Cost Sharing/Matching Policy (Draft)
- Introduction
- Extramual Funded Proposals
- Why Cost Share
- Pre-Award - Office of Grant and Research Development (OGRD)
- Federal Regulations
- Consistency in Grant Administration
- Definitions
- Cost Sharing or Matching Criteria
- Post Award Accounting and Documentation
- Expenditures Allowability - Cost Sharing
- Third Party Contributions
- Monitoring Cost Share Commitments
- Cost Sharing for Federal Formula Funds
- Resources
- WSU Organizations to Contact for Assistance
Introduction
Who Should Be Familiar With This Policy
- Area Finance Officers
- Administrative and Department Managers/Accountants
- Deans, Directors, and Department Chairs
- Grant and Contract Administrators
- Personnel Certified to Submit Sponsored Project Proposal Budgets
- Principal Investigators
- Office of Grant and Research Development Personnel
- Sponsored Programs Services Personnel
Extramual Funded Proposals
The university policy on cost sharing/matching as defined herein, applies to all proposal budgets submitted for grants/contracts/cooperative and construction agreements negotiated with:
- For simplicity, the single term "cost sharing" is used to address "cost sharing/matching" unless noted otherwise. For clarification, "matching" is generally used to refer to a statutorily specified percentage of program or project costs that must be contributed in order to be eligible for federal funding.
- Cost sharing requirements are generally set forth in the Program Announcement (PA) or Request for Proposal (RFP).
- Financial liability: The university can be held liable should it fail to meet the cost sharing commitments as defined in this policy as "mandatory cost sharing" and "voluntary committed cost sharing". Failure to meet the cost share commitment could result in a reduction of sponsor funding and thus subject the department/college to fund the amount of the reduction.
- Statutory Cost Sharing: The National Science Foundation requires that each grantee share in the cost of research projects from unsolicited proposals. The alternatives in meeting this requirement are:
- To cost share a minimum of one percent (1%) of the project, or
- To cost share a minimum of one percent (1%) of the aggregate costs of all NSF projects that require cost sharing.
- Special Authorities: Certain federal programs may allow for a waiver of "matching/cost sharing" requirements. The applicable waiver must be included in the terms or conditions of the award.
- Federal funds used as cost sharing: Federal funds may be used as cost sharing only when approved in the award document or special terms and conditions by the authorized contracting official.
Why Cost Share
Voluntary cost sharing commitments, as defined in this policy, [Section VII] should consider the impact on resource availability for meeting future mandatory cost sharing.
Voluntary cost sharing must be documented in the university's records. These costs are included in the Modified Direct Cost base (denominator) when preparing the Facilities and Administrative (F&A) Rate proposal and thus result in a lower proposed rate.
Unless cost sharing is quantified in a budget proposal, "voluntary uncommitted cost sharing" [Section VII] should limit the statement of cost sharing to the budget narrative without quantifying the dollar amount or level of effort.
Pre-Award - Office of Grant and Research Development (OGRD)
The OGRD, in submitting proposals to sponsors will:
- Conduct, train, and certify administrators in the submission of proposal budgets including cost sharing.
- Review proposal budgets for compliance with the university policy for cost sharing.
- Negotiate special cost sharing provisions with sponsors when required.
- Consult with Project Investigators, Department Administrators and the Sponsored Project Finance Office when conditions warrant.
Federal Regulations
Washington State University, as a recipient of federal grants and contracts, is required to comply with the following Office of Management and Budget Circulars:
http://www.whitehouse.gov/omb/grants/
- OMB Circular A-110 - "Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations".
- OMB Circular A-21 - "Cost Principles for Educational Institutions" which establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions.
- OMB Circular A-133 - "Audits of States, Local Governments, and Non-Profit Organizations"
- Cost Accounting Standards (CAS) as referenced in OMB Circular A-21.
Consistency In Grant Administration
http://www.whitehouse.gov/omb/grants/
- OMB Circular A-110 - sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations.
- OMB Circular A-21 - "Cost Principles for Educational Institutions" - The university's cost accounting practices must be consistent with the following Cost Accounting Standards as listed in Appendix-A of the circular:
- CAS 9905.501 -- Consistency in estimating, accumulating and reporting costs.
- CAS 9905.502 -- Consistency in allocating costs incurred for the same purpose.
- CAS 9905.505 -- Accounting for unallowable costs.
- CAS 9905.506 -- Cost accounting period.
