Rates

Every sponsored project has both direct and indirect costs. Indirect costs, or facilities and administrative (F&A) costs, are costs needed for common or joint objectives that cannot be easily assigned to a specific project but are distributed across many projects. They are necessary to the performance of the university's sponsored programs, so the university is reimbursed for these costs in a more efficient manner that allocates a fraction of those costs to each grant. 

Examples of indirect costs include:

• Costs to build, operate, and maintain state of the art research laboratories (including shared equipment, utilities, and maintenance staff)
• High-speed data processing and data storage
• Management of administrative and regulatory compliance requirements on research grants and contracts (including sponsored programs administration, export controls review, patient and animal safety, and legal and accounting functions)
• Maintenance of libraries and resources

The F&A portion of sponsored programs is neither profit nor a source of revenue for the university. These costs reimburse the university for actual expenses incurred maintaining the university’s research infrastructure. These rates are established through a negotiation with the federal government that audits the university’s actual expenses to manage the research infrastructure. This negotiation occurs every two to four years.  

The F&A portion of a sponsored project’s total budget is calculated by multiplying the F&A rate by a subset of direct costs (The F&A cost rate is only applied to certain direct costs, excluding budget items like tuition and equipment). Thus, the portion of a sponsored project that contributes to the university’s F&A costs varies depending on how the principal investigator designs the budget to best meet program goals; F&A costs typically account for around a quarter of a project’s budget.

Because budgets estimate costs associated with performing a particular program of research, salary increases for principal investigators and other staff that may occur during the budgetary timeframe must be factored into total costs, as well as the cost of any tuition rate increases. In those cases where sponsor documentation states that the sponsor does not allow or fund salary escalations, the principal investigator is not required to include the salary escalations in their budget. 

Escalation rates are established by the Controller’s Office and are applied to base salaries and tuition rates on specific dates during the year.

Salary and Tuition Escalation Rates