FAQs about the Transition to the New F&A Rates

General

1). Why did the rates increase?

The Facilities and Administrative (F&A) rate agreement is negotiated between Rutgers, the State University of New Jersey and the Department of Health and Human Services (DHHS) Cost Allocation Services. Before negotiations began, Rutgers submitted a required proposal documenting the actual costs incurred during FY17 (July 1, 2016 – June 30, 2017) for items such as space, utilities, general purpose equipment, administrative salaries and benefits, etc. Costs in these categories have increased significantly since our previous negotiation and the merger with University of Medicine & Dentistry of New Jersey (UMDNJ). Even with the current rate increases, Rutgers will not be fully recovering the costs for these items.

2). Does the new rate agreement apply to both Federal and Non Federal projects?

Yes, per Rutgers policy, the new rates apply to all externally sponsored projects.  Note that the new rates also apply to funding that is provided to Rutgers through a subaward.

3). When will the next rate agreement be negotiated?

The next base year for the F&A proposal is FY 2022.  Space survey (including training) will begin mid-way through FY 2022.  We anticipate a new rate agreement will be fully executed some time in FY 2023 with new rates applicable to awards dated on or after July 1, 2023.

New Proposals

4). When should I start using the new rates in my proposal?

The new rates should be used immediately.

5). I am submitting a supplemental proposal for an existing award What rate should I use to prepare the budget for this proposal?

The new rates should be used in the supplemental proposal unless otherwise specified in the funding announcement or as identified by the Sponsor.  Examples:

  • NSF Supplements must use the F&A rate(s) approved at the time of the initial award.
  • NIH Supplements in response to the NIH Supplemental Funding Announcements must use the F&A rate(s) in effect when the new funding is provided (NOT the rate(s) applicable at the time of the initial award).
  • Any other NIH Supplements should follow the instructions of the announcement they are submitted under.  If no guidance is provided, the Grants Management Contact named on the Notice of Award (NOA) of the initial award should be contacted to obtain necessary guidance.

6). The research rate changes from one fiscal year to the next.  How should I incorporate it in my proposal?

For the purpose of creating a budget, one may choose between a simplified budgeting method or a more complex one. For the simplified method, the rate in effect at the beginning of the budget period (typically 12 months) would be used for the entire budget period, regardless of whether or not the budget period in question crosses over a fiscal year and becomes subject to a new rate (per the rate agreement). For the more accurate budgeting method, ORSP has created an advanced budget template for proposals in which a budget period straddles two fiscal years. In these cases, proposed costs are split into costs before and costs after the rate change at the start of each fiscal year. The template will apply the correct rate to the costs depending on where they fall in the fiscal year. The ORSP budget template automatically assumes a constant rate of spending across the entire budget period, however, the template can be manipulated to move costs within a budget period for more precision. Budget templates can be found at http://orsp.rutgers.edu/budget-template. Note that the F&A rate applied to expenditures depends on when the expenditures are made. If an expenditure was expected in a time period when the F&A rate was 55% but does not occur until a time when the rate is 56%, the 56% rate will apply, regardless of what was originally budgeted. See below for different examples that illustrate two possible dates.

Proposal A

Start date May 1, 2019 (during FY2019)

F&A Rate

Proposal B

Start date September 1, 2019 (during FY2020)

F&A Rate

Budget Year 1

5/1/2019 - 4/30/2020

55%

Budget Year 1

9/1/2019 - 8/31/2020

56%

Budget Year 2

5/1/2020 - 4/30/2021

 

56%

Budget Year 2

9/1/2020 - 8/31/2021

56/57%

Budget Year 3

5/1/2021 - 4/30/2022

56/57%

Budget Year 3

9/1/2021 - 8/31/2022

57%

Budget 4

5/1/2022 - 4/30/2023

57%

Budget Year 4

9/1/2022 - 8/31/2023

57%

Budget 5

5/1/2023 - 4/30/2024

57%

Budget Year 5

9/1/2023 - 8/31/2024

57%

 

7). What rate should I use for my competing renewal application?

Competing renewal applications should use the appropriate F&A rate(s) specified in the new rate agreement, regardless of the rate(s) applied to the previous segment. You should determine when the new segment is expected to start and use the rate that is effective at the beginning of the budget period for that budget period (see FAQ 6 for different budget methods).

