What is Cost Sharing?
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- Amelia Atkinson
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1 UCSF s Cost Sharing Policy Summary Overview February 2005 What is Cost Sharing? When a source other than the sponsor pays for the cost of effort or materials on an award 1 Budget and Resource Management 1
2 What is Cost Sharing? There are two types of cost sharing: Committed and Uncommitted 2 Cost Sharing at UCSF Most committed cost sharing is voluntary, i.e. not mandated by the sponsor. IN FY ONLY $11,000 OUT OF OVER $9.5 MILLION OF COST SHARING WAS MANDATORY. 3 Budget and Resource Management 2
3 Cost Sharing at UCSF Almost all voluntary cost sharing is in the form of time, not material. Therefore, at UCSF most cost sharing can be examined to determine if it is truly desirable. 4 Cost Sharing at UCSF The final calculated On Campus Research Rate for FY would have been almost 1 point higher without any cost sharing. This point would translate into more than $1,800,000 per year in federal ICR. 5 Budget and Resource Management 3
4 Why focus on cost sharing now? Cost sharing and effort reporting are major compliance issues and high audit priorities for DHHS, Office of Inspector General. 6 Why focus on cost sharing now? Major legal settlements at Harvard, Johns Hopkins, and Northwestern totaling over $10 million related to effort reporting violations in the past few years. 7 Budget and Resource Management 4
5 Why focus on cost sharing now? PHS 398 forms have been revised to more clearly define roles between Key Personnel and Other Significant Contributors. 8 Why focus on cost sharing now? Federal agencies are now required to clearly state if cost sharing will be used in any manner, either as a criterion for eligibility for review, or in the proposal review process. 9 Budget and Resource Management 5
6 What causes cost sharing? Often cost sharing comes from commitments made in proposals, so a brief review of the proposal process is helpful to understand why UCSF has cost sharing. 10 Cost Sharing and the Proposal/Award Process Proposal Set-Up PI/primary department determines when to include cost sharing in proposal Submit Proposal OSR reviews submission for completion, accepts department judgment on cost sharing pledge as stated on form, and submits proposal Receive and Setup Award A pledge becomes a commitment at the time of award EMF works with PI/ primary department to confirm cost sharing commitment, submit and record cost sharing budget and program code with award Award Management Department completes reports and forms and tracks cost sharing funds Investigators certify effort on PAR reports 11 Budget and Resource Management 6
7 What causes cost sharing? When a proposal includes a commitment of time (effort) that will not be paid for by the sponsor. 12 What causes cost sharing? When a PI shifts funding for committed effort on an award to another source but does not formally reduce the commitment with the sponsor. 13 Budget and Resource Management 7
8 What causes cost sharing? When a PI accepts an award with no budget for effort. University policy requires a minimum level of effort (1% or more if appropriate) on all sponsored activity. 14 Some examples: A faculty member commits a percentage of effort that exceeds the request for funding in the proposal budget. The proposal budget is for 15% effort but only asks for 10% funding. 15 Budget and Resource Management 8
9 Some examples: A PI changes the source of funding for time on an award by substituting other funds for the sponsor s. The commitment was for 20% but only 15% was charged to the sponsored award. 16 Some examples: Material resources are identified in the grant proposal but are not funded by the sponsor. A proposal budget includes $20,000 for piece of equipment, but plans to charge the award only $15,000. The committed cost sharing is $5, Budget and Resource Management 9
10 What happens? PAR certifications must reflect the % effort associated with cost sharing. Cost sharing commitments should be consistent with Other Support Pages. 18 What happens? Cost sharing expense is subject to audit and potential financial reporting. 19 Budget and Resource Management 10
11 What happens? Departmental or other funds must be used to pay the cost of the commitment not paid by the sponsor. 20 What happens? Committed cost sharing impacts: People with effort committed to a sponsored project but not equivalent salary Principal Investigators Department Administrators Academic Payroll 21 Budget and Resource Management 11
12 What happens? Committed cost sharing impacts: Office of Sponsored Research Controller s Office Extramural Funds Budget Office 22 How can a department avoid cost sharing? Do not include in proposals quantifiable commitments of personal or collegial effort that will not be on the budget. 23 Budget and Resource Management 12
13 How can a department avoid cost sharing? Do not make commitments of quantifiable effort to colleagues which will not be in their project budget. 24 How can a department avoid cost sharing? Do not shift support from an award without sponsor approval to reduce effort. 25 Budget and Resource Management 13
14 Next Steps? Finalize cost sharing policy, procedures, and training materials by March 31, Conduct department training April-June Next Steps? New UCSF OSR Approval Form PROPOSAL EXPRESS FORM New Parts of Budget Section for Committed Cost Sharing and for Program Income xxxxx xxxxx 27 Budget and Resource Management 14
15 Next Steps? Policy & procedures will include: Clear directives for identifying, utilizing, and reporting cost sharing. Structured accounting procedures for ensuring proper documentation, use, and reporting of cost sharing. 28 Where can I find out more? Go to: Draft Policy Draft Accounting Procedures Draft Frequently Asked Questions Who to Contact Policy: Charles Taylor (ctaylor@finance.ucsf.edu) Accounting Procedures: Mike Anthony (manthony@accounting.ucsf.edu) Proposal Questions: Pat Clausen (Pat.Clausen@ucsf.edu) 29 Budget and Resource Management 15
16 Questions? 30 Budget and Resource Management 16
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