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Facilities & Administrative Cost Recovery & Distribution

Externally-funded projects administered by the San José State University Research Foundation (91´«Ã½³§RF) include Facilities and Administrative (F&A) charges, also known as indirect cost or overhead, which is based on federally negotiated rates with the federal government. These charges are intended to cover the university’s costs associated with shared services such as research-specific physical plant operations, maintenance, and utility costs; departmental, unit or college, and sponsored projects’ administrative expenses; federal compliance requirements; depreciation of buildings and equipment; and libraries. 

91´«Ã½³§RF is required to use F&A funds to support itself, being the university auxiliary providing some of these shared services to the research enterprise. Additionally, F&A funds are used to support new research space development (e.g., the Interdisciplinary Science Building) and existing space maintenance, 91´«Ã½³§ IT infrastructure support, 91´«Ã½³§ off-campus research administration expenses, other specific 91´«Ã½³§ research program administration, and other overhead costs (e.g., NASA project cost share, as well as 91´«Ã½³§RF Board approved reserves to cover 91´«Ã½³§RF expenses during federal government shutdown periods). 

The remaining F&A funds at the end of each fiscal year are paid to 91´«Ã½³§ to continue the development and support of the research enterprise. 91´«Ã½³§ administration determines how these funds are distributed internally. See the 91´«Ã½³§RF F&A memo [pdf] to the 91´«Ã½³§ Academic Senate for additional details. 

F&A Distribution

The campus distribution of the F&A returns is shared among the university constituents of qualifying projects/grants for future Research, Scholarship, and Creative Activity (RSCA)-related expenses: principal investigator (PI): 15%, department: 15%, college: 35%, and Division of Research & Innovation: 35%.

As set by the 91´«Ã½³§RF Board of Directors, a project/grant qualifies for an F&A return by having an F&A rate higher than the calculated 91´«Ã½³§RF Administrative Percentage (AP) for the year. The AP is equal to the actual 91´«Ã½³§RF general and administrative expenses divided by the Modified Total Direct Costs (MTDC)—defined as total direct costs minus items that do not earn an indirect recovery such as pass through amounts—which changes each year, typically between 20-25%. The amount distributed to each qualifying project or grant is equivalent to the amount of total F&A indirects generated by that project over and above the AP.

Examples:

A total of $5 million of F&A indirects was generated in the year, of which $4.5 million was spent on 91´«Ã½³§RF operation, contributions to 91´«Ã½³§ research enterprise development, and board-designated reserves. 91´«Ã½³§RF has $500,000 in remaining F&A funds at the end of its fiscal year to distribute to campus. 91´«Ã½³§RF’s AP for the year is 23%.

The projects or grants that qualify to receive F&A returns are those that generated F&A indirects at a rate higher than 23%. Qualifying projects share the total F&A campus distribution in the following amounts:

A qualifying project or grant (with an F&A rate higher than 23%) with total MTDC of $100,000 that had an F&A rate of 46% and contributed $46,000 of indirect revenue, would receive F&A returns in the amount that is equivalent to the difference between the F&A rate and the AP which is 23% (46-23), or $23,000.

A qualifying project or grant (with an F&A rate higher than 23%) with total MTDC of $100,000 that had an F&A rate of 26% and contributed $26,000 of indirect revenue, would receive F&A returns in the amount that is equivalent to the difference between the F&A rate and the AP which is 3% (26-23), or $3,000.

In each of these examples, the project’s/grant's F&A return would be split between the university constituents; i.e. $23,000 in F&A return, would be distributed as follows: $3,450 for the PI(s), $3,450 for the department, $8,050 for the college, and $8,050 for the Division of Research and Innovation.

Related Resources

91´«Ã½³§ Research Foundation Facilities and Administrative Cost Policy [pdf]

Facilities and Administrative Costs Overview

Facilities and Administrative FAQs