8). What happens if I am submitting a proposal that includes a budget year starting beyond 6/30/2022?

You should use the rate(s) in place as of 6/30/2023. For example, a research project with a budget period that begins on or after 7/1/2023 should use a 57% F&A rate. You will be notified of the final rate once a new rate agreement is in place.

Submitted Proposals

9). My application was previously submitted at 55% F&A before the notification of the new rates. Will this rate be honored even though the new rate agreement specifies higher rates effective 7/1/2019?

Proposals previously submitted and approved at the 55% provisional rate will be adjusted to account for rates as negotiated under the current rate agreement. However, in some cases, where the sponsor does not allow the new F&A rates and/or does not provide additional funding to support the added cost, contact ORSP for guidance on how to request an F&A waiver.

Existing Awards

10). How will the F&A rate be applied to a project grant that has already committed multiple periods of support (e.g., NSF, NIH, DOE, NASA, and DED)?

For proposals submitted using provisional rates (unapproved), award budgets will be adjusted to account for rates as negotiated under the current rate agreement when the award is received.

Example 1

Budget Period: 07/01/2018 - 06/30/2019

Project Period: 07/01/2015 - 06/30/2020

Competitive Segment: 07/01/2015 - 06/30/2020

Facilities and Administrative Costs Year 1 Year 2 Year 3 Year 4 Year 5
F&A Cost Rate 1 55% 55% 55% 55% 55%

 

 

 

 

 

F&A rate in Notice of Award for competitive segement: 55%

The original competitive segment began prior to the effective date for the rates in the current agreement. Thus, the 55% rate is as specified in the notice of the award for this competitive segment. 

Example 2

Budget Period: 07/01/2018 - 06/30/2019

Project Period: 07/01/2000 - 06/30/2020

Competitive Segment: 07/01/2018 - 06/30/2020

Facilities and Administrative Costs Year 19 Year 20
F&A  Cost Rate 1 55% 56%

 

 

 

 

F&A rate in the Notice of Award for competitive segement is 55%

The competitive segment began in line with the effective date for rates in the current rate agreement.  Thus, the current rates of 55% & 56% are applicable for this competitive segment.

11). How will the F&A rate be applied to existing federal multiyear contracts?

Federal contracts will continue with the current rate until the end of the period of performance as specified in the agreement. In other words, if the contract defines a specific F&A rate which is locked into the agreement, the specified rate will continue.

12). How will the F&A rate be applied to existing Non-Federal projects?

The rate approved at the time of award will continue for the remainder of the award period if awarded prior to the effective date of the current rate agreement.

13). If the F&A rate changes on my award will the internal fund/project number change or stay the same?

In most cases the project number will remain the same, however, there may be special circumstances that need to be evaluated on a case-by-case basis.

14). What F&A rate should be used when submitting a supplement application under an already existing award?

Unless sponsor policies state otherwise, supplemental funding will be considered new funding. Any application for new uncommitted funding, such as a supplement, should incorporate the new rates.

Exception: The National Science Foundation has a policy of funding supplemental support using the negotiated indirect cost rate(s) approved at the time of the initial award, so supplemental proposals to NSF should use the original agreement's rates. See NSF PAPPG Chapter X.D.1.d.

If you have questions, please contact ORSP.

15). How will GCA handle the set-up of supplements that are funded with the new F&A rates?

To the extent possible, the oracle award number will remain the same.  However, the project ID number may or may not remain the same. GCA will need to evaluate these situations on a case-by-case basis, looking at circumstances such as the timing of supplement, the amount of the supplement, the amount of the original award, the funding mechanism and the Sponsor issuing the supplemental funding.

16). All of the non-Organized Research rates (Instruction, Public Service, etc.) have an effective period going back to 7/1/2018. Will GCA be revising the F&A rates on those types of existing projects retroactively?

Yes. All burden schedules on awards with start dates beginning 7/1/2018 were updated to reflect the new rates in the rate agreement.  However, most non-Organized Research rates remained the same as in the last rate agreement

New Awards

17). I submitted a proposal with an anticipated start date of June 1, 2019, but I learned that the sponsor will not be issuing the award until August 1, 2019. I built the first budget period with a 55% F&A rate, but when the project starts, the new tiered F&A rates will be in effect. What will happen in this situation?

