Indirect Cost Recovery, Distribution, and Use (A-51)
Original Implementation: October 26, 1999
Last Revision: April 21, 2009
IIndirect costs are those incurred for a common or joint purpose that benefit more than one university unit/activity and which are not readily assignable to a specific unit/activity. They also are known as Facilities and Administrative (F&A) or overhead costs. In most instances, grantors and funding entities agree to reimburse the university for the overhead expenses of conducting research, education, and service projects. This policy establishes guidelines for the recovery, distribution, and use of such reimbursements from externally funded grants, contracts, and cooperative agreements.
Indirect Cost Recovery
The Principal Investigator or Project Director must include indirect costs in the proposed budget for all grants, contracts, and cooperative agreements at the maximum rate allowed by the sponsor. Only the director of the Office of Research and Sponsored Programs (ORSP) or the director’s designee is authorized to negotiate alternative indirect cost rates with sponsors, which are then recommended to the president for approval.
Indirect Cost Distribution and Use
The Texas Education Code, Section 145.001 provides that recovered indirect costs can be retained by state universities to support and encourage further research. The revenue from indirect cost reimbursements to SFASU shall be allocated annually:
- ORSP shall receive an amount sufficient to cover the total actual costs of operations as approved by the provost and vice president for academic affairs (VPAA).
- The academic units that generated the recovered indirect costs shall receive fifty percent of any remaining revenue up to $100,000 and one hundred percent of any remaining revenue in excess of $100,000 . Such units shall expend the funds for projects encouraging further research, including:
- conducting pre-grant feasibility studies;
- preparing competitive proposals for sponsored programs;
- providing carryover funding for research to provide continuity between externally funded projects;
- supporting new researchers pending external funding;
- purchasing capital equipment directly related to expanding the research capability of the institution; and
- providing research or project administrative costs not covered by the funding entity.
All funds shall be expended to support research and sponsored programs at SFASU according to the provisions of the Texas Education Code, Section 145.001. Additionally, the university shall report the actual amounts of money retained and expended under this policy and the estimated amounts for the next biennium in its report to the Legislative Budget Board as part of the biennial budget reporting process.
ORSP shall calculate distributions of recovered indirect costs to academic units based on a formula recommended by the University Research Council and approved by the provost and VPAA. The distributions shall be made by the controller at the close of each fiscal year, based upon the previous year's indirect cost reimbursements. No allocations shall be made to academic units in any year in which the total indirect costs recovered are less than the actual amount expended by ORSP.
Cross Reference: Texas Education Code § 145.001
Responsible for Implementation: Provost and Vice President for Academic Affairs
Contact for Revision: Director, Office
Forms: None