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F&A Rate FAQs - Drexel

The following are a list of Frequently Asked Questions (FAQs) related to the Drexel University Facilities and Administrative (Indirect Cost) Rate:

Facilities and Administrative Rate FAQs

Why have the F&A rates changed?

The F&A rate is negotiated between Drexel University and the Department of Health and Human Services Cost Allocation Services.  Drexel submitted its last proposal in December 2017 using its base year activities from fiscal year 2017 (July 1, 2016 to June 30, 2017).  From this data our rates for organized research, instruction, and other sponsored activities were derived.  You can see the make-up of the rates by component part on our website.

Why are the different on-campus rates changing over the life of the F&A rate agreement?

Drexel University’s F&A proposal was delayed in its processing by the Department of Health and Human Services Cost Allocation Services.  As such, their protocol requires them to make our provisional rates for the past and current fiscal year the final rate.  Our base year rate submission showed decreased facilities costs and that combined with the overstated provisional rate required us during negotiations to lower the rate.  Requesting the increase beginning in fiscal year 2022 was in the best financial interests of the University projecting future conditions.

When should I start using the new rates in my proposals?

The new rates should be used immediately.  Coeus has been updated to reflect the new rates according to the table above.

I am submitting a supplemental proposal for an existing award. What rate should I use to prepare the budget for this proposal?

Utilize the appropriate type of rate (i.e. organized research, instruction, other sponsored activities) for the proposal and the rate applicable to the time period of the proposal.

The research rate changes from one fiscal year to the next. How should I incorporate it in my proposal?

 The rates should be applied based on the effective dates of the rate in the agreement.

Example 1:

5-year Organized Research Proposal with noncompeting renewals

Start date of May 1, 2020

                                                                                                                                 

Budget Period F&A Rate Applicable
5/1/2020-6/30/2020 (Year 1)    56.50%
7/1/2020-4/30/2021 (Year 1)   51.00%
5/1/2021-6/30/2021 (Year 2)   51.00%
7/1/2021-4/30/2022 (Year 2)   51.50%
5/1/2022-4/30/2023 (Year 3)   51.50%
5/1/2023-4/30/2024 (Year 4)   51.50%
5/1/2024-4/30/2025 (Year 5)   51.50%

 

Example 2:

3-year Instructional Research Proposal with noncompeting renewals

Start Date January 1, 2020

 

Budget Period F&A Rate Applicable
1/1/2020-6/30/2020 (Year 1)  43.00%
7/1/2020-12/31/2020 (Year 1) 49.00%
1/1/2021-12/31/2021 (Year 2) 49.00%
1/1/2022-12/31/2022 (Year 3)   49.00%

  

What rate should I use for competing renewal applicataion?

Competing renewal applications should use the appropriate F&A rate specified in the new rate agreement, regardless of the rate that was applied to the previous segment.  You should determine when the new segment is expected to start and use the rate(s) that is(are) effective for the budgeted proposal period.

What happens if I am submitting a proposal that includes a budget year starting beyone 6/30/2023?

You should use the rates in place as of 6/30/2023.  For example, a research project with a budget period that begins 7/1/2023 should use the 51.50% rate.  This rate would be utilized for all periods after 7/1/2023 until a new F&A rate is negotiated.

My application was previously submitted at 56.5% F&A rate before the notification of the new rates. Will this rate be honored even though the new rate agreement specifies lower rates effective 7/1/2020?

Based on the Uniform Guidance, awards that were made using the provisional rate of 56.5% during the period of 7/1/2018 to the date of the agreement must be adjusted to the negotiated rates for the competitive segment that was awarded at the provisional rate.

 

  1. Grants awarded before 7/1/2018, remain as awarded and will utilize the 56.5% for the remainder of the competitive segment.

  2. Grants awarded while the provisional rate was in place (7/1/2018 to 10/28/2019) will be adjusted to the negotiated rates.  Therefore, an organized research award, will have a rate applied to it for the period of 7/1/2020-6/30/2021 of 51.0% and then beginning on 7/1/2021 the rate will be increased to 51.5% until the end of the competitive segment. 

  3. Grants awarded after 10/28/2019 will be subject to the negotiated rates

The following is excerpted from Uniform Guidance-Appendix III to Part 200—Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs):

C. DETERMINATION AND APPLICATION OF INDIRECT (F&A) COST RATE OR RATES

7. Fixed Rates for the Life of the Sponsored Agreement

Federal agencies must use the negotiated rates except as provided in paragraph (e) of §200.414 Indirect (F&A) costs, must paragraph (b)(1) for indirect (F&A) costs in effect at the time of the initial award throughout the life of the Federal award. Award levels for Federal awards may not be adjusted in future years as a result of changes in negotiated rates.  “Negotiated rates” per the rate agreement include final, fixed, and predetermined rates and exclude provisional rates. “Life” for the purpose of this subsection means each competitive segment of a project. A competitive segment is a period of years approved by the Federal awarding agency at the time of the Federal award. If negotiated rate agreements do not extend through the life of the Federal award at the time of the initial award, then the negotiated rate for the last year of the Federal award must be extended through the end of the life of the Federal award.

b. Except as provided in §200.414 Indirect (F&A) costs, when an educational institution does not have a negotiated rate with the Federal government at the time of an award (because the educational institution is a new recipient or the parties cannot reach agreement on a rate), the provisional rate used at the time of the award must be adjusted once a rate is negotiated and approved by the cognizant agency for indirect costs.

