Cost Share

Definition

· Funding for part of a sponsored project that is not paid by the sponsor or contracting agency

o Necessary to complete the project

· Must be auditable and verifiable separately from the sponsor expenditures

· Must comply with the same requirements as the sponsored funding

o Conform to all University, state, and federal regulations

o Exception – Louisiana Board of Regents

§ Does not allow tuition for graduate students in their portion of the budget

§ But is allowed as cost share

Federal Regulations

· Office of Management and Budget (OMB) circulars A-110 (general federal grant administration) and A-21 (cost allowability)

o Applied to all awards for consistency

OMB Circular A-110

· Cost share can be cash or in-kind

o In-kind contributions examples– volunteering time or donating space

· Can use funding from other projects if all parties agree, except for federal awards

o Federally funded projects may not be used on cost share unless authorized by Federal statue

· Must be necessary and reasonable to complete the project

· Must be stated in the budget and be approved by the sponsor

· Expenditures must be verifiable from all other records

o UNO policy – separate accounts/speed keys

OMB Circular A-21

· Identifies cost principles (direct quote from the circular):

“C.2. Factors affecting allowability of costs. The tests of allowability of costs under these principles are (a) they must be reasonable; (b) they must be allocable to sponsored agreements under the principles and methods provided herein; (c) they must be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances; and (d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items.”

· Four tests to pass:

o Reasonable

§ Something a prudent person would do in the same situation

§ Necessary for the completion of the project

o Allocable

§ Clearly benefit the project

§ Clearly identified as expended for that project

§ If an item has multiple users, users/uses must be tracked

· Examples: general office supplies or a department’s printer or copier

o Consistency

§ Costs identified as university overhead cannot be directly charged to the grant in a similar situation

o General allowability

§ Some costs are not allowed, such as:

· Advertising cost

· Membership fees

· Alcohol

· Food

§ See Circular A-21 for other restrictions

§ Additional compensation is generally not allowable unless prior approval

§ Other restrictions may be in the award document

Cost Share Uses

· Any of the regular budget categories, as long as allowed by the sponsor or regulations

· Most common cost share use - salary and fringe benefits

o Submit Personnel Action Form (101) prior to the start of the project

o Add the cost share speed key and the appropriate fund code type

o Fringe benefits will automatically be charged based on the salary charged

· Can also be the indirect cost amount for the other cost share amounts

· Can be unrecovered indirect cost

o Refer to sponsor guidelines to see if allowed or obtain sponsor approval

o Vice President for Research must approve

o Calculate by multiplying the indirect cost base (or MTDC) by the difference between the UNO approved on/off campus indirect rate and the sponsor reduced indirect cost rate

§ Indirect base excludes tuition, scholarships, fellowships, and equipment

§ Example:

Budget indirect cost rate = 25%

Negotiated indirect cost rate = 45%

Unrecovered indirect cost = MTDC X (45% - 25%)

Cost Share Types

· Two types of cost share – mandatory and voluntary

Mandatory Cost Share

· Required by the sponsor

o Identified in the request for proposal, award announcement, or other correspondence

· Proposal will not be considered if cost share is not included

o Funding lost not based on the merits of the project, but rather on a failure to follow directions

· Includes when the sponsor will not pay for an allowable cost

o Louisiana Board of Regents will not pay for graduate assistant’s tuition

· Referred to as committed cost share

o Committed cost share includes all amount specified in the proposal budget even if the amount is not included in the sponsor’s award budget

· Must be separately tracked and reported

Voluntary Cost Share

· Not required by the sponsor

o Investigator includes it in proposal or it is provided after the award is made

o Must be tracked if included in the proposal

· The Office of Research will usually not approve voluntary cost share

o May be unusual situations when approved

o Proper justification must be supplied

· Department Chairs, Deans and Directors may not approve

· Can be either committed or uncommitted

· Uncommitted cost share

o Faculty time spent on the project above what was detailed in the proposal

o University resources not specified in the proposal

o No dollar amounts in the proposal or the award document

o Does not have to be separately tracked and reported

Cost Share Sources

· Three sources – restricted, in-kind/third party, and general fund

· Most common sources at UNO – the Office of Research (restricted) and general fund accounts

Restricted

· The Office of Research provides the majority

o Usually only approve mandatory cost share

o Approval granted by the Vice President for Research or designee

· Other sources – other grants, endowments, or gift

o Must have the approval of the sponsor(s) and not be in violation of any terms and conditions

o Should already have a speed key

§ Sponsored Programs Accounting will determine if a new speed key will need to be assigned

· Must receive approval from individual responsible for managing the account

General Fund

· Either a department or college level general fund account

o Must have approval for use

o Individual responsible for monitoring the spending from the particular general fund (such as the Department Chair, Dean or Director) must approve

· Procedure

o Appropriate general fund cost share amounts moved to the project’s cost share account at start of award period

o Sponsored Programs Accounting is responsible

o Unused amounts will be returned to appropriate general fund

Third Party

· Both cash and in-kind contributions from a private or public organization

· Cash contribution

o Specifically offered as the cost share for the project and not previously given to the university for some other purpose

o Separate speed key will be assigned

o Will be tied to the sponsor’s account

· In-kind contribution

o Offer to use the entity’s lab or office space without being charged a fee

o Donation of an employee’s time

o Not tracked in a separate account

o Tracked with annual letter from the entity stating the amount of cost share provided for the project

