PURPOSE OF THIS POLICY
The federal Office of Management and Budget (OMB) issued a new regulation, UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND AUDIT REQUIREMENTS FOR FEDERAL AWARDS (Uniform Guidance), effective December 26, 2014, combining elements from eight longstanding OMB circulars including A-21, A-110, and A-133 [2 CFR §200, et. seq.]. Within these cost principles, cost sharing or matching are terms used to refer to the portion of project costs not paid by Federal funds (unless otherwise authorized by Federal statute). [2 CFR §200.1, 200.36]. In some programs, these requirements are mandated by legislation or regulation. Whether mandatory or voluntary, any cost sharing which has been specifically committed to a sponsor must be separately identified in the University's accounting records. The amount of University cost sharing should be limited to the amount specifically required by the funding agency as a condition of an award. This policy is intended to provide rules and guidance for cost sharing arrangements as required under the regulation [2 CFR §215.23(a)(5), 200.29, & 200.306].
DEFINITIONS USED IN THIS POLICY
Cost Sharing -- Project costs not reimbursed by the sponsor to support the scope of work defined by the sponsored award [2 CFR §200.29).
In-kind Cost Sharing – Third party non-cash contributions of time, talent, or resources from CSU or donated by third parties for which CSU is responsible. Third-party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, or goods and services directly benefiting and specifically designated for the project or program.
Mandatory Cost Sharing -- Project costs that are not borne by the sponsor, but are required as a condition of the award. Mandatory cost sharing may be a certain percentage or amount, or may be in the form of contributions of specified items or activities (e.g., provision of equipment).
Over-the-cap Cost Sharing -- Portion of a faculty or staff member's salary that exceeds a regulatory maximum imposed by the sponsor, e.g., NIH salary cap.
Voluntary Committed Cost Sharing -- Project costs specifically pledged on a voluntary basis in the proposal’s budget or the award and that becomes a binding requirement of the award [Uniform Guidance §200.29]. Voluntary committed cost sharing becomes mandatory once the award is made and must be added to the direct cost research base for indirect cost calculations.
Voluntary Uncommitted Cost Sharing -- Cost sharing that is not included as part of the submitted proposal or subsequent award is considered voluntary uncommitted cost sharing. It usually consists of faculty-donated additional time above that agreed to as part of the award.
Note: many other definitions are contained within the regulation [2 CFR §200.1].
APPLICATION OF THIS POLICY
All individuals involved with the administration and conduct of sponsored award activities, including central and departmental sponsored project administrators, principal investigators, and other research personnel, must comply with this policy.
Colorado State University is committed to excellence in research and good stewardship of institutional and extramural funds. CSU recognizes that non-compliance with federal rules and guidelines and sponsor agency requirements creates risks to the institution, the researcher, and the sponsor. Cost sharing arrangements can be an important part of a research grant, and must be carefully proposed and carried out during the program.
Expenses incurred to meet cost-sharing commitments require the same accounting, financial, legal, and regulatory burdens as other costs on CSU sponsored programs. Cost-shared expenses must be in compliance with the following:
- U.S. Office of Management and Budget Circular (OMB) Uniform Guidance, especially Section 200.306, which requires that cost sharing funds are a) verifiable from the University's records, b) not included as contributions for any other federal award, c) necessary and reasonable for the accomplishment of the project or program objectives d) allowable under Subpart E Cost Principles, e) not paid from another federal award, and f) included in the approved budget when required by the Federal awarding agency;
- CSU Sponsored Programs expenditure policies;
- Any applicable sponsor agency or non-federal entity rules and guidelines; and
- Any other requirements specified in the grant or contract.
This policy and related guidance from Sponsored Programs govern the manner in which cost sharing arrangements will be approved.
- Generally, the University’s policy is to minimize institutional cost sharing on sponsored projects. Therefore, the amount of University cost sharing should be limited to the amount specifically required by the funding agency as a condition of an award unless the circumstances clearly warrant a cost sharing arrangement. Such cost sharing will be considered mandatory cost sharing. Cost sharing funds may be provided by the department, school or college, or a third party participant in the program, with the appropriate approvals.
