Budget
Total direct cost (TDC) includes all allowable direct project costs (salaries, fringe, travel, equipment, supplies, tuition, subawards, etc.). Modified total direct dost (MTDC) is the subset of direct costs used to calculate indirect costs (IDCs or F&A). MTDC excludes certain categories required by federal Uniform Guidance, including the following: equipment, capital expenditures, tuition remission, participant support costs, subaward amounts over $25,000. Indirect costs are applied to MTDC—not TDC.
“Effort” is not hours. Is is a proportion of your time spent on a particular activity, and, because it is a proportion, you only have 100% (no more, no less) to allot to various activities. “Effort reporting” is required by federal law, and it is a way for a university and a grant funder to track what percentage of an employee’s total job is devoted to a specific grant project. To understand how it works, imagine an employee’s entire university job as a single pie based on the length of their annual contract (9, 10, 11, & 12 are the most common contract slices).
- The size of the pie doesn’t depend on clocking a strict 40-hour work week. Whether someone works 35 hours or 60 hours in a week, their total work for the university equals 100% of their effort during the contract period.
- The 100% is made up of all university duties combined: teaching classes, grading, attending faculty meetings, advising students, and doing research.
How Effort Connects to Grants
When a grant gives money to support a research project, the organization paying for the grant wants to know how much of the employee’s overall job is dedicated to that specific project.
- Estimate the Effort: The employee estimates what slice of their overall job the project takes up—for example, 25% of their total work.
- Apply to Salary: The university then charges that exact percentage of the employee’s salary to the grant money rather than the university’s normal budget.
A Simple Example
Suppose a professor earns a salary of $100,000 per year from the university for doing all of their normal duties (100% effort).
- If a research grant requires 25% of their total effort over their nine-month contract, the grant will cover 25% of their salary.
- Math: 25% of $100,000 = $25,000.
- Result: The grant pays $25,000 of the salary, and the university pays the remaining $75,000 (75%) for teaching and administrative duties.
In short, effort reporting isn’t about counting hours on a timecard; it’s about dividing up the employee’s total job into percentages so the funder(s) is/are responsible for the right slice of work.
Remember to always check with your chair before contacting OGSR to discuss the potential commitment of effort and how it will be managed as well as other departmental resources for external funding.
UCA’s federally negotiated indirect-cost (IDC) rates are as follows:
- On-Campus Employees with Effort toward a Grant: 33.20% of salaries and wages.
- Off-Campus Employees with Effort toward a Grant: 14.64% of salaries and wages.
Because UCA receives federal funding, the US Department of Health and Human Services acts as the “cognizant agency,” the watchdog for most educational institutions that receive federal grant money. HHS audits UCA’s receipts every four years to ensure we follow the guidance provided in 2 CFR 220, Subpart E, formerly known as OMB Circular A-21, and don’t overcharge for indirect costs.
In mathematical terms, the rate is determined by dividing the indirect-cost pool by direct costs based on the previous four year’s receipts:
The indirect-cost pool numerator accounts for institutional expenses that keep the lights on but cannot be cleanly assigned to a single, specific microscope or research paper. Federal auditors allow UCA to aggregate these into two main buckets.
Facilities: Building depreciation, interest on structural debt, equipment depreciation, operations and maintenance (utilities, janitorial services, campus security), and library operations that grant activities expend above normal, daily university operations.
Administration: General administration (payroll, HR, legal), departmental administration (the operational costs of administrative assistants and other support staff that manage purchase orders, personnel action forms, and quotes for services and equipment), and the Offices of Research and Sponsored Programs and Post-Award Grants and Contracts, which assure grants and contracts meet federal guidelines prior to award and monitor grant activities post-award, including research compliance with human participants and animal subjects.