CAS 9905.501 requires that the university's cost accounting practices are consistent in recording those costs committed to the project as estimated in the proposal budget, including cost sharing. The university's accounting system and subsidiary systems must account for all costs including those funded by the university and third parties.
Definitions
- Allowable Costs - are defined as the cost sharing commitment pledged in a proposal's budget and are consistent with:
- the terms, conditions, and definitions contained in OMB Circular A-21 and the Cost Accounting Standards (CAS) referenced in section VI; and,
- university policies, and any special terms and conditions or restrictions as subsequently awarded.
- Cost Sharing Cash Account - is defined as an account set up in conjunction with a sponsored account for the purpose of accepting cash deposits as required by the conditions of the award.
- Cost Share Obligation - is defined as the amount of WSU and third party funds committed in a proposal's budget and awarded, or included as special terms and conditions of the award. This amount may be adjusted as a result of subsequent amendments agreed upon in writing by all parties to the agreement.
- Cost Sharing or Matching - means that portion of project or program costs not borne by the Federal Government.
- Mandatory Cost Sharing - for the purpose of this policy shall include all matching and third party contributions that are required by:
- Statute;
- Regulation;
- Executive Order;
- Official agency policy;
- Special conditions included in the sponsor's cover letter;
- Special conditions included as an attachment to an award.
- Sponsored Account (project) is defined as an account assigned in fund 145, programs 11 through 14. Normally there is a signed agreement between the university and a third party as identified in section II of this policy.
- Third Party - is defined as a non-Washington State University party who contributes goods and services in the form of cash and/or non-cash contributions that directly benefit the project.
- Un-recovered Facilities and Administrative Costs (F&A) - is defined, for the purpose of this policy, as the difference between the "F&A" rate approved by the Department of Health and Human Services (DHHS) and the sponsor's rate. The difference may be use as cost sharing if approved by the sponsor.
- Voluntary Committed Cost Sharing - for the purpose of this policy is defined as cost sharing pledged in a proposal's budget or award but not specifically required by the sponsor as a condition of accepting the award.
- Voluntary Uncommitted Cost Sharing for the purpose of this policy is defined as:
- Cost sharing, regardless of source, contributed to a sponsored account (programs 11 through 14) with the following exclusions: (a) "Mandatory Cost Sharing", and (b) "Voluntary Committed Cost Sharing".
- Effort contributed to an account that is within the 5% deviation as outlined in Effort Reporting - BPPM section 40.35.1. This effort does not need to be reported.
- University faculty (including senior researchers) effort that is over and above that which is committed and budgeted for in a sponsored agreement
- Waived or Reduced Facilities and Administrative Costs (F&A) - is defined, for the purpose of this policy, as a proposal budget with no F&A or a reduced F&A rate. At its discretion, the university may elect to reduce or waive the F&A costs for the purpose of cost sharing or for other reasons when approved by the Office of Grant and Research Development (OGRD).
Cost Sharing or Matching Criteria
Unless superceded by the provisions of the awarding agency or special conditions of the award, the following criteria will apply to "Mandatory" and "Voluntary Committed" Cost Sharing - regardless of sponsor:
- All contributions, including cash and third party in-kind, shall be accepted as cost sharing when such contributions are incurred within the performance period of the agreement and meet all of the following criteria:
- Are verifiable from the university's records.
- Are not included as contributions for any other federally assisted project or program.
- Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
- Are allowable under the applicable cost principles.
- Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching.
- Are provided for in the approved budget when required by the Federal awarding agency.
- "Un-recovered" and "Waived or Reduced" Facilities and Administrative Costs may be included in a proposal's budget and used as cost sharing:
- With the prior approval of the Federal awarding agency.
- When included in a non-federal sponsor's proposal's budget and awarded.
- When the cost sharing budget is subsequently amended and approved by the sponsor.
Reference: (Items "c" through "g") OMB Circular A-110 - Subpart - .23 Cost sharing or matching. http://www.whitehouse.gov/omb/grants/
- Values for recipient contributions of services and property shall be established in accordance with the applicable cost principles. If a Federal awarding agency authorizes recipients to donate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donated property for cost sharing or matching shall be the lesser of (1) or (2).
- The certified value of the remaining life of the property recorded in the recipient's accounting records at the time of donation.
- The current fair market value. However, when there is sufficient justification, the Federal awarding agency may approve the use of the current fair market value of the donated property, even if it exceeds the certified value at the time of donation to the project.
- Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services shall be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
- When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.
- Donated supplies may include such items as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing or matching share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.
- The method used for determining cost sharing or matching for donated equipment, buildings and land for which title passes to the recipient may differ according to the purpose of the award, if (1) or (2) apply.
- If the purpose of the award is to assist the recipient in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as cost sharing or matching.
- If the purpose of the award is to support activities that require the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. However, the full value of equipment or other capital assets and fair rental charges for land may be allowed, provided that the Federal awarding agency has approved the charges.
The value of donated property shall be determined in accordance with the usual accounting policies of the recipient, with the following qualifications:
(1) The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.
(2) The value of donated equipment shall not exceed the fair market value of equipment of the same age and condition at the time of donation.
(3) The value of donated space shall not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.
(4) The value of loaned equipment shall not exceed its fair rental value.
(5) The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties.
(i) Volunteer services shall be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal service, material, equipment, buildings and land shall be documented.
Post-Award Accounting and Documentation
The University's subsidiary cost sharing system, excluding federal formula matching programs, [ section VII ] [ section XIII ] is the official system of record for all cost sharing activity, regardless of source. This includes cost sharing reported in official or unofficial survey requests completed by a department, college, or central administrative unit. The cost sharing subsidiary system will record all cost sharing in programs 11 through 14 that is considered in the preparation of the "Facilities and Administrative Cost" proposal submitted to the Department of Health and Human Services (DHHS).
- The Sponsored Programs Services in setting-up an account that requires cost sharing, enters the cost share obligation as awarded in the "Master Account Table". This information can be viewed on-line by administrators and Project Investigators.
- Upon setting-up the account, a "Cost Share Effort Inquiry Request" form is sent to the Departmental Administrator/Project Investigator for completion. The form is used to provide a listing of university personnel whose effort will be contributed in support of the "sponsored account" (project) from state and/or unrestricted funds.
- The employees listed on the "Cost Share Effort Inquiry Request" form are entered into the system as well as the account(s) to which the employee will cost share effort. The cost sharing accounts will appear in section "E" of the "Effort Certification Report".
- Business Policies and Procedures References:
- Sources for Cost Sharing
Effort reporting should consider the following as referenced in OMB Circular A-21, section J,8,b, (1) (c): "In the use of any methods for apportioning salaries, it is recognized that, in an academic setting, teaching, research, service, and administration are often inextricably intermingled. A precise assessment of factors that contribute to costs is not always feasible, nor is it expected. Reliance, therefore, is placed on estimates in which a degree of tolerance is appropriate."
- Effort Certification Report - Cost Sharing Effort
- Faculty Effort - The percentage of cost sharing effort, excluding effort of 5% or less, must be reported by account in section "E" of the "Effort Certification Report". The cost share amount calculated for salary, fringe benefits and F&A costs for a given account can be viewed on-line by accessing the Account Balances main menu and selecting: PF7 = Cost Sharing.
- Cost Sharing Effort - Cost sharing effort as previously defined in this policy is:
- Mandatory; and,
- Voluntary committed.
- Cost sharing effort contributed to a sponsored agreement for these classifications must be entered in section "E" of the "Effort Certification Report". If the account (s) is/are not preprinted, the account(s) must be entered manually by the Departmental Administrator or Project Investigator.
- Time Slip Wages - (manual entry) - Cost sharing effort for WSU employees must be contributed from unrestricted accounts. This excludes effort from appointments to accounts in programs 11 through 14 unless authorized by the sponsor. Departments must submit documentation to the Sponsored Programs Services via memo to record effort for time slip wages. Generally funds to support cost sharing in this category are from state funded appropriations.
- Other WSU Cost Sharing
- Supplies/Equipment/Other Contributions - (manual entry) The departmental administrator provides this information to the Sponsored Programs Services via memo or highlighted transactions on the budget statement. This information must have the signature of an individual who has account signature authority. Generally funded from state appropriated accounts or unrestricted funds.
- "Un-recovered" and "Waived or Reduced" Facilities and Administrative Costs (F&A) - (manual entry) The Sponsored Programs Services will manually calculate the F&A amount based on the approved award and enter the amount into the cost sharing subsidiary system.
- Tuition Waivers - (manual entry) The value of a tuition waiver is allowable if approved by the sponsor. The department must notify the Sponsored Programs Services via memo of the amount. The application of the F&A rate will be subject to the provisions of the approved DHHS F&A Rate Agreement.
