Cost Sharing Basics

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  • 1. Presented by the Office of Sponsored Programs, a division of the Office of Research and Research Accounting and Analysis, a division of Financial Management at the University of Washington March 30, 2010
  • 2. Cost Sharing Basics What is Cost Sharing? A.Cost sharing is the portion of project or program costs not borne by the sponsor and quantified in the proposed budget and budget narrative. B.It is the University’s share of the cost of carrying out the objectives of a project or program.
  • 3. Cost Share Basics - The Proposal Stage
  • 4. Definitions What are the various forms of cost sharing? A. Mandatory – Required in order to qualify for an award. (M) B. Committed – Not required but voluntarily included in the proposal budget or narrative of the proposal. C. Conditional – Such as salary limitations imposed by the sponsor. (Salary Cap (C)) or “K” award salary limit (K)
  • 5. Definitions What are the methods for cost sharing? A. Proportional to the award and percentage of the award are sometimes referred to as “matching”. B. Percentage of effort committed to the project but not included in the requested award amount. C. Specific dollar amount
  • 6. The Grant ProposalHow do we know if cost share is required? A. The Request for Proposals (RFP) says that the recipient must participate in the cost of the project at a certain percent of total project costs? B. The estimated costs to complete the project exceeds the maximum projected award amount? C. The sponsor’s program director has said that institutional contributions may impact the award decision? D. A and/or B? E. A and/or C?
  • 7. The Grant Proposal When should you provide cost share? When the sponsor requires cost participation as a requirement to qualify for an award. (mandatory) What should be provided as cost share? The type of costs that have the least negative impact on the University yet necessary to complete the project.
  • 8. The Grant Proposal What type of costs have the least negative impact on the university? A. Third party contributions made in support of the project. B. Unrecovered Indirect Costs (F&A Costs) C. MTDC exclusions, e.g., subcontract costs, tuition
  • 9. The Grant ProposalHow will our cost sharing impact the university? The university may forfeit: A. Recovery of direct research costs that might otherwise be funded by the project. B. Recovery of F&A costs associated with these direct costs C. Our overall F&A rates may be lowered by adding these costs to our research base. Funds are redirected from other university priorities and opportunities.
  • 10. The Grant Proposal Where do you find the policies concerning cost sharing? A. OMB Circular A-110 (2 CFR 215) B. OMB Circular A-21 (2 CFR 220) C. UW policy GIM 21 D. UW procedures GCA web site.
  • 11. Sources of Funds What type of budgets may be used to fund cost share expenses? A. Departmental budgets B. Gift budgets if consistent with the purpose of the gift. C. Discretionary budgets D. Indirect cost return E. Royalty income
  • 12. Sources of Funds What type of budgets may be used to fund cost share expenses (cont’d)? F. State-line budgets G. Inter-departmental funds (with appropriate approvals) H. Special allocations from Provost, College, and/or Dean I. Private third-party grants
  • 13. Sources of Funds What costs may NOT be used for cost sharing? A. Costs funded by another federal program. (e.g. VA) B. Costs funded by another sponsored program without both sponsor’s approval. C. Costs contributed as cost share for another sponsored program.
  • 14. Types of Costs What type of costs may be used as cost sharing? A. Personnel compensation including associated fringe benefits. B. The cost of supplies, materials, services and travel used to support the project. C. The cost of equipment necessary to complete the project D. Waived costs (Tuition waiver, Waived F&A)
  • 15. Third Party Contributions May be in the form of Cash, Services and/or tangible assets. Often referred to as “Third Party In-Kind” contributions. Not represented as an expense on the books of the prime institution.
  • 16. Gifts as Cost Share A Gift made to the university to support the project may be used as cost share. A cash gift is processed into a university budget. The expenditures on the gift account constitute cost sharing (NOTE - A gift is not cost sharing until it is spent.)
  • 17. Recording the Pledge From the beginning of time until Feb 2009 the FAS Budget Driver (BGT) was used as the official university record of cost share transactions. In Feb 2009 a new system linked to MyFD was established. We refer to this new system as the Cost Share Module (CSM).
  • 18. Recording the Pledge When cost share is required or committed in a proposal how is the pledge tracked in the university system? A GC1 Addendum is completed and submitted to the Office of Sponsored Programs (OSP) along with the eGC1.
  • 19. Recording the Pledge The GC1 Addendum is forwarded to GCA along with the other award and proposal documents. GCA enters the pledge into the official Cost Share system of the university. Management Accounting and Analysis (MAA) sends out quarterly “unmet cost share” reports to departments.
  • 20. Tracking Cost Shared Expenses Cost shared expenses incurred on university budgets may be tracked in many different ways, a few examples include: A. Use Project Cost Accounting (PCA) coding to track individual expenses. B. Track expenses on a spreadsheet. C. Set up a dedicated budget to accumulate cost share expenses.
  • 21. Documenting Cost Share Documentation requirements may differ depending on the type of expenses being cost shared. Faculty salaries – Individuals on a faculty appointment document their salary cost share contributions through the Faculty Effort Certification (FEC) process.
  • 22. Documenting Cost Share Non-faculty salaries (e.g., supplies, materials and services) – These contributions are documented on a non-faculty cost share contribution spreadsheet.
  • 23. Documenting Cost Share A. Attach copies of the BAR that show the transaction or screen prints of the transaction from MyFD. B. Highlight the transaction(s) being claimed as cost share. C. Submit the spreadsheet and BAR/MyFD supporting documentation to your Team in GCA at least quarterly.