The modified total direct cost base denominator includes the following example expenses:
- Direct faculty/staff salaries
- fringe benefits
- travel for conferences and project development
- lab supplies
- the first $25,000 of any subaward
Examples of costs that would be excluded from the denominator would be capital equipment (items over $5,000), student tuition remission, rental of off-campus space, and any subaward expenditures beyond the first $25,000.
So, in the previous negotiation, UCA spent $10,000,000 in MTDC on grant-eligible activities (paying researchers, buying pipettes, funding project travel).
After complex space-use studies (calculating how many square feet of buildings devoted to grant projects consume electricity and how many hours payroll spends processing grant stipends, for example), HHS agrees that UCA spent $3,320,000 in back-end support to sustain grant-specific activities.
The math translates to $3,320,000 / $10,000,000 = 33.20%.
Travel
Professional Services
Indirect Costs
UCA’s federally negotiated indirect-cost (IDC) rates are as follows:
- On-Campus Employees with Effort toward a Grant: 33.20% of salaries and wages.
- Off-Campus Employees with Effort toward a Grant: 14.64% of salaries and wages.
Because UCA receives federal funding, the US Department of Health and Human Services acts as the “cognizant agency,” the watchdog for most educational institutions that receive federal grant money. HHS audits UCA’s receipts every four years to ensure we follow the guidance provided in 2 CFR 220, Subpart E, formerly known as OMB Circular A-21, and don’t overcharge for indirect costs.
In mathematical terms, the rate is determined by dividing the indirect-cost pool by direct costs based on the previous four year’s receipts:
The numerator accounts for institutional expenses for sponsored projects that keep the lights on but cannot be cleanly assigned to a single, specific microscope or research paper. Federal auditors allow UCA to aggregate these into two main buckets.
Facilities: Building depreciation, interest on structural debt, equipment depreciation, operations and maintenance (utilities, janitorial services, campus security), and library operations that grant activities expend above normal, daily university operations.
Administration: General administration (payroll, HR, legal), departmental administration (the operational costs of administrative assistants and other support staff that manage purchase orders, personnel action forms, and quotes for services and equipment), and the Offices of Grants and Sponsored Research and Post-Award Grants and Contracts, which assure grants and contracts meet federal guidelines prior to award and monitor grant activities post-award, including research compliance with human participants and animal subjects.
The denominator includes the following example expenses:
- Direct faculty/staff salaries
- fringe benefits
- travel for conferences and project development
- lab supplies
- the first $25,000 of any subaward
Examples of costs that would be excluded from the denominator would be capital equipment (items over $5,000), student tuition remission, rental of off-campus space, and any subaward expenditures beyond the first $25,000.
So, in the previous negotiation, UCA spent $10,000,000 in MTDC on grant-eligible activities (paying researchers, buying pipettes, funding project travel).
After complex space-use studies (calculating how many square feet of buildings devoted to grant projects consume electricity and how many hours payroll spends processing grant salaries, for example), HHS agrees that UCA spent $3,320,000 in back-end support to sustain grant-specific activities.
The math translates to $3,320,000 / $10,000,000 = 33.20%.
Stipends, Honoraria, and Tuition
Cost Sharing or Matching
- Increasing the requirements for auditable record-keeping by imposing a substantial tracking, monitoring, recording, and documenting burden on the PI and university administrators.
- Redirecting departmental, school, college, or central resources from other mission-critical uses to support sponsored agreements.
- Producing an adverse effect on the university’s indirect-cost rate. In the calculation of the IDC rate, the denominator is the university’s organized research base – the direct costs associated with sponsored projects and non-sponsored research. The numerator is the university’s research pool expenses, or the facilities and administrative costs associated with supporting organized research. The total amount of the university’s cost-sharing must be included in the denominator. The increase in the denominator serves to decrease the university’s overall IDC rate.
- Increasing the university’s exposure to audit liability. Cost sharing commitments are subject to audit, and a failure to provide the level of cost sharing reflected in the approved award budget may result in a disallowance of award costs, refund of award funds to the sponsor, and possible termination of the award.