- Budgeted voluntary cost sharing occurs when a specific commitment, although not mandated, has been quantified in the budget or budget justification, e.g., level of effort or dollar amount for a budget item, and is, therefore, considered significant to the negotiation of an award. Voluntary cost sharing may be included in the sponsor’s notice of funding opportunity, but will not be used as a factor by the sponsor agency during the merit review of proposals [2 CFR §200.306(a)].
- Once a proposal that includes voluntary cost sharing is awarded, the cost sharing becomes part of the award and must be budgeted.
- In the event that the project budget is amended and effort distribution changes, any cost-sharing that arises as a result must be documented in a cost-sharing account.
- Voluntary cost sharing can be detrimental when it reduces the flexibility of the researchers and staff to conduct other research, increases the administrative burden for the activity, and decreases the University’s indirect cost recovery.
Whether cost sharing is mandatory or voluntarily committed, the University’s contribution must be included on the Institutional Commitment Form and attached to the proposal record before routing the proposal for submission. The Institutional Commitment Form must be approved by the appropriate Department Head(s), Dean(s), Director(s) and the Office of the Vice President for Research. Proposals with cost sharing commitments will not be submitted without these approvals.
Subsequent funding of the proposal requires that all proposed cost sharing of direct costs, whether mandatory or budgeted voluntary (except that defined in the paragraph below) be accounted for and auditable in the official University records (HRS Manual, Section 8: Management Reports, Cost Sharing). This requirement must be met by the creation of a separate cost share account. Once established, the cost share account number can be found on the Research Project Status (RPS) screen.
- Faculty and staff effort (i.e., salary and fringe benefits) which have not been quantified in a proposal, e.g., faculty paid on 1-3 funds during the academic year, are considered unbudgeted, voluntary cost sharing. Such effort will not require that separate cost share accounts be established.
- Contributions which do not involve the outlay of cash, e.g., use of equipment or facilities, and third-party in-kind contributions such as volunteer services, use of non-University equipment, facilities, etc., are strongly discouraged due to the special rules that apply to valuation and documentation of such costs. Proposals with such contributions, either University or third-party, will not be approved without justification and adequate documentation supporting the valuation.
- Principal investigators may commit to expend time and effort on a sponsored program without charging commensurate salary to the sponsored fund as part of an approved cost sharing arrangement, but all such time and effort must be carefully recorded and reported in the same manner as for funded activities.
- Over-the Cap cost sharing cannot be used to meet a cost sharing commitment.
- Acquisition costs for equipment included in the project budget may be committed as part of the cost share pursuant to 2 CFR §200.306. (Also see 2 CFR §200.2, 200.33, 200.48, regarding equipment acquisition). In such cases, purchase and acquisition must occur during the period of performance of the project. Depreciation on such equipment is not part of the indirect cost rate calculation. Existing equipment owned by CSU is included in the University’s indirect (facilities and administrative) cost rate. The proposal must be clear in stating what equipment is existing and what must be purchased for performance of the program. Sponsors may have specific requirements for disposition of the equipment when the grant activity is complete.
- Third party in-kind contributions may be used in cost sharing. The fair market value of the goods and services contributed by a third party (i.e., a non-CSU, non-Federal entity) must be established and documented. [2 CFR 306(j)].
- Most other costs that could be charged (allowable, allocable, reasonable, and consistently treated) to a sponsored project can be cost-shared. The following are examples of other direct costs that may be cost-shared:
- Travel expenses
- Laboratory supplies
- Equipment items that do not meet the capitalization threshold (currently $5000) [see CSU Financial Procedure Instruction FPI 4-1(5)(A)]
- Unrecovered indirect costs may only be used in cost sharing with prior approval of the federal agency. [2 CFR §200.306(c)].
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200