- Third Party Cost Sharing
- Third Party Contributions - (manual entry) Cost sharing is recorded from information provided in a letter or memo that conforms to the categories and/or provisions contained in the approved budget proposal. The amount is entered into the Cost Share Subsidiary System by the Sponsored Programs Services.
- Subcontracts - (manual entry) Cost sharing is normally included in the invoice received from the subcontractor or a memorandum. The amount is entered into the Cost Share Subsidiary System by the Sponsored Programs Services
- Cost Sharing Records
Cost sharing documents and records are retained for review and audit as part of project correspondence. Unless the project is under audit or involved in litigation, the records are destroyed as per the retention schedule filed with the State of Washington.
- Cost sharing reported via the "Effort Certification Report" are filed in the Sponsored Programs Services.
- Cost sharing information entered from memos, third parties and subcontractors, is entered manually into the Cost Share Subsidiary system. The Sponsored Programs Services will record the information on an internal cost share form for entry into the cost share system and retain as part of the project file.
- All Cost share information is retained in accordance with the record retention schedule filed with the State of Washington.
- The Cost Share Subsidiary system is the official system of record for all cost sharing information. This system is accessed for cost share reporting and for data included in the Facilities and Administrative Cost proposal. (F&A)
- The fringe benefit and F&A rates used for calculating cost sharing effort are derived from the rates maintained in the cost sharing table. These rates are modified as required.
Expenditures Allowability - Cost Sharing
- Cost sharing can consist of direct costs that are charged to state funds or other unrestricted accounts. Direct costs for goods and services must directly benefit the project or program, and cannot be included as cost sharing for any other project.
- A federally funded or federal flow-through agreement is not allowable for cost sharing without prior approval of the sponsor.
- Administrative salaries, office supplies, and telephone are normally treated as F&A costs as per Exhibit-C of OMB Circular A-21 and not allowable for cost sharing.
- Pre-award costs up to 90 days prior to the effective date of the award are permitted by some federal programs under expanded authorities. Cost sharing contributions are allowed within this time period. With sponsor approval, retroactive cost sharing will be allowed to any date that precedes the effective begin date of the award or the pre-award cost date.
- Account overrun (overdraft) - For any account, or aggregation of accounts when summarized for closure at the award level, the amount of the overdraft will be treated as cost sharing regardless of whether the account (award) has a cost sharing obligation.
- Excess cost sharing - Upon closure of an account, cost sharing in excess of the obligation amount is allowable to offset any disallowance as determined by audit.
- Cost sharing contributions can consist of direct costs for faculty effort certified to a grant account or accounts, related fringe benefits, and the negotiated F&A rate. Direct costs of supplies, travel, equipment are allowable unless excluded by OMB Circular A-21 or award conditions.
- "Un-recovered" and "Waived or Reduced " F&A costs are allowed when included in a proposal's budget and approved by the sponsor.
- Cost sharing salary dollars in excess of the NIH regulatory salary cap is not allowed for cost sharing.
- Cost sharing for space in university owned facilities is unallowable, since space is included in the Facilities and Administrative cost rate.
- Cost sharing the use of university owned equipment is unallowable, since the Facilities and Administrative cost rate includes an equipment use allowance or depreciation.
- Program income may not be used as cost sharing unless specifically authorized in the notice of grant award, or other program policies or guidelines.
- Costs that are unallowable as direct costs to a federal agreement cannot be used to cost share.
Note: The proposal narrative may include reference for the use of university space and the use of university equipment for the purpose of clarifying to a sponsor how the research will be conducted. However, it should be presented in such a manner that neither the sponsor nor the university considers it as a cost sharing commitment.
