Financial Services
Policies and Procedures - Contracts and Grants
Appendix 2 - Factors For Use In Cost Proposal Submission
Fringe Benefits
If salary is charged to a grant, the matching fringe benefits (employer share) must be charged also. The rates for 2006-2007 are:
1.Social Security (FICA) 7.65%
2.State Retirement 7.83%
3.Optional Retirement 11.46%
4.Employment Disruption/Discontinuation Reserve. This is .003 or .3% times the total base salaries.
5.Medical Insurance* $321.17/month per employee ($4157/yr)
The application of fringe benefits varies with the type of appointment as follows:
Full-time employees paid 100% by grant: 1,2 or 3,4,5
Full-time employees paid partially by grant: 1,2 or 3,4,5
Part-time employees: 1, 4
Enrolled Students (graduate or undergraduate): 4
Students not enrolled: 1, 4
Summer Salary for Faculty: 1,2 or 3, 4, 5
*The same percentage medical insurance is charged as the salary percentage.
Composite Fringe Benefit Rate - Most cost proposals involve uncertainty as to project staffing and fringe benefit costs for future years. For purposes of cost estimates, it is generally more appropriate to apply a composite Social Security, Retirement (State and T.I.A.A.) and other fringe benefit rate of 28% to the total estimated salary and wages subject to such contributions and without regard to existing taxable salary base limitations. Use of the composite rate generally approximates these and other existing fringe benefit costs within reason. Unless a sponsor insists upon precise adherence to current limitations and agrees to cover legislated increases, the use of the composite rate is reasonable for most circumstances. However, this does not preclude the use of designated rates and salary bases in a proposal if there is reason to believe that the use of the composite rate will result in the significant underestimation of expected fringe costs.
Facilities and Administrative Cost Rate
- Negotiated: July 20, 2004
- Negotiating Agency: Department of Health and Human Services
- Effective Dates: July 1, 2004 - June 30, 2008
- Organized Research
- On-Campus Rate: 39.5%
- Off-Campus Rate: 26%
The off-campus rate is applicable in the following cases::
- For all activities performed in facilities not owned by the institution and to which rent is directly allocated to the project(s), the off-campus rate will apply.
- Actual costs will be apportioned between on-campus and off-campus components.
- Each portion will bear the appropriate rate.
Facilities and Administrative Rates - Commercial Sponsors (Profit-Oriented)
In dealing with private businesses or corporations, there is no requirement that the applicable facilities and administrative cost rate first be reviewed and approved by HHS. Failure on the University's part to apply the most recently determined rate, as well as projections where necessary, inevitably results in contractual funding disputes and financial losses for the University. Private businesses or corporations are generally reluctant or unwilling to accept later facilities and administrative cost rates higher than those quoted in a proposal and incorporated into an award, even though the award may be cost reimbursable in nature. When preparing a proposal to be submitted to a private business or corporation, contact the Office of Contracts and Grants for guidance as to the facilities and administrative cost rate(s) to be utilized, if the period of performance extends beyond the period for which fixed facilities and administrative cost rates have been established. Such rates will be the most current ones available and may differ from the rates listed above.
Facilities and Administrative Cost Rates - Private Nonprofit Agencies
The diverse private nonprofit funding agencies, e.g., foundations/endowments, which support University research reflect an equally diverse range of policies regarding payment of facilities and administrative costs. These policies are unique to each agency and range from full indirect cost recovery to no allowance for indirect cost recovery.
The University will approve proposals to agencies which have a stated written policy applicable to all awardees regardless of the rate established by that policy. If an agency does not have a stipulated policy, proposals to that agency should include the University's full negotiated rate.
When a proposal is being prepared for submission to a private nonprofit agency the principal investigator should determine that agency's policy regarding facilities and administrative costs. In some cases, the accepted rate, if any, is identified in the instructions for submission and/or on the budget form. The principal investigator should include a copy of the relevant instruction page with the materials submitted for University approvals. If no policy is stipulated, the P.I. should contact the Office of Contracts and Grants for further information.
Escalation Factors
Salary and Wages: Proposals normally are submitted six months to a year in advance of the effective date and often include a financial plan for three to five future years. It is, therefore, essential that estimates for cost-of-living, promotion, and merit increases are included.
In the absence of more specific or timely information, a conservative 4% escalation factor should be applied to current salary and wage rates to approximate the salary and wage cost-of-living increases for future fiscal years (the state's fiscal year is July 1 through June 30) included in a proposal.
Non-salary and Wage Items: Individual cost trends must be considered on non-personnel elements (scientific and general purpose supplies, equipment, telephone tolls, publications, equipment rental, etc.) to be included in each project proposal. In the absence of more specific or definitive information, it is suggested that current cost factors be escalated by 10% per year to estimate future fiscal year costs for proposal purposes.
Any questions on escalation factors to be applied in a proposal should be coordinated with the Office of Contracts and Grants.
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