Slide 7 of 12
Notes:
To expand on the caption in the above slide, there is never an instance where a sponsored project can truly be fully costed at an institution of higher education. This is because the basic concept of the F&A rate negotiation that takes place once every 3 – 5 years and is handled by the division of Finance and Business, is to force institutions to accept a certain portion of the fiscal burden associated with conducting. For example, irrespective of an institution’s actual administrative costs, the federal government through OMB Circular A-21 has [generally] limited recovery to 26% of modified total direct costs (all direct costs minus items such as equipment, tuition and the value of subcontracts in excess of $25,000 cumulative). Other various caps are built into the rate inherently and through federal policy.
These federal policies are considered by many to be in place in recognition that most institutions involved in the pursuit of extramural funding have as an element in their core funding resources already in existence necessary for leveraging and supporting expansion through the competition for external funding. In fact, this very point of view is one that seems to escape many state legislatures around the country as it is often the back to basic’s approach that is touted as necessary during times of budget crisis which in fact dismantles the very fabric of our ability to seek external funding to supplement if not supplant the budget needs of a research-intensive institution.
As such, a project recovering full F&A costs erodes a small portion of the core as a matter of policy. A project that recovers less than full F&A costs due to other than the limitations established by a Public Law (that’s federal not state) erodes the core at an exponential rate. My use of the word exponential by the way is not sloppiness. In fact, it is indeed an exponential erosion of the core funding. This is because of several factors, in my opinion the most contributory of which is that it is possible to categorize those projects that recover less than full overhead without the support of a Public Law as those which more often than not impose extraordinary administrative and resource burden on the institution. For example, a standard NSF research project recovering full F&A generates little burden on existing administrative and clerical functions. By contrast, a state funded economic development and viability study which may involve numerous cross-disciplinary departments, centers and institutions and generates between zero and fifteen percent as a matter of state agency desires has great burden on administrative and clerical functions of the entire institution, centrally, within the college and at the department level in coordinating and paving an administrative path.
