What does F&A stand for?
The "F" is for Facilities such as depreciation on equipment, interest on debt associated with certain buildings, equipment and capital improvements, operation and maintenance expenses related to the research, and library expenses. The “A" stands
for Administrative expenses including sponsored projects administration at the university, human resource activities such as hiring and evaluation of grant personnel, student administration and services when students are hired on a project, utilities,
and departmental administration costs.
Who defines these costs?
The federal government determines what are and are not “allowable costs” to be considered in computing the F&A. Most of these costs are at the university level. You can see the quite detailed and often restrictive definitions for each of these on the White House website.
Why do we have F&A?
The Federal government recognized years ago that grants increase wear and tear on buildings and equipment, increase loads on sponsored programs personnel, add work to human resources with hiring and management of grant personnel, increase strain on IT systems for Internet usage, add work to university administration for assisting with managing large grants and maintaining research compliance, and add work to the college and department housing the grant. F&A is designed to reimburse the institution for those costs.
What is the current F&A rate?
The rate for programs being conducted on campus is 52.53 percent, and the rate for programs being conducted off campus is 23.60 percent. These rates are effective until June 30, 2019. There are only two rates.
Who calculated those rates?
The U.S. Department of Health and Human Services calculates the rate based on data that IUP provides. This agency calculates the percentage needed to reimburse the university for the Facilities and Administrative costs incurred by the grant. In other words, IUP does not determine the F&A rate.
How are the rates calculated?
IUP submits its grant award and general ledger data to the U.S. Department of Health and Human Services. The F&A rate is based on the costs submitted. The percentage of grants and contracts that do not pay F&A matters, too, because it means that there are fewer grants (i.e., the ones that do pay F&A) that must pay for all of these costs. This drives up the F&A rate.
Why don’t we waive the rate?
If IUP waived the F&A rate for a grant, it would eventually cause IUP to have a higher F&A rate as stated above. IUP has also made a decision to reallocate the annual F&A reimbursement to support additional sponsored research and scholarly activity. Waiving the rate would reduce the F&A reimbursement, thus negatively impacting the allocation of funds in support of sponsored research and scholarly activity.
Why is our rate so high?
Grants and contracts incur costs that are sometimes not in the budget. For example, IUP has many grants or contracts that do not pay F&A, and this inflates our F&A rate. If a department or college has many grants that do not pay F&A, the university’s F&A rate will be set higher by the U.S. Department of Health and Human Services to compensate for that.
How is the F&A distributed?
After all F&A is collected, a portion is allocated to pay for the services provided by the IUP Research Institute. This use fits the definition of F&A as described above. Then, of the balance remaining after the RI funding, 45 percent of the F&A flows back to colleges, 5 percent directly to departments, and 5 percent to the PIs. The School of Graduate Studies and Research receives 25 percent, and the Provost’s Office receives nothing (0 percent). The President’s Office receives 10 percent and manages an “Other” account that receives 10 percent.
What does the School of Graduate Studies and Research do with its F&A?
The 25 percent that the School of Graduate Studies and Research receives is being used to pay for the software that IUP uses to search for grants, to help pay for the Undergraduate and Graduate Scholars’ Forums, and to offset costs of faculty pursuit of external funding
What should F&A be used for?
It should be used for what it is collected, which is for Facilities and the Administrative costs as defined by OMB "Uniform Guidance". (See “What does F&A stand for?” above). IUP dedicates and reallocates the reimbursement to areas in support of research.