Facilities & Administrative Costs (Indirect Costs) and Service Centers
Facilities & Administrative Costs (F&A), also referred to as Indirect Costs, are expenses incurred for common objectives and cannot be specifically identified with a major mission of the institution. These costs include:
- Building costs and debt financing/interest
- Cost of most equipment
- Heat, A/C, water, and custodial services
- Use of the library
- Central services, such as the President’s Office, Human Resources, Legal, Central Financial Services, ITG, LogisticsDean/Directors’ offices, department admin, office supplies
- Research Development, including Sponsored Project Administration
F&A Cost Rates
F&A rates enable the University to recover overhead expenses related to grants and contracts. An F&A Cost Rate Agreement is negotiated with the Federal Department of Health and Human Services, Division of Cost.
The F&A Rate Agreement covers 3-5 years, with incremental rate increases each year.
| Activity | FY 05 | FY 06 | FY 07 | FY 08 | FY 09 |
| Research | 51.0 | 52.5 | 53.5 | 54.0 | 54.0 |
| Instruction | 34.9 | 36.5 | 37.5 | 38.0 | 38.0 |
| Other Sponsored Activity (OSA)* | 30.6 | 32.0 | 33.0 | 33.5 | 33.5 |
| ONPRC A Rate | 16.0 | 27.0 | 27.0 | 28.0 | 28.0 |
| ONPRC A/B Rate | 59.0 | 63.0 | 63.0 | 64.0 | 64.0 |
* OSA includes most "clinical trials"
F&A costs are allocated to the benefiting functions/missions using the proper allocation base.
- Space: The “Facilities” cost pools are generally allocated based on functionalized net assignable square feet (NASF). Accurate coding of space on the annual space survey is critical to the F&A rate calculation.
- MTDC: The “Administrative” cost pools are generally allocated based on Modified Total Direct Cost. Administrative costs are capped at 26%.
F&A COST RECOVERY
The process for F&A Cost Recovery includes several steps:
- Mission codes determined and F&A rate assigned by the Department
- Sponsored project proposal submitted to OHSU’s Research Development & Administration department who verifies mission code and rate applied
- Grant awarded
- F&A revenue is recovered, generally over the life of the award as the expenses are incurred
F&A Revenue Distribution
Central Financial Services (CFS) is responsible for returning a percentage of F&A revenue directly to the Dean or Director of each Unit (i.e. School, Institute, Center). The percentage of F&A returned to each Unit includes the department administration component (less cross-allocations) and half of the equipment component of the Research F&A Rate. Based on the F&A Rate Agreement dated 2/18/05, these components calculate to be 27.4% of F&A Revenue. It is then the discretion of the Dean/Director to return these funds down to the department and/or division level.
The remaining 72.6% of F&A revenue is credited to the Unit in the overhead cost allocation (OCA) calculation.
Each month, one-twelfth of the budgeted F&A revenue is allocated to the Unit via a monthly recurring journal entry. Each quarter, CFS completes a true-up journal entry to ensure the Unit received 27.4% of the actual F&A revenue they earned that quarter. All F&A is returned to the Unit in the fiscal year it is earned.
Service Centers
As part of the normal operation of the University, some departments will provide goods or services to other departments on a recurring basis in the form of a service center. Service centers are established primarily as a means to capture costs associated with providing goods and services to the University customers, including externally sponsored research programs, through the use of a calculated rate structure. The centers are expected to offer goods and services that are unique, convenient, or not readily available from external sources. For the University to remain in compliance with federal guidelines, service centers must ensure that the rates being charged do not recover more than the actual cost of operation.
