Indirect Cost (F&A) Rate Information

Sometimes referred to as indirect costs, overhead, administrative allowance, or occasionally, institutional allowance, Facilities and Administrative Costs (F&A) are costs incurred in support of sponsored programs, in general, but not identifiable with any single project. Including requests for F&A allows the university to recover some of its real costs.

F&A costs are general in nature, shared by multiple users, where it is not easy to determine each user's share. F&A costs include electricity, water, utilities, and administrative research services. Direct costs can be assigned to a specific project with a high degree of accuracy. Direct costs include faculty, technical and student salary, travel, scientific supplies, equipment, tuition, human subject incentives, animal costs, consultant pay, etc.

The federal government determines the rates in conjunction with the University using OMB 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The rates are reviewed and approved every four years by the University’s cognizant federal audit agency, the U.S. Department of Health and Human Services (DHHS). The most current F&A Rate Agreement is dated August 8, 2018 and continues in effect until new rates are established.

There are three cognizant audit agencies: Department of Defense (DOD), Department of Education (DoED), Department of Health and Human Services (DHHS). Only universities who receive the bulk of their sponsored funding from DOD or DoED are assigned to those agencies. All other universities are assigned to DHHS, including Texas State.

No. The rate and base vary according to the type of project and the project’s performance site along with sponsor or program limitations.

Texas State has two federally approved rates, one for on-campus projects and the other for off-campus projects. Texas State’s rates and base are:

• On-Campus Rate: 50.5% Modified Total Direct Cost
• Off-Campus rate: 26% Modified Total Direct Cost

A base is a set of specific project costs in your budget that are subject to F&A.

No. There are multiple bases, each appropriate to each different situation. Below are examples of bases most frequently used:

Modified Total Direct Costs (MTDC): Texas State’s federally approved rates are based on a Modified Total Direct Cost base. In this calculation, F&A applied to all direct costs, excluding equipment (unit cost of $5,000 or more), capital expenditures, charges for patient care and tuition remission, rental costs of off-site facilities, scholarships, and fellowships, participant support, as well as the portion of each subgrant and subcontract in excess of $25,000

Total Direct Costs (TDC): The F&A rate is applied to all of the direct costs without exclusions. Total Direct Costs must be used for all sponsors who publish an F&A rate but do not stipulate any direct cost category exclusions.

Total Costs: This base is determined using total project costs. For assistance with calculation of this unusual base, departmental personnel should contact the Pre and Post Award Support Services for more information.

Projects fall under one of two designations: Research or Instruction.

Research and Development (R&D) means all research activities, both basic and applied, and all development activities that are supported at universities, colleges, and other non-profit institutions. “Research” is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. “Development” is the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function [2 CFR 200.87, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards].

Instruction means the teaching and training activities of an institution. It includes all teaching and training activities, whether they are offered for credit toward a degree or certificate or on a non-credit basis, and whether they are offered through regular academic departments or separate divisions, such as a summer school division or an extension division. Sponsored instruction and training means specific instructional or training activity established by grant, contract, or cooperative agreement [Appendix III to CFR 200, Indirect Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHSs)].

The off-campus rate of 26% (applied to modified total direct cost) may be utilized when the project budget includes the leasing or renting of an off-site facility as a direct cost. Personnel paid from the project and any equipment must be located at that facility.

There are some exceptions. However, it should be noted that these exceptions only apply when there are no federal funds involved. Projects with federal flow-through funds must abide by the instructions of the federal sponsor.

If the sponsor does not have a written published policy which they apply to all applicants, Texas State’s approved rate and base will apply.

Special considerations for these situations should be routed to your PreAward Coordinator for review and recommendation.