirect costs. In fact DOI, being a federal agency, will honor the university’s negotiated indirect cost rate. Fresca University’s PI is responding to the proposal with the following budget:
Direct cost $100,000 + IDC $15,000 (Fresca’s IDC rate is 65% of MTDC, IDC is waived in the DOI portion)= $115,000
Fresca’s cost sharing budget is: $50K from the “waived” IDC
Can the PI include waived IDC as part of the matching requirement? Who needs to approve this proposed cost sharing commitment?
Case Study #2
Dr. Brenan submitted a research proposal to NSF for grant. He was happy that he could save $s by not charging any portion of his salary directly to the award, and managed to add a graduate research assistant in his proposal. Dr. Brenan made sure that he included 1 calendar month of his effort in the budget but did not request for salary support. • What type of cost sharing is this?• Would NSF consider awarding this proposal?
Case Study #3
Dr. Smith, from Presidency College, is the main PI of a cooperative agreement from NASA (award total is $4M) that requires a significant amount ($1M) of cost sharing. The collaborators are sub-awardees, PIs from three other universities, Eastern College, Northern University and Western University, committed to cost share a total of $800,000 toward the cooperative agreement. Dr. Smith’s university was going to cost share the balance, $200,000.
Breakdown of collaborator cost sharing: Eastern College: $400,000; Northern University: $200,000 and Western University: $200,000
Western University, unfortunately, could not meet their commitment of $200,000 and cost shared only $100,000. Total cost sharing from collaborators came to $700,000, instead of $800,000. I. Who is responsible to oversee that the total cost sharing commitment has been
met?II. What action can Dr. Smith take to make up the shortfall?III. Can Dr. Smith take any actions against the university that did not meet the
commitment?