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Cost Share

Definition

Funding for part of a sponsored project that is not paid by the sponsor or contracting agency
- 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
- Conform to all University, state, and federal regulations
- 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)
- Applied to all awards for consistency

OMB Circular A-110

Cost share can be cash or in-kind
- In-kind contributions examples– volunteering time or donating space
Can use funding from other projects if all parties agree, except for federal awards
- 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
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:
- Reasonable
  - Something a prudent person would do in the same situation
  - Necessary for the completion of the project
- 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
- Consistency
  - Costs identified as university overhead cannot be directly charged to the grant in a similar situation
- 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
- Submit Personnel Action Form (101) prior to the start of the project
- Add the cost share speed key and the appropriate fund code type

add appropriate fund code type

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
- Refer to sponsor guidelines to see if allowed or obtain sponsor approval
- Vice President for Research must approve
- 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
- Identified in the request for proposal, award announcement, or other correspondence
Proposal will not be considered if cost share is not included
- 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
- Louisiana Board of Regents will not pay for graduate assistant's tuition
Referred to as committed cost share
- 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
- Investigator includes it in proposal or it is provided after the award is made
- Must be tracked if included in the proposal
The Office of Research will usually not approve voluntary cost share
- May be unusual situations when approved
- Proper justification must be supplied
Department Chairs, Deans and Directors may not approve
Can be either committed or uncommitted
Uncommitted cost share
- Faculty time spent on the project above what was detailed in the proposal
- University resources not specified in the proposal
- No dollar amounts in the proposal or the award document
- 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
- Usually only approve mandatory cost share
- Approval granted by the Vice President for Research or designee
Other sources – other grants, endowments, or gift
- Must have the approval of the sponsor(s) and not be in violation of any terms and conditions
- 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
- Must have approval for use
- Individual responsible for monitoring the spending from the particular general fund (such as the Department Chair, Dean or Director) must approve
Procedure
- Appropriate general fund cost share amounts moved to the project's cost share account at start of award period
- Sponsored Programs Accounting is responsible
- 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
- Specifically offered as the cost share for the project and not previously given to the university for some other purpose
- Separate speed key will be assigned
- Will be tied to the sponsor's account
In-kind contribution
- Offer to use the entity's lab or office space without being charged a fee
- Donation of an employee's time
- Not tracked in a separate account
- 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
- Attach justification for cost share use
- Identify source of cost share
- 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
- Approval for other restricted sources must be attached or mentioned in the comments field
Third party contributors must submit a letter of commitment
- Must be received before the routing form is approved by the Office of Research
- Necessary for both cash and in-kind

UNO Policies

Separate speed key for cost share amounts
- Same project number as the sponsor
- 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
- 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
- Extended if a no-cost extension is received from the sponsor
Expend concurrently with the sponsored funding
- Do not "save" spending for the end of the project
- Do not spend before the sponsored funding is allowed to be spent
- 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
- 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
- Expend cost share at same time as sponsor's funding, if project allows for this
- Cost share funds cannot be held to be used as a reserve

Budget Adjustments

Two situations
- Proposal budget is reduced or increased when awarded
- Awarded budget category amounts need to be adjusted
If the proposal budget is reduced or increased:
- Cost share adjusted based on sponsor's budget adjustment, most of the time
- Sponsor may dictate the cost share amount remain the same
- 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
- 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:
- Request a budget adjustment through Sponsored Programs Accounting
  - Same procedure as if requesting an adjustment of the sponsor's budget
- May need sponsor approval

Close out Procedures

Upon project completion, final invoice and report sent to the sponsor
- 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
- 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
- Has occurred with awards from Louisiana state agencies
- 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
- 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
- Award document is legally binding – all terms must be met
  - Includes cost share
- 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
- Remember – all identified cost share will be issued a separate speed key and must be tracked and reported on
- 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
- Sponsor may not allow an expense (Louisiana Board of Regents will not pay for graduate assistants' tuition) but it is required
- Sponsor may cap their funding but more is needed

Responsibilities

Principal Investigator

Accurately complete the internal routing form
- Answer all of the cost share questions
- Attach all necessary documents
- Provide justification for cost share
Use correct speed keys
- Monitor the project spending – sponsor and cost share amounts
Stay within the approved budgets
- 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
- Review routing forms for any cost share
- Cost share approval obtained when sign the routing form
Administrative staff
- Assist with payment documents – personnel action forms, purchase orders, lab supply requests, etc.
- Check to make sure proper speed key is used

The Office of Research and Sponsored Programs

Ensure the cost share section of the routing form is properly completed
- Contact investigator if there are questions
- Read cost share justifications
- Make sure a letter of commitment is attached for third-party cost share
Review requests for Office of Research cost share
- The Vice President for Research, or designee, must approve