Facilities & Administrative Cost Rates
The Facilities & Administrative (F&A) rate is used to reimburse Rutgers for the infrastructural support costs associated with sponsored projects.
You can think of the F&A rate as an overhead rate; it is calculated as a percentage of overhead associated with—and allocable to—sponsored research and other activities and divided by the direct costs of sponsored research and other activities. To collect F&A, Rutgers adds the negotiated F&A rate to invoices or other billing notifications submitted to sponsors. ‘
F&A costs, sometimes referred to as “indirect costs” or “burden costs,” are federally defined as the costs "incurred for common or joint objectives [that] therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity."
Space Inventory and Survey
A space inventory and functional usage survey is a critical component of F&A rate proposal development. The survey results guide how most of the university’s facility costs (depreciation, interest, and operations and maintenance expenses) will be allocated to functions such as instruction and organized research. Because space has a substantial impact upon the F&A rate, it is essential to accurately determine and assign the usage of each room surveyed to the correct function(s).
A space inventory differs from a space functional usage survey. Whereas a space inventory determines and assigns codes on the general and primary use of the space, a space functional usage survey assigns actual functional coding and percent of use to space for a given period of time. Functional use codes for the space usage survey are based on guidance from the White House Office of Management and Budget (OMB) Uniform Guidance.
Facilities/administrative costs are the expenses incurred in support of Rutgers University’s sponsored activities.
F&A cost rates are based on the actual operating costs for a given base year. Using guidelines provided by the federal government, Rutgers captures and calculates F&A costs on a regular basis. These costs are allocated to different activities, such as research or teaching, in a fashion that is proportionate to the benefit provided.
Once all F&A costs have been determined, Rutgers assesses the portion of costs related to sponsored research activities. This information is then submitted to and reviewed by the federal government. F&A cost rates are negotiated every four years with our cognizant agency, the Department of Health and Human Services–Division of Cost Allocation Services.
View past facilities and administrative rate agreements below:
The F&A rate(s) applied to individual awards remains in effect throughout the competitive cycle of the award.
F&A costs are charged to individual awards as direct costs are paid. Rutgers does not recover F&A costs from sponsors until direct costs of the awards are incurred.
The F&A rate is normally applied to the modified total direct costs (MTDC) of awards. The MTDC represents the total direct costs of a sponsored agreement minus the cost of capitalized equipment and other capital expenses, patient care costs, rental of offsite facilities, tuition remission, scholarships and fellowships, as well as the portion of each subgrant/subcontract in excess of $25,000 within a competing segment of an award.
Other Sponsored Activities
National Transit Institute
On-Campus Special Instruction
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)–Division of Cost Allocation Services. Before negotiations began, Rutgers submitted a required proposal documenting the actual costs incurred during fiscal year 2017 (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 and Dentistry of New Jersey (UMDNJ). Even with the current rate increases, Rutgers will not fully recover 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 and 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 fiscal year 2022. The space survey (including training) will begin midway through that year. We anticipate that a new rate agreement will be fully executed in fiscal year 2023, with new rates applicable to awards dated on or after July 1, 2023.
1. When should I start using the new rates in my proposal?
The new rates should be used immediately.
2. 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:
- National Science Foundation (NSF) supplements must use the F&A rate(s) approved at the time of the initial award.
- National Institutes of Health (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 rather than the rate(s) applicable at the time of the initial award.
- Any other NIH supplements should follow the instructions of the announcement under which they were submitted. 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.
3. 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).
The Office of Research and Sponsored Programs (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 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.
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 percent but does not occur until a time when the rate is 56 percent, the 56 percent rate will apply, regardless of what was originally budgeted. See below for different examples that illustrate two possible dates.
Start date May 1, 2019 (during FY2019)
Start date September 1, 2019 (during FY2020)
Budget Year 1
5/1/2019 - 4/30/2020
Budget Year 1
9/1/2019 - 8/31/2020
Budget Year 2
5/1/2020 - 4/30/2021
Budget Year 2
9/1/2020 - 8/31/2021
Budget Year 3
5/1/2021 - 4/30/2022
Budget Year 3
9/1/2021 - 8/31/2022
5/1/2022 - 4/30/2023
Budget Year 4
9/1/2022 - 8/31/2023
5/1/2023 - 4/30/2024
Budget Year 5
9/1/2023 - 8/31/2024
5. 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 question six for different budget methods).
