Preparing for a F&A Proposal Base Year 2011 NCURA Region VI & VII Conference Presented By: Adrienne Clifton and Ginger Baker, MAXIMUS.

Preparing for a F&A Proposal Base Year

2011 NCURA Region VI & VII ConferencePresented By: Adrienne Clifton and Ginger Baker, MAXIMUS

Agenda

• Overview of F&A Calculation• Preparing for a Base Year• Negotiations

Overview of F&A

Facilities and Administrative Costs

• Costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity. (OMB Circular A-21, Section B.4)

Facilities & Administrative Costs

• Administrative components– General Administration and General Expenses

– Departmental Administration

– Sponsored Projects Administration

– Student Administration and Services

• Administrative components are capped at 26% of modified total direct costs (OMB Circular A-21 G.8)

Facilities & Administrative Costs

• Facilities components– Building Depreciation

– Equipment Depreciation

– Interest

– Operations and Maintenance

– Library

Facilities & Administrative Costs

• Order of allocation– Building Depreciation

– Equipment Depreciation

– Interest

– Operations and Maintenance

– General Administration

Facilities & Administrative Costs

• Order of allocation (continued)– Departmental Administration

– Sponsored Projects Administration

– Student Administration and Services

– Library

Facilities & Administrative Costs

• Bases represent an institution’s direct cost activities:– Instruction and Departmental Research

• Sponsored instruction and training• Departmental research

– Organized Research• Sponsored research• University research

– Other Sponsored Activities– Other Institutional Activities

Preparing for a F&A Proposal Base Year

This is my base year, what do I do?

• Define your objectives• Review past problems• Identify resources• Plan• Get resources commitment• Start early

Major Problems

• Base / Space Relation• Space Survey / Space Inventory• Reclassifications of Financial Statement

functions to F&A functions• Rates are decreasing, lower Administrative

components also• Time constraints• Compliance with Disclosure Statement (DS-2)

Major Opportunities

• Special studies• Interest• New construction since last proposal

– Should be occupied• Equipment by room• Quality space survey

Where To Start• Is the F&A Proposal due date realistic?• Resources

– Internal resources • Staffing• Financial systems

– External• Auditors• Consultants

• Goals – Expectations for the rate– Rate increase, maintain rate or minimize staff

effort

Define Base• Define the base

– Financial Statement reconciliation issues– Financial Statement reclassifications out of

Organized Research– Financial Statement reclassifications that

are large amounts (i.e. into Operations and Maintenance)

– Cost sharing

Need For Special Studies

• Library Study– Requires full year of data

• Componentization Study– The components of a building have different

useful lives and this results in accelerating the recognition of depreciation.

– Requires change on Financial Statements for building depreciation.

Interest

• Get it in the State Wide Cost Allocation Plan (SWCAP)

• Get it by building• Get it by department• Get it by the total amount for interest

associated with Campus Wide Improvements

New Construction/Projection• What new research intensive buildings are

coming on line?• When will the building be completed?• What departments are moving into that

space? What is happening to the space they vacate?

• Will this building support new or existing research?

Equipment

• Ideally, want to match 90% of equipment to a valid building and room.

• Accurate inventory• Well documented• Split funded equipment• Service Center equipment

Space Survey

• Best if done in the final months of the base year (spring) or some schools are conducting the survey after the base year ends

• Identify source and quality of base inventory• Identify departments to survey• Identify survey tools• Identify resources

Space Survey

• Develop Survey Plan• Develop Survey Materials• Train Surveyors• Conduct Survey• Quality Assurance• Review Results

Anticipate Results

• Conduct a practice year• Use partial year data to model results• Make adjustments in the accounting

system before year end• Review physical plant accounting

Results

• The more you can do before year end, the better

• No surprises during the rate calculation• Maximize rate calculation• With cleaner data, you can spend more time

focusing on data analysis, instead of data clean up

Review

• Are there significant percent changes in the individual components of the rate when compared with your last base year?

• What is the value of a point?– How many Administrative dollars are required to

increase the Administrative component by one point?– How many Facilities dollars are required to increase the

facilities rate by one point?– How much Organized Research space is needed to

increase the rate?

Review

• What departments have large Direct Charge Equivalent (DCE) ratios, why?

• Does your system coding facilitate the proper identification of other expenses?

• Does the campus have a clearly defined definition for Organized Research? Other Sponsored Activities? OIA?

• Do you have a common consistent understanding of University data?

Review

• What three things are you most comfortable with?

• What three things do you have the most concern about?

• Where are there possibilities for an increase in the rate?

• If you were the government, where would you look to decrease the rate?

Negotiations

• What is the submitted rate?• What is the minimum rate the University

will accept?• What rate can the University live with?• What is the ideal rate the University would

like?• What is the actual rate of recovery?

Negotiations• How many years should you negotiate for?• Do you have new research intensive buildings

coming on line? It is ideal to have a full year of costs in your proposal.

• Do you need to change your off-campus definition?

• Are you considering an equipment capitalization change?

Post Analysis

• What did you do right?• What can you do better next time?• Would a practice year benefit you?• Document, document, document• Fix it before you start the next one!

Questions/Comments

• Adrienne Clifton– 773-575-2599 (Mountain Time Zone)– [email protected]

• Ginger Baker– 702-994-2999 (Pacific Time Zone)– [email protected]