The sponsor should use the F&A rates in place at the time the award is issued. In this case, the award should incorporate the higher F&A rate in effect on August 1, 2019 and subsequent increases for future budget periods if applicable. The higher F&A rate may necessitate preparation of a revised budget. If you have questions, please contact ORSP.

18a). I submitted a proposal budget according to the guidancein FAQ #6 above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, however, and the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (Oct 1). The sponsor did not provide any additional funding, so the total awarded budget is the same as the total proposed budget.  What happens now?

ORSP will accept the award and will ask the Department to budget reallocation (Department Conciliation).  The purpose of the reallocation is to ensure that the currently applicable F&A rate(s) are used based on the start date of the award, while keeping the total obligated amount of the award the same.  This scenario may result in the PI having slightly less direct costs than originally requested.

18b). I submitted a proposal budget according to the guidance in FAQ #6 above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, however, and the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (Oct 1). The sponsor also provided any additional funding to cover the higher F&A rates, so the total awarded budget is greater than the total proposed budget.  What happens now?

This is a fairly unusual situation.  ORSP will accept the award and will ask the Department for a budget reallocation (Department reconciliation).   The purpose of this reallocation is to ensure that the currently applicable F&A rate(s) are used based on the start date of the award, while ensuring that the total budget will not exceed the amount obligated under the award. However, this scenario will result in the PI having the requested direct costs available for use.

18c). I submitted a proposal budget according to the guidance in FAQ #6 above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, however, and the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (Oct 1). The  total awarded budget is less than the total proposed budget.  What happens now?

In this scenario, the PI will have to revisit the Scope of Work and determine if the budget reduction should result in the modification of the SOW and the potential elimination of one or more tasks.  The PI will inform ORSP and ORSP will perform the necessary negotiations with the Sponsor, keeping the PI informed.  Upon completion of the negotiations and finalization of the scope of work that can be performed for the amount awarded, ORSP will accept the award.   The Department will have to do a Budget Reconciliation in order to prepare the budget using the currently applicable F&A rate(s) based on the start date of the award and ensuring that the total amount will not exceed the amount awarded.

Other

19). I have heard that the Off-Campus Definition is different than it has been in the past.  What is the difference?

In the past, off-campus projects had to take place in facilities not owned by the institution AND in facilities for which rent was directly allocated to the project. The agreement signed in February 2019 indicates that for activities performed in facilities not owned by the institution OR in facilities to which rent is directly allocated to the project, the off-campus rate will apply.

The other condition in the definition still applies: An agreement will not be subject to more than one F&A rate. If more than 50% of a project is performed off-campus, the off-campus rate will apply to the entire project. If less than 50% of a project is performed off-campus, the on-campus rate will apply to the entire project. When in doubt of on-/off-campus status, contact ORSP for clarification.

20). What F&A rate is applied to carryover funding?

Carryover is subject to the F&A rate is in effect when the costs are incurred.

21). Why are expenses that were not burdened in the past now being burdened with F&A?

While charging practices may have been inconsistent across multiple units, departments, campuses in the past due to a myriad of reasons, University Leadership now has a commitment to proper costing and charging across all sources of funding.  As such, the decision was made to implement proper charging practices in tandem with the implementation of the new F&A rate agreement on 7/1/18.  Random practices of waiving F&A on Repairs & Maintenance, Post Doc Insurance, Freight Costs, Student Fees, Recovery Costs, etc., were not compliant with the listed exclusions from F&A in any past federal rate agreement. These past improper charging practices do not negate our current responsibility to the federal government or the University to correct those practices. While rates for awards issued prior to 7/1/18 are not subject to the rates in the new rate agreement, the MTDC exclusions stated in prior F&A agreements have not changed. All non-MTDC excluded expenses were always subject to F&A. University Leadership has decided to no longer forego the consistent collection of F&A per the agreement and are enforcing the compliant charging practices as of 7/1/18 (i.e. F&A was not retroactively assessed on expenses posted prior to 7/1/18).  The listing of natural accounts subject to MTDC was updated and communicated to campus as such. You can find the most current listing at https://postaward.rutgers.edu/news/burden-structure-details-fa-mtdc-updated-103019.

If you have questions regarding how these costs will affect your award please contact GCA. If there are questions regarding the MTDC definition and calculation please contact Cost Analysis & Reporting.