6. What happens if I am submitting a proposal that includes a budget year starting after June 30, 2022?
You should use the rate(s) in place as of June 30, 2023. For example, a research project with a budget period that begins on or after July 1, 2023 should use a 57 percent F&A rate. You will be notified of the final rate once a new rate agreement is in place.
1. My application was previously submitted at 55 percent F&A before the notification of the new rates. Will this rate be honored even though the new rate agreement specifies higher rates effective July 1, 2019?
Proposals previously submitted and approved at the 55 percent provisional rate will be adjusted to account for rates as negotiated under the current rate agreement. However, an F&A waiver might be necessary 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. Please contact ORSP for guidance on how to request an F&A waiver.
1. 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.
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
F&A Cost Rate 1
F&A rate in Notice of Award for competitive segment: 55 percent
The original competitive segment began prior to the effective date for the rates in the current agreement; therefore, the 55 percent rate is as specified in the notice of the award for this competitive segment.
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
F&A Cost Rate 1
F&A rate in the Notice of Award for competitive segment is 55 percent
The competitive segment began in line with the effective date for rates in the current rate agreement; therefore, the current rates of 55 percent and 56 percent are applicable for this competitive segment.
2. 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, locked into the agreement, the specified rate will continue.
3. 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.
4. 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.
5. 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.
6. How will GCA handle the setup 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. Research Financial Services (RFS) 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.
7. All non-organized research rates (instruction, public service, etc.) have an effective period dating back to July 1, 2018. Will RFS revise the F&A rates on those types of existing projects retroactively?
Yes. All burden schedules on awards with start dates beginning July 1, 2018, were updated to reflect the new rates in the rate agreement. However, most non-organized research rates remained the same compared to the rate specified in the last rate agreement.
1. 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 percent 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.
2a. I submitted a proposal budget according to the guidance in question six above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, but the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (October 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 perform 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 and keep the total obligated amount of the award the same. This scenario may result in the principal investigator having slightly less direct costs than originally requested.
2b. I submitted a proposal budget according to the guidance in question six and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, but the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (October 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 to perform 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 and keep the total obligated amount of the award the same. However, this scenario will result in the principal investigator having the requested direct costs available for use.
2c. I submitted a proposal budget according to the guidance in question six above and changed the F&A rate at the beginning of each budget period. The sponsor issued the award, but the F&A rate changes at the start of the fiscal year (July 1), not at the start of the budget period (October 1). The total awarded budget is less than the total proposed budget. What happens now?
In this scenario, the principal investigator will have to revisit the scope of work and determine if the budget reduction should result in the modification of the scope of work and the potential elimination of one or more tasks. The principal investigator will inform ORSP, and ORSP will perform the necessary negotiations with the sponsor, keeping the principal investigator 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 perform 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. This also will ensure that the total amount will not exceed the amount awarded.
1. I have heard that the off-campus definition of a “project” is different from what 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 the off-campus rate will apply to activities performed in facilities not owned by the institution OR in facilities to which rent is directly allocated to the project.
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 percent of a project is performed off-campus, the off-campus rate will apply to the entire project. If less than 50 percent 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.
2. What F&A rate is applied to carryover funding?
Carryover is subject to the F&A rate in effect when the costs are incurred.
3. Why are expenses that were not burdened in the past now being burdened with F&A?
Although charging practices might have been inconsistent across multiple units, departments, and campuses in the past for a variety of reasons, university leadership is committed to upholding 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 July 1, 2018.
Random practices of waiving F&A on repairs and 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.
Though rates for awards issued prior to July 1, 2018 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 is instead enforcing compliant charging practices as of July 1, 2018 (i.e., F&A was not retroactively assessed on expenses posted prior to this date). The listing of natural accounts subject to MTDC was updated and communicated to campus as such.
If you have questions regarding how these costs will affect your award, please contact RFS. If you have questions regarding the MTDC definition and calculation, please contact Cost Analysis & Reporting.