How to Account for Multiple Indirect Cost Rates in a Proposal Budget
Wayne State University's federally negotiated indirect cost rate agreement of May 14, 2014 changed the indirect costs for On-Campus Organized Research per fiscal year as follows:
FY15 - 10/1/14-9/30/15: 52.5% FY17 - 10/1/16-9/30/17: 54%
FY16 - 10/1/15-9/30/16: 53% FY18 - 10/1/17-9/30/18: 54%
As a result, there may be questions regarding how indirect costs for On-Campus research should be listed in proposals and eProp. There are no changes to processes in proposal development in eProp. The system is designed to calculate budgets based on proposal rates that exist by default and the start/end dates of a proposal period that are entered by a user. Please continue to enter proposals using the current eProp data entry processes.
However, indirect cost information on proposal applications needs to be properly reflected. Since rates change per fiscal year and project dates will, invariably, overlap with fiscal year dates, proposal budgets and justifications should accurately and properly show a breakdown of indirect costs according to the rate changes. Proposals should include the following justification for clarification:
WSU's negotiated F&A rate is aa% for the period xx/xx/xx to xx/xx/xx, and bb% for the period yy/yy/yy. The award will be charged the actual F&A rate in effect at the time of expenditure.
Different methods can be utilized to track indirect costs: (1) apply the rate to the period it represents, or (2) apply the rate that is in effect at the start of a project year. Method (1) is preferred.
For instance:
Indirect Costs on a three year project with project dates of 6/1/15-5/31/18:
| Method 1 *PREFERRED* - Apply FY IDC Rate to corresponding project period | Method 2 - Apply the IDC Rate that is in effect at the start of a project year | |
|
F&A Base $250,000 52.5% for 4 mos. (6/1/15 to 9/30/15) 53% for 8 mos. (10/1/15 to 5/31/16) Utilize 52.5% = $131,250 total IDC for year 1 |
|
|
F&A Base $250,000 53% for 4 mos. (6/1/16 to 9/30/16) 54% for 8 mos. (10/1/16 to 5/31/17) Utilize 53% = $132,500 total IDC for year 2 |
|
|
F&A Base $250,000 $135,000 @ 54% for year 3 (6/1/17 to 5/31/18) |
In this example, Method (2) clearly lessens the indirect cost return on a sponsored project by not accounting for the rate change during the project year. Method (1) accounts for the proper indirect cost rate for the entire project period and yields a higher indirect cost return on the project.
If you have any questions regarding this information, please contact your Sponsored Program Administration Grant & Contract Officer for assistance.
Contact info
Julie O'Connor
Director, Research Communications
Phone: 313-577-8845
Email: julie.oconnor@wayne.edu