§ Sponsored Programs Accounting will keep the letter(s)

Cost Share Approval

· Cost share section of the internal routing form must be completed

o Attach justification for cost share use

o Identify source of cost share

o Provide appropriate speed keys for sources, if applicable

· By signing the routing form, the Chair, Dean and/or Director, and the Office of Research approve the cost share

o Approval for other restricted sources must be attached or mentioned in the comments field

· Third party contributors must submit a letter of commitment

o Must be received before the routing form is approved by the Office of Research

o Necessary for both cash and in-kind

UNO Policies

· Separate speed key for cost share amounts

o Same project number as the sponsor

o Different fund code based on the cost share source

§ 103XX – General Fund cost share

§ 142XX – Office of Research cost share

§ 130XX – Third-party cash cost share

o Example:

Source	Project	Fund Code	Speed Key
Sponsor	000010000001500	115XX	13XXX
Office of Research	000010000001500	142XX	13XX1
Department General Fund	000010000001500	103XX	13XX2
Third-party cash	000010000001500	130XX	13XX3

· Cost share requirements end when the project ends and are closed

o Extended if a no-cost extension is received from the sponsor

· Expend concurrently with the sponsored funding

o Do not “save” spending for the end of the project

o Do not spend before the sponsored funding is allowed to be spent

o Can be differences if the nature of the project dictates the variances

§ For example – cost share is for tuition for last semester of the project

Reporting and Invoicing

· Sponsored Programs Accounting reports and invoices the sponsored funding

o Only report actual expenditures/costs or amounts reported on a third party’s cost share letter

· Sponsor may refuse to pay all or part of an invoice if mandatory cost share is not used

o Expend cost share at same time as sponsor’s funding, if project allows for this

o Cost share funds cannot be held to be used as a reserve

Budget Adjustments

· Two situations

o Proposal budget is reduced or increased when awarded

o Awarded budget category amounts need to be adjusted

· If the proposal budget is reduced or increased:

o Cost share adjusted based on sponsor’s budget adjustment, most of the time

o Sponsor may dictate the cost share amount remain the same

o Investigator may request cost share amount remain the same when the sponsor reduces the funding but the scope remains the same

§ May need the same amount to complete the project

§ Need approval from the Department Chair, Dean, Director, or Vice President for Research

o Third-party contributors must be informed of budget reductions from the sponsor

§ Will then decide whether to keep the committed amount the same

· If determine the cost share amounts need to be used for a different budget category:

o Request a budget adjustment through Sponsored Programs Accounting

§ Same procedure as if requesting an adjustment of the sponsor’s budget

o May need sponsor approval

Close out Procedures

· Upon project completion, final invoice and report sent to the sponsor

o Only include cost share amounts that were spent

· Investigator needs to contact Sponsored Programs Accounting if there are trailing cost share charges or waiting for third-party cost share letter

· The Office of Research (fund code 142XX) and General Fund (fund code 103XX) cost share accounts are closed with the main grant

o Unused funds will be returned to their source

What happens if I don’t use the cost share?

· Sponsor may not fully reimburse an invoice

o Has occurred with awards from Louisiana state agencies

o Lack of cost share spending may be interpreted to mean that their full amount is not needed or there is a lack of commitment by the university

o Sponsor may have a policy of reimbursing only a certain percentage of the total spending based on the percent of cost share required

§ For example:

· Sponsor requires a 10% cost share

· Reimburse up to 90% of the total costs (which is sponsor and cost share funds) on each invoice

§ Reductions may be taken on quarter, annual, and/or final invoices

· UNO may receive audit findings

o Award document is legally binding – all terms must be met

§ Includes cost share

o Could lead to returning sponsor funds, paying fines, or losing future funding

§ Sponsors may read prior audit reports and not fund a proposal based on a finding

Cost share – Should it be in the proposal?

· Only include if mandatory or absolutely necessary for the completion of the project

o Remember – all identified cost share will be issued a separate speed key and must be tracked and reported on

o Adds responsibilities to the principal investigator, college and department staff, Office of Research and Sponsored Programs Accounting

· Provide justification for inclusion of committed, voluntary cost share

o Sponsor may not allow an expense (Louisiana Board of Regents will not pay for graduate assistants’ tuition) but it is required

o Sponsor may cap their funding but more is needed

Responsibilities

Principal Investigator

· Accurately complete the internal routing form

o Answer all of the cost share questions

o Attach all necessary documents

o Provide justification for cost share

· Use correct speed keys

o Monitor the project spending – sponsor and cost share amounts

· Stay within the approved budgets

o Follow Sponsored Programs Accounting’s budget adjustment policy if necessary

· Provide final copy of the budget to their departmental staff responsible for tracking the general fund and processing human resource paperwork

College or Department Offices

· Dean, Director, or Chair

o Review routing forms for any cost share

o Cost share approval obtained when sign the routing form

· Administrative staff

o Assist with payment documents – personnel action forms, purchase orders, lab supply requests, etc.