510: Facilities and Administrative Rate
Fiscal Operations Manual
Section 500: Financial Accounting and Analysis
The Facilities and Administrative rate (commonly referred to as indirect cost rate or F&A Rate) is based on the latest update of OMB (Office of Management and Budget) Circular A-21. The F&A Cost Proposal is prepared by OSU Business Affairs' Financial Accounting & Analysis Unit. Negotiations are completed by the VP for Finance and Administration with staff from the US Department of Health and Human Services (DHHS), Division of Cost Allocation (DCA). DHHS-DCA is OSU's cognizant agency responsible for negotiating and approving rates for OSU on behalf of all Federal agencies. Negotiated rates are usually established for a 3-4 year period.
The Modified Total Direct Cost (MTDC) method of calculating the Facilities and Administrative rate is the method required for use by OSU. The process is as follows:
- Establish the total costs incurred for the institution for the base period.
- Establish F&A cost pools consisting of expenditures (exclusive of capital items and other costs specifically identified as unallowable).
- General administrative and general expenses (exclusive of costs of student administration and services, student activities, student aid, and scholarships).
- Operation and maintenance of university-owned facilities and depreciation after appropriate adjustment for costs applicable to other institutional activities.
- Departmental administration expenses.
- Sponsored project administration.
- Building depreciation
- Equipment depreciation
- Interest on bonds
- Student Services Administration
- Establish a MTDC distribution base: (1) that consists of all the institution's instruction, research, other sponsored activities, and other instructional activities.
- Calculate the rate by dividing the MTDC base: (1) into each of the F&A cost pools (2) and adding the results together.
- Establish the F&A cost rate, determined by dividing the amount in the F&A cost pool by the amount of the modified total direct cost base. This rate is then audited by DHHS and further refined (negotiated) as final.