  • 24. Documenting Cost Share Documentation standards for Third-Party In-Kind contributions. Before the proposal is submitted Non-university entities and individuals committing resources to the project need to be informed of the documentation standards and requirements if the project is funded.
  • 25. November 15, 2006 Company LETTER HEAD (or name and address of individual.) RE: Award # _________________ Arthur Extension UW Dept of Infinity Research Box XXXXXXXX Seattle, WA. 98105-0000 Dear Arthur Extension, During the period Jan 1, 2000 through March 31, 2000 Start-upInc. has made contributions to the XYZ award noted above. Our contributions supportedthe following activities infurtheranceof the project objectives: A. B. C. Theresources used to support these activities consistedof the following expenses funded from non-federal sources and provided here as documentationfor cost sharing. (Details availableupon request for no less than 3 years from the end of the funding agreement.) These contributions arevalued at the actual costs to our organization. Salaries & wages $ FringeBenefits $ Supplies & materials $ Travel $ Other costs $______________ Total $______________ Theseexpenses have not been used as cost sharing for any other program. Sincerely, Benjamin Factor Accepted: ____________________Date___ President, Arthur Extension, U W, PI Start-upInc.
  • 26. Documenting Cost Share Third-party contributions represent the highest risk for disallowance. The following guidelines are used to determine the allowability of third party contributions: They are verifiable from the recipient's records. Are not included as contributions for any other federally- assisted project or program. Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
  • 27. Documenting Cost Share Guidelines for third party contributions (cont’d): Are allowable under the applicable cost principles. Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching. Are provided for in the approved budget when required by the Federal awarding agency. Conform to other provisions of this Circular, as applicable.
  • 28. Documenting Cost Share Guidelines for third party contributions (cont’d): When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid. Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees payroll. (e.g. time sheets) The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented.
  • 29. Documenting Cost Share Guidelines for third party contributions (cont’d): Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. Paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
  • 30. Volunteer contributions to ________________________________________ Budget # _________ For the period: Through Date Name Time from To Total hours Rate Imputed value Travel miles Rate Imputed value Other costs Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 I certify that the contributions noted above are valid, allowable and allocable to the referenced project. (NAME) PI/PD Date
  • 31. Documenting Cost Share Third-Party including volunteer time does not accrue university F&A as part of the cost share being claimed. Third-Party cost share is Identified in the cost share system by using object code 03-00.
  • 32. Documenting Cost Share Calculating and documenting waived F&A ( Indirect) costs. Waived or Unrecovered F&A is the portion of applicable F&A not paid by the sponsor. May be equal to total F&A when no F&A is paid by the sponsor or it may be a portion of the F&A when the sponsor pays F&A at a rate and/or base different from ourapproved negotiated rate applicable to the specific award.
  • 33. Documenting Cost Share Formula for calculating waived F&A 1. Calculate F&A using the “cost share” F&A rate and base identified in the 02 index in FIN. 2. Calculate F&A using the “actual” F&A rate and base identified in the 02 index in FIN. Subtract 2 from 1 to arrive at the waived F&A. GCA calculates and records waived F&A on a quarterly basis.
  • 34. Monitoring Cost Share How do you monitor progress in meeting the pledged cost share? Should be part of the monthly budget reconciliation process. Pledges and actuals recorded to date are available from the cost share application in MyFD. Quarterly MAA sends out an “unmet cost share” report to department administrators.
  • 35. Monitoring Cost Share How do you monitor progress in meeting the pledged cost share? Ensure that quarterly/semi-annual FECs are processed in a timely manner. Ensure that Interim FEC Cost Sharing Reports are processed to facilitate timely reporting.
  • 36. Monitoring Cost Share How do you use the Unmet Cost Share Report to monitor progress in meeting what was pledged? Review the report for critical items. A. Budgets that will be expiring within the next three months. B. Budgets that require cost share to be included in the monthly/quarterly invoice prepared by GCA.
  • 37. Fiscal Reporting of Cost Share Mandatory and committed cost share must generally be reported at least annually to the sponsor. Most sponsors expect that the timing of cost share expenditures will coincide with the expenditure of their funds. Some sponsors require cost share to be included on invoices and will only pay a portion of the total expenses included on the invoice.
  • 38. Record Retention Generally all records pertaining to a sponsored agreement must be maintained for 3 years after submission of the final financial report/request for payment. For awards that are renewed annually most federal sponsors treat the renewal as a new award for record retention purposes. Review record retention requirements on the Records Management web site,
  • 39. Other Cost Share Shift in effort for PI and/or Key personnel. (S) Used to account for a long term shift in the funding of effort from being paid on the grant to cost sharing and vice-versa. Salary Cap (C) Used to record salary paid in excess of the statutory salary cap amount. “K” award salary limitation (K) Used to record cost share from salary paid in excessof the salary limitation
  • 40. Other Cost Share  Cost share and no-cost extensions.  Cost share derived from committed effort continues. GC1 Addendum needs to be processed for the no-cost extension period.  F&A on cost shared expenses.  F&A is applicable to all cost shared UW expenses at the applicable UW negotiated rate and base unless sponsor terms and conditions state otherwise.
  • 41. Reference Material OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations OMB Circular A-21, Cost Principles for Educational Institutions Grants Information Memorandum #21, Cost Sharing Policy for Sponsored Agreements
  • 42. Questions & Answers