Policy for Facilities and Administrative (Indirect) Cost Recovery

A-21, "Cost Principles for Educational Institutions," was revised by OMB as of May 8, 1996. One of the revisions changed the term indirect costs to Facilities and Administrative Costs (F & A Costs)

The policy of Western Kentucky University is to share F & A recovery funds coming to the University through grants and contracts in an equitable manner. The principles for allocation and use of these funds are:

• The funds should provide incentives to those units that are successful in attracting funds.
• The funds should provide base funding for the University's efforts to increase extramural funding.
• Priority should be given to meeting the needs for equipment, facilities, and administrative costs, especially where improvements will increase opportunities for additional extramural funding.
• In addition to rewarding units and individuals for research, funds should provide seed funding for increasing grant writing and for helping junior faculty and departments become competitive for extramural funding.

When F & A cost recovery funds result from projects involving faculty in more than one college, the deans of the colleges will be responsible for jointly recommending F & A cost distribution to the Director of the Office of Sponsored Programs. F & A cost recovery funds will be allocated FOUR times a year. Allocations will be based on receipts from the previous three months (i.e., one quarter lag). The allocation will occur as follows:

The funds will be distributed in the following manner:

40% University's General fund for support of facilities

40% College or appropriate Vice President

20% Office of Sponsored Programs

The Chief Financial Officer will allocate the previous quarter's F & A cost recovery revenue under the above-referenced formula in the F & A cost center accounts. F & A cost recovery funds allocated to cost center accounts in any given fiscal period will be carried over from year-to-year. Carry forward funds will be available for use in the new fiscal year after the previous fiscal year's books are closed (approximately the first week of August of each year).

Additionally, a year-end report is to be submitted by each cost center fiscal officer to the Office of Sponsored Programs and the Vice President for Academic Affairs summarizing how these funds were used in the context of this policy. The Office of Sponsored Programs will periodically review accounts.

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Last update made January 12, 1999.
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