UMass Low ell Core Research Facilities Rate Model Calculations - PowerPoint PPT Presentation

UMass Low ell Core Research Facilities Rate Model Calculations Theresa Hamelin, Director Core Research Facilities Presentation ABRF March 2015 Learning w ith Purpose

UMass Low ell Core Research Facilities Talk Highlights  Quick review: Federal Guidance “Core Facilities”  UMass Lowell CRF Model & Criteria  No federally funded “Cores”  Brief financial compliance basics  Direct costs  Indirect costs  Rate calculations basics  Two examples of rate formulation  Indirect rate application and rationale  Summary Learning w ith Purpose

UMass Low ell Core Research Facilities : Federal Guidance Core Facility definitions:  “ The typical core facility is a discrete unit within an institution and may have dedicated personnel, equipment, and space for operations. In general, core facilities recover their cost, or a portion of their cost, of providing service in the form of user fees… ”(NIH FAQ)  “… These centers function as nonprofit businesses, funding operations through fees from users.” (DHHS Audit Findings 1994 ) Learning w ith Purpose

UMass Low ell Core Research Facilities UMass Lowell Core Research Facilities Model (distinct from other “campus shared services”)  Professional directors, managers, staff  Annual revenue > $50K < $1M  Multiple instruments/ services servicing several departments/ schools  Annual review & budgets approval  Rates calculations-cost recovery model  Published rates on website (according to user group)  Uniform application of F & A (indirect) costs, by user group classification, for all CRF Learning w ith Purpose

UMass Low ell Core Research Facilities CRF Financial Compliance Basics  Expenses, revenue (including subsidy) identified as a unique financial account per Core  Direct costs -Allowable, reasonable, allocable  Application of F & A (indirect) to direct base  Rate Calculation: Direct costs + F & A  Charged on actual use  Rates adjustments: Min. 2 years  Over/ under recover apply to “direct” cost base for next year rates.  Establish “Reserve and Replacement account” for excess resulting from non-federal indirect costs Learning w ith Purpose

UMass Low ell CRF  “ Direct costs are those that can be identified specifically with a particular final cost objective ( labor, m aintenance, supplies, etc) Learning w ith Purpose

UMass Low ell CRF Indirect Costs are those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective (Institution F & A) Learning w ith Purpose

Core Research Facilities ? 1. What does it cost to run your lab? Budget • Budget= Forecasted Expenses i.e. (labor, materials & supplies, instrument specific training, maintenance and repair costs) 2 . In what “measurable unit” do you sell your service? Service Units: • Define “service unit ” May include hours, service, samples, runs, etc” 3 . Direct Cost Base: • Calculate: Direct cost base= Budget/ Service unit Learning w ith Purpose

Determ ining Expense per “Service Unit ”  When historical data is unavailable, forecast labor, ODC’s and use. Provide justification for rate calculation as part of the business plan. Use historical data when available to project future annual costs and use  Supplies, materials and labor requirements may vary—consider when establishing bill out rate  “Exact costs” per instrument is not required— may “group” instruments within same lab  Two rate calculations examples are provided: Guidance see: http: / / grants.nih.gov/ grants/ guide/ notice-files/ NOT- OD-13-053.html Learning w ith Purpose

Establishing Rates Budget Labor & fringe: $150,000 Non-Labor Expenses (ODC’s) $250,000 Total $ 4 0 0 ,0 0 0 Service Units= 1843 (Possible lab operating hours) “Direct Cost” per “Service Unit” = Lab hour cost $ 4 0 0 ,0 0 0 / 1 8 4 3 = $ 2 1 7 .0 0 cost per hour to operate lab Learning w ith Purpose

Rate Breakdow n 1 1. Direct Costs for lab per operating hour: $217.00 2. Number of Instruments: 20 3. Direct Costs per $10.85 (SU) instrument 4. Service unit is based on operating hours $217/ 20= $10.85 per instrument service unit Assumption all instruments require equal proportion of labor and ODC’s Learning w ith Purpose

“ Tier” Direct Cost Breakdow n 1. Direct Costs to run lab per operating hour= $217.00 2. Number of Instruments: 20 3. Equation: • Multiply total lab costs per hour by the proportional percentage of applicable labor and ODC’s • Next divide that sum by the number of instruments grouped within “tier”, • Result in hourly rate per instrument per hour for all instruments within the “tier” Tier 1 ( 5 instrum ents) $217.00* 10% = $21.70/ 5= $4.34 per hour, per instrument Tier 2 ( 1 0 instrum ents) $217.00* 40% = $86.80/ 10= $8.68 per hour, per instrument Tier 3 ( 5 instrum ents) $217.00* 50% = $108.50/ 5= $21.60 per hour, per instrument Total “cost recovery” aim is $217.00 per core hour Learning w ith Purpose

Application of I ndirect Rates for Rate Calculation Note: Are costs billed by CRF or ORA?— When costs are billed directly by a Core to Government for on-site use, the rate should be the same as when billed as a “odc”-service under faculty federally sponsored research billed by ORA. Learning w ith Purpose

I ndirect Rate Justification Rate Type Cost Basis Basis of rate calculation Rationale I nternal Cost Direct (base) Recovery cost is billed internally. Governm ent Cost DHHS Meet fed capped Recovery approved for adm cost indirect rate recovery Academ ic Full Cost Actual indirect Achieve full cost Recovery rate recovery I ndustry Actual Full cost Under recovery Partners Cost Plus recovery X2 off-set I ndustry Actual Full cost Under recovery Cost recovery X3 off-set and Recovery replenish plus off- equipment set “reserve” account Learning w ith Purpose

Rate Calculation Sum m ary  Base “direct costs” on related allowable costs  Direct cost base should be the same for all users, unless federal grant terms are otherwise (separately funds group of researchers)  If billing direct from CRF , apply DHHS approved F& A (indirect rate) to establish Government rate  Document and explain indirect rate and allocation for non-government users  Document direct rate calculation formula and instrument/ service proportional allocation  Document rate calculation rational  Be consistent! Say what you are doing and do what you say Learning w ith Purpose

Resources a.. CFR PART 200—UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS b. OMB A-21: Cost Principles for Educational Institutions, section J44 on specialized service facilities b. OMB A-110: Uniform Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-profit Organizations c. OMB-133 Compliance Supplement (Part 3, Compliance Requirements) d. NSF Grant Policy Manual-Notice 122 e. Code of Federal Regulations .215-34 Equipment f. Internal Revenue Code: Sec. 115. Income of States, municipalities, etc. g. Internal Revenue Code 512(b) 9 Private Use h. DCA Best Practices Manual for Reviewing College and University Long-Form Facilities & Administrative Cost Rate Proposals U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES DEC 2006 Website: MEMORANDUM FOR SECRETARIES OF THE MILITARY DEPARTMENTS, THE UNDER SECRETARY OF DEFENSE, 3010 DEFENSE PENTAGON WASHINGTON, DC 20301-301, SUBJECT: Contracted Fundamental Research, dated May 24, 2010 i. Website: Federal Regulations Reference http: / / www.bis.doc.gov/ policiesandregulations/ ear/ index.htm j. Website: http: / / grants.nih.gov/ grants/ policy/ core_facilities_faqs.htm# 3631 Learning w ith Purpose

UMass Low ell ABRF- Thank you for the invitation! UMass Lowell CRF appreciates your support! Visit us: http: / / www.uml.edu/ Research/ CRF Learning w ith Purpose