F&A Increase for Federal Awards

David P. Norton, Vice President for Research

The University of Florida has been issued new F&A (indirect) rates for federally sponsored research awards. New rates are listed at http://www.cg.cfo.ufl.edu/indirectcostrates.php . F&A rates will increase on 7/1/2012 and again on 7/1/2014. The following provides details on the impact of these increases on Existing Awards, New Proposals, and Pending Awards:

1. Existing Awards Officially Received by UF before March 1, 2012: For awards officially received by UF before March 1, the old F&A rate will apply to that award for the life of the award. “Life” shall mean for the competitive segment approved by the funding agency at the time of the initial award. For those projects that receive scheduled installments within an existing award, (for example, multi-year NSF awards are often distributed to the university in one-year budgetary installments), C&G will ensure that the correct (old) rates remain in effect for the life of these projects.
2. New Proposals: Effective immediately all proposals must use the new F&A rate schedule unless otherwise specified by the agency’s solicitation. For new proposals with budget periods that span the F&A Rate change on 7/1/12 or 7/1/14, the F&A component should be computed for each budget period by the pro rata number of days in each year that would have different rates. When possible, please utilize the PeopleSoft system (Grants – Proposals – Maintain Proposals) – to build your proposal and subsequently help in the calculation of appropriate IDC recovery. The system has an algorithm in place which looks at the IDC table and automatically calculates the overall IDC for a project for the proposed performance period.

Consider the following example:
Grant Proposal has Performance Period: May 1, 2012 through April 30, 2016 = 48 months
Direct Costs on the project: $200,000/Sal + fringe and $30,000 Tuition = $230,000 Total Direct
MTDC base = $200,000 (tuition removed)
($200,000/48 = $4,166.67 per month)

IDC Rates:
46.5% MTDC through June 30, 2012
49.0% MTDC July 1, 2012 through June 30, 2014
50.0% MTDC July 1, 2014 through “indefinite”

Algorithm assumes the following with no consideration of burn rate.
May 1, 2012 – June 30, 2012 = 2 months @ 46.5%
July 1, 2012 – June 30, 2014 = 24 months @ 49.0%
July 1, 2014 – April 30, 2016 = 22 months @ 50.0%

IDC Calculations:
46.5% x $4,166.67 x 2 = $3,875.01 = Round to $3,875.
49.0% x $4,166.67 x 24 =$49,000.04 = Round to $49,000
50.0% x $4,166.67 x 22 = $45,833.37 = Round to $45,833

Total IDC = $98,708.42 Round to $98,708
Please keep in mind that if a proposal is funded – there will likely be a recalculation of the IDC and an adjustment of the Direct Costs – all based upon the awarded performance period as it relates to the change in IDC rates over that performance period.
In some instances, it will not be feasible to utilize PS for budget calculations prior to the proposal submission – the information above will be useful for calculation of IDC outside the PS system such that once the proposal information is entered into PS (after-the-fact), the IDC calculated by PS will match the non-PS budget calculations.

1. New Awards Including Those in Response to Proposals Submitted with Budgets Based on Old Rates: For all awards received on or after March 1, 2012, the new rate schedules (e.g  46.5% thru 6/30/12, 49% effective 7/1/12, 50% effective 7/1/2014 for federal grants) must be used unless otherwise specified by the agency’s solicitation.  This includes awards for proposals submitted with budgets based on the old rates. In awards in which the proposed budget was submitted based on the old rates, you should not anticipate receiving additional funds from the agency to cover the increased cost of F&A. These projects may need to be re-budgeted with the direct costs reduced to cover the additional indirects. The new F&A rates will be applied to all new awards including competitive renewals and supplements that are not part of an approved segment of a legacy award. Note that the F&A process will apply the rates based upon the PeopleSoft accounting date on the transaction. All transactions on new awards processed after July 1, 2012 will be charged the higher F&A rate.

Additional questions should be directed to either Tom Walsh at (352) 392-3516 or Brad Staats at (352) 273-3136.