Similar to the overhead costs of a business, facilities and administrative (F&A) costs reflect actual expenses incurred in support of the UW's sponsored activities. F&A cost rates are based on the UW's actual operating costs. Using guidelines provided by the federal government, the UW captures and calculates F&A costs on a regular basis. These costs are allocated to different activities, such as research or teaching, proportionate to the benefit provided. Once all F&A costs are determined, the University determines the portion of costs that are related to sponsored activities. This information is then submitted to, and reviewed by, the Federal government, and F&A cost rates are negotiated approximately every 4-5 years.
The policies and regulations governing the establishment of F&A rates at the University of Washington are set forth in Office of Management and Budget (OMB) Circular A-21 (CFR 2 Part 220), "Principles For Determining Costs Applicable To Grants, Contracts, And Other Agreements With Educational Institutions."
The University negotiates F&A rates with its cognizant agency, the Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA), San Francisco region.
Space Functional Use
Space data is one of the most important factors in determining the F&A rate. University facility costs are primarily allocated to University functions, such as instruction and research, according to how University space is utilized, or functionalized. It is therefore critical that every department accurately classify its space according to established functional use definitions. Click here for the space survey summary web page.
Operating expenses with similar characteristics or purposes are grouped into common cost categories or "pools." Each budget is classified as either direct costs or F&A costs. MAA uses these cost pools defined by OMB Circular A-21 to calculate F&A rates.
It is critical that academic units review cost pools assigned to their budgets and correct them as needed. A listing of all budgets and related cost pool assignments can be accessed using the University's Enterprise Data Warehouse reporting tools. Submit any changes to firstname.lastname@example.org.
Allowable and Unallowable Costs
Specific costs are described in OMB Circular A-21 as allowable or unallowable. None of the "unallowables" or "non-reimbursable costs" may be allocated to research through F&A (indirect) cost pools or directly charged to sponsored programs. A-21 also specifies that for a cost to be allowable, it must be reasonable, allocable, and consistently treated, and it must conform to any limitations or exclusions specified in the sponsored agreement. Click here for a list of unallowable costs.
Departments should monitor whether any unallowable costs are incurred on their budgets. Departments should flag those transactions that meet the definition of an unallowable cost per 2 CFR 220 section J (OMB Circular A-21).
The next proposal will be based on FY 2013 (July 1, 2012 - June 30, 2013). The existing F&A rates are based on FY 2008 (July 1, 2007 - June 30, 2008) cost and space data. Negotiation of those rates was completed in November 2010, and the new rates are in effect through FY 2014.