How will the F&A rate be applied to a grant that has already committed multiple periods of support?

Rates currently in effect on active awards that were awarded before July 1, 2018, will be continued until the end of the current competitive segment.  A competitive segment is a period of years approved by the sponsor at the time of the award.

Example 1:

Project Period:                  7/1/2017 – 6/30/2022

Competitive Segment:      7/1/2017 – 6/30/2022

Budget Period:                  7/1/2019 – 6/30/2020

F&A predetermined rate in Notice of Award for competitive segment: 56.50%.  Note: This award was granted before the effective date of the new F&A rate agreement and was using a predetermined rate, thus it will use the rates in effect at that time until the end of the competitive segment.

Budget Period Year 1 Year 2 Year 3 Year 4  Year 5
 7/1/2017-6/30/2018 (Year 1)  56.50%        
 7/1/2018-6/30/2019 (Year 2)    56.50%      
 7/1/2019-6/30/2020 (Year 3)      56.50%    
 7/1/2020-6/30/2021 (Year 4)        56.50%  
 7/1/2021-6/30/2022 (Year 5)          56.50%

 

Example 2:

Project Period:             7/1/2018 – 6/30/2023

Competitive Segment: 7/1/2018 – 6/30/2023

Budget Period:             7/1/2020 – 6/30/2021

This award was granted when Drexel was utilizing a provisional rate of 56.5%.  The provisional rate was effective during 7/1/2018 through to 6/30/2020 and is now referred to as a final rate for that time period.  The period of 7/1/2020 through to 6/30/2023, or the last three years of this competitive segment, are subject to the new predetermined rates for each respective time period in the competitive segment.  Research Accounting Services will effectively date every grant’s F&A rates where the project start date is on or after July 1, 2018, to utilize the newly negotiated rates on the effective date.  The rates will automatically update to the appropriate rate for that time period based on the effective date.

Budget Period Year 1 Year 2 Year 3 Year 4 Year 5
7/1/2018-6/30/2019 (Year 1) 56.50%    
7/1/2019-6/30/2020 (Year 2) 56.50%
7/1/2020-6/30/2021 (Year 3) 51.00%
7/1/2021-6/30/2022 (Year 4) 51.50%
7/1/2022-6/30/2023 (Year 5) 51.50%

 

Example 3:

Project Period:            11/1/2019 – 10/31/2024

Competitive Segment: 11/1/2019 – 10/31/2024

Budget Period:            11/1/2019 – 10/31/2020

Since this award was granted after the effective date of Drexel University’s agreement, it will utilize the tiered rates and corresponding effective dates to calculate the F&A

Budget Period Year 1 Year 2 Year 3 Year 4 Year 5
11/1/2019-6/30/2020 (Year 1) 56.50%    
7/1/2020-10/31/2020 (Year 1) 51.00%
11/1/2020-6/30/2021 (Year 2) 51.00%
7/1/2021-10/31/2021 (Year 2) 51.50%
11/1/2021-10/31/2022 (Year 3) 51.50%
11/1/2022-10/31/2023 (Year 4)       51.50%  
11/1/2023-10/31/2024 (Year 5          51.50%

 

How will the F&A rate be applied to existing federal multiyear contracts?

Federal contracts will continue with the current rate until the end of the period of performance as specified in the agreement.  Therefore, if the contract defines a specific F&A rate that is locked into the agreement, that will be the rate which is utilized.

How will the F&A rate be applied to existing non-federal grants?

The rate approved by the sponsor at the time of the award will continue for the remainder of the award period.

If the F&A rate changes on my award during its noncompeting segment, will the grant number or fund number change or stay the same?

The grant and fund number will not change as a result of the rate changing.  Banner utilizes effective dating so when awards are set up it will be programed to automatically update the F&A rate to the rate in effect.  Please note, that if two different rates apply for the same time period (i.e. an on-campus rate and an off-campus rate), then it would be necessary to established separate fund numbers for the on-campus portion and the off-campus portion, but those funds would be linked to the same grant.

What F&A rate is applied to carryover funding?

Carryover is subject to the F&A rate in effect when costs are incurred.