F&A Distribution Guidelines

These guidelines reflect administrative practice regarding the distribution of facilities and administration (F&A) costs recovered in connection with external grants awarded to the University of Montana on behalf of faculty and staff serving as principal investigators.  These guidelines strive to import a coherent and transparent allocation process that fosters rational, accountable, and well-informed institutional investments into projects and infrastructure that significantly enhance research and scholarship pursued at the University.  Funds recovered from F&A are used for the ongoing support of the research enterprise. 

Definitions

Costs incurred by the University relating to externally-funded projects can be understood as “direct costs” or as “indirect costs,” also known as F&A. F&A recovery is automatically calculated as part of each expenditure and are dynamically reflected in any reporting.

“Direct costs” are those costs that can be linked directly to a particular sponsored project with a high degree of accuracy.  Direct costs must be reasonable and allowable in context of the sponsored project, and clearly allocable to that project.

“Total direct costs” are the sum of all direct costs relating to a sponsored project.

“Total modified direct costs” are the sum of all direct costs relating to a sponsored project minus the following: equipment, capital expenditures, tuition remission, rental costs, scholarships and fellowships, and the cost of each subgrant in excess of the first $25,000.

“Facilities and Administration” (F&A) Costs or, “Indirect Cost Recovery (ICR),” are costs incurred by the University for common or joint projects and cannot be specifically attributed to an individual project.  Some examples of indirect costs include accounting staff, the maintenance of physical facilities, building depreciation, libraries, operations, affirmative action monitoring, protection of animal and human subjects, computer infrastructure, custodial services, environmental health and safety, employee benefits, purchasing services, and security services.

Recoverying F&A

F&A costs are recovered from the funding agency – as allowed – in recognition of the real and unallocable costs incurred by the University when hosting a sponsored activity.  Per University System Board of Regent Policy 404 – Indirect Cost Recovery Rate, the University is required to request the total amount of F&A recovery allowed by the sponsor.  Typically, F&A is recovered at a flat rate against total modified direct costs anticipated in connection with the sponsored activity.  The default rate is negotiated between the University and a cognizant federal agency every 3 to 5 years and the University of Montana currently operates under four separate F&A rates based on total modified direct costs, as reflected on UM’s rate agreement.  

Some funding agencies allow complete recovery of F&A on a program-to-program basis, while others publish a hard cap on the rate at which institutions are allowed to recovery these costs.  Still others forbid the recovery of any F&A at all.

Rationale

There are no federal or state restrictions on how recovered indirect costs can be used by the receiving university.  These funds need not be allocated in the same categories and proportions used in determining the institutional indirect cost recovery rate.  Accordingly, the University of Montana has the discretion to reinvest such funds to best benefit the research enterprise. 

These guidelines redirect the allocation of indirect costs captured in connection with externally-funded grants in ways that 1) enhance institutional support for research and scholarship; 2) increase faculty competitiveness in statewide and national grant competitions; 3) magnify the impact of current internal and external investments in faculty-driven research and scholarship; 4) provide direct and significant incentive for faculty, academic departments and collegiate units to invest in faculty research and scholarship; and 5) enhance the national profile of the University of Montana.

Distribution of Recovered Indirect Costs

When the funding agency commits funds for ICR and there is no commitment of matching cash from the University of Montana, recovered will be distributed via Sponsored Program Asset Based Allocation (SPABA) as follows:

Unit

Allocation VPR Notes
Dean/Director 27% 73% The Dean's Office determines how the monies are to be allocated among the Departments/PIs
Centers/Institutes 32% 68% Distribution may vary at the discretion of the Vice President for Research.  Additionally, if a center is based under an academic department, a portion of that percentage may be returned to the college and department.
Rural Institute 35% 65%
FLBS 50% 50%

Co-Principal Investigators.  In the case of a sponsored project that has one or more co-principal investigators, the amount of recovered indirect costs allocable to the Dean(s) will be based on an equal distribution among the number of investigators unless negotiated with the Vice President for Research prior to the grant proposal submission.

Disbursement of Funds.  Units scheduled to receive disbursements of indirect cost recovery will receive their funds one fiscal year following the fiscal year the funds are recovered from external grants. For example, the F&A recovered in FY14 will be allocated in FY16.

Cash Matches.  In cases where the University commits any cash match to a sponsored project, 100% of indirect costs recovered by the University from the funding agency shall be retained by the Office of the Vice President for Research.

Appropriations.  In cases where the University receives a sponsored project resulting from a federal appropriation, 100% of indirect costs captured by the University from the funding agency shall be retained by the Office of the Vice President for Research.

Fixed Price Residual Funds.  After completion of all deliverables required under a fixed-price award, all costs in fulfilling the requirements of the award have been charged to the account, and full payment from the sponsor has been received, residual funds will revert to an account controlled by the Vice President for Research for discretionary re-investment in the research enterprise.