The following is a list of costs from OMB Circular A-21, Section J, General Provisions for Selected Items of Cost. To determine the allowability of these costs for cost sharing or as a charge to the sponsored account, refer to the following web site:
http://www.whitehouse.gov/omb/circulars/a021/a021.html
J. General provisions for selected items of cost
- Advertising and public relations costs
- Alcoholic beverages
- Alumni/activities
- Bad debts
- Civil defense costs
- Commencement and convocation costs
- Communication costs
- Compensation for personal services
- Contingency provisions
- Deans of faculty and graduate schools
- Defense and prosecution of criminal and civil proceedings, claims, appeals and patent infringement
- Depreciation and use allowances
- Donations and contributions
- Employee morale, health, and welfare costs and credits
- Entertainment costs
- Equipment and other capital expenditures
- Executive lobbying costs
- Fines and penalties
- Goods or services for personal use
- Housing and personal living expenses
- Insurance and indemnification
- Interest, fund raising, and investment management costs
- Labor relations costs
- Lobbying
- Losses on other sponsored agreements or contracts
- Maintenance and repair costs
- Material costs
- Memberships, subscriptions and professional activity costs
- Patent costs
- Plant security costs
- Pre-agreement costs
- Professional services costs
- Profits and losses on disposition of plant equipment or other capital assets
- Proposal costs
- Rearrangement and alteration costs
- Reconversion costs
- Recruiting costs
- Rental cost of buildings and equipment
- Royalties and other costs for use of patents
- Sabbatical leave costs
- Scholarships and student aid costs
- Selling and marketing
- Severance pay
- Specialized service facilities
- Student activity costs
- Taxes
- Transportation costs
- Travel costs
- Termination costs applicable to sponsored agreements
- Trustees
Third Party Contributions - (generally non-cash)
Third party contributions should coincide with the categories enumerated in the proposal budget. Oftentimes these contributions are for volunteer services, employees salary from the contributing organization, supplies, travel, space, equipment on loan, and donated equipment. The preceding is not intended to be an exhaustive list, but merely a guide in the types of contributions that can be provided.
- The valuation of the services provided by volunteers should be consistent with similar positions in the labor market and those at Washington State University.
- The valuation of services to be provided by employees of a contributing organization should be at the regular pay based on their job class. A reasonable amount of fringe benefits is allowable.
- Contributions in the form of supplies, travel, loaned equipment and space, should be based on the fair market value at the time of donation.
- Equipment donated should be accompanied by documentation that provides an appraisal of the equipment based on industry criteria or market criteria. Donated equipment must be tagged and included in the Property Inventory system.
- The valuation of other contributions that are difficult to establish should be based on what a prudent individual would consider reasonable given the circumstances.
Monitoring Cost Share Commitments
The Project Investigator and department administrators are responsible to ensure that the cost sharing commitments are being met in accordance with the budget categories and amounts included in the proposal budget. The cost sharing obligation and cost sharing expenditures are available electronically on the Account Balances files. Failure to meet the cost sharing obligation could result in the department having to repay the sponsor for funds previously provided.
Cost Sharing for Federal Formula Funds [ section VII; section IX ]
The university is required to provide matching funds for the following programs:
- Hatch
- Multi State (Regional Research)
- McIntire Stennis
- Animal Health
- Smith Lever (3B and 3C)
- CSRS Retirement
- FER (Federal Employee Retirement)
- Penalty Mail
- For the programs listed, the term "match" is used in order to maintain "same term use" as per the awards received.
The above programs are unique in that funds awarded are formula based and require reporting on a federal fiscal year - October/September. The financial reports are normally prepared by the college finance office and may include matching costs.
- Federal funds provided are broad based and support an entire college. Therefore, specific accounts are not established to capture the matching costs.
- The college finance officer, in determining matching costs, must maintain supporting documentation whereby costs captured in the Cost Sharing System are excluded in determining allowable matching costs.
- Upon request, the Sponsored Project Finance Office will provide a cost sharing report for the period being reported. These costs must be excluded from the total costs that the college reports for matching.
- Spreadsheet(s) which indicate the source from which matching funds were derived must be made available to support audit, and to ensure that the costs are reasonable, allowable, and based on accounting records.
Resources
(Includes Cost Accounting Standards Disclosure Statement - DS-II)
USEFUL GRANT LINKS
- Catalog of Federal Domestic Assistance - Information on obtaining Federal grants
- GrantsNet - General grant resources and information
- CFO Council Grants Management Committee - Emerging grant policy
- Interagency Electronic Grants Committee - Electronic processing information
- Federal Demonstration Partnership - Research grant information
- Federal Assistance Awards Data System - Statistical information
- Federal Audit Clearinghouse - Results of Grantee Audits
- NIH Grants Policy Statement
- National Science Foundation
- Federal Demonstration Partnership
- DHHS Grants Administration
WSU Organizations to Contact For Assistance
Questions and/or assistance for cost sharing in the pre-award cycle for inclusion in proposal budgets should be directed to the Office of Grant and Research Development (OGRD). Questions pertaining to the post-award cycle should directed to the Sponsored Programs Services.
