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

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 2022 using its base year activities from fiscal year 2022 (July 1, 2021 to June 30, 2022).  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.  Our next F&A base year is FY2026, and the proposal is due to be submitted by December 31, 2026.
The Department of Health and Human Service Cost Allocation Services is Drexel's cognizant agency.  It is their protocol to covert our provisional rates for the past fiscal year a final predetermined final rate. Our on-campus rates are being increased effective July 1, 2024, and then again on July 1, 2026.  Obtaining an increase in our F&A rates over the life of the agreement is in the best financial interest of the University.    
The new rates should be used immediately.  Coeus has been updated to reflect the new rates according to the table above.
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 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, 2024

                                                                                                                                 

Budget Period F&A Rate Applicable
5/1/2024-6/30/2024 (Year 1)   51.50%
7/1/2024-4/30/2025 (Year 1)   52.00%
5/1/2025-4/30/2026 (Year 2)   52.00%
5/1/2026-6/30/2026 (Year 3)   52.00%
7/1/2026-4/30/2027 (Year 3)   52.50%
5/1/2027-4/30/2028 (Year 4)   52.50%
5/1/2028-4/30/2029 (Year 5)   52.50%

 

Example 2:

3-year Instructional Research Proposal with Noncompeting Renewals

Start Date January 1, 2024

 

Budget Period F&A Rate Applicable
1/1/2024-6/30/2024 (Year 1)  49.00%
7/1/2024-12/31/2024 (Year 1) 51.00%
1/1/2025-12/31/2025 (Year 2) 51.00%
1/1/2026-6/30/2026 (Year 3)  51.00%
7/1/2026-12/31/2026 (Year 3)  52.00%

  

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.
You should use the rates in place as of 6/30/2027.  For example, a research project with a budget period that begins 7/1/2027, should use the 52.50% rate.  This rate would be utilized for all periods after 7/1/2027, until a new F&A rate is negotiated.

Based on the Uniform Guidance, awards that were made using the provisional rate of 51.50% during the period of 7/1/2023 to 6/30/2024, must be adjusted to the negotiated rates for the competitive segment that was awarded at the provisional rate.  Thankfully, the final negotiated rate for the time period of 7/1/2023 to 6/30/2024 is the same 51.50% rate.  Therefore, no rate adjustment is needed.  To break this down further:

 

  1. Grants awarded before 7/1/2023, remain as awarded and will utilize the 51.50% for the remainder of the competitive segment.

  2. Grants awarded while the provisional rate was in place (7/1/2023 to 06/30/2024) will be adjusted to the negotiated rates.  Therefore, an organized research award, will have a rate applied to it for the period of 7/1/2023-6/30/2024 of 51.50% and then beginning on 7/1/2024, the rate will be increased to 52.00%, and then will then be adjusted again on 7/1/2026, to 52.50% and remain at that rate until the end of the competitive segment. 

  3. Grants awarded after 7/1/2024, 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

a. 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.

Rates currently in effect on active awards that were awarded before July 1, 2023, 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:                  7/1/2021 – 6/30/2026

Competitive Segment:    7/1/2021 – 6/30/2026

Budget Period:                  7/1/2024 – 6/30/2025

F&A predetermined rate in Notice of Award for competitive segment: 51.50%.  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
 7/1/2021-6/30/2022 (Year 1)  51.50%        
 7/1/2022-6/30/2023 (Year 2)   51.50%      
 7/1/2023-6/30/2024 (Year 3)     51.50%    
 7/1/2024-6/30/2025 (Year 4)       51.50%  
 7/1/2025-6/30/2026 (Year 5)          51.50%

 

Example 2:

Project Period:             7/1/2023 – 6/30/2028

Competitive Segment: 7/1/2023 – 6/30/2028

Budget Period:             7/1/2024 – 6/30/2025

This award was granted when Drexel was utilizing a provisional rate of 51.50%.  The provisional rate was effective during 7/1/2023 through to 6/30/2024, and is now referred to as a final predetermined rate for that time period.  The period of 7/1/2024 through to 6/30/2027, or years 2 through 4 of this competitive segment, are subject to the new predetermined rates for each respective time period in the competitive segment.  Year 5 is subject to the provisional rate effective 7/1/2027.  Research Accounting Services will effective date every grant’s F&A rate where the project start date is on or after July 1, 2024, 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
7/1/2023-6/30/2024 (Year 1) 51.50%    
7/1/2024-6/30/2025 (Year 2) 52.00%
7/1/2025-6/30/2026 (Year 3) 52.00%
7/1/2026-6/30/2027 (Year 4) 52.50%
7/1/2027-6/30/2028 (Year 5) 52.50%

 

Example 3:

Project Period:            11/1/2024 – 10/31/2030

Competitive Segment: 11/1/2024 – 10/31/2030

Budget Period:            11/1/2024 – 10/31/2025

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
11/1/2024-6/30/2025 (Year 1) 52.00%    
7/1/2025-10/31/2025 (Year 1) 52.00%
11/1/2025-6/30/2026 (Year 2) 52.00%
7/1/2026-10/31/2027 (Year 2) 52.50%
11/1/2027-10/31/2028 (Year 3) 52.50%
11/1/2028-10/31/2029 (Year 4)       52.50%  
11/1/2029-10/31/2030 (Year 5)         52.50%

 

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.

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

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.

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