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Government Costing

Government Costing Frequently Asked Questions

Browse FAQs by Category: General - Facilities & Administrative Rates - Fringe Benefit Rates - Tuition Remission Rates - Service Center Activities & Rates


General


Facilities & Administrative Rates


Fringe Benefit Rates


Tuition Remission Rates


Service Center Activities & Rates

Policy

Service Center Fund

Responsibilities

Equipment Depreciation

Rates

Surplus/Deficit


General

Q. What is a cognizant agency?
A. A "cognizant agency" means the Federal agency responsible for negotiating and approving rates or providing audit oversight for an educational institution on behalf of all Federal agencies.

Q. Who is the cognizant agency for the UofI's F&A, fringe benefit, and tuition remission rates?
A. The Office of Naval Research, Department of Defense is the cognizant agency for the University's F&A, fringe benefit, and tuition remission rates.  Note that there is a different cognizant agency for the University's A-133 audit which is the Department of Education.


Facilities & Administrative Rates

Q. Where do I go to find a listing of Facilities & Administrative rates to use in my proposal? 
A. Go to the following website: http://www.obfs.uillinois.edu/rate-schedules/urbana-champaign/.

Q. Why is my project being taxed?
A. Sponsored project activities are conducted in University space which has related overhead facility costs.  Facility costs include but are not limited to operations & maintenance including utilities, building and equipment depreciation, library, interest, etc.  In addition, sponsored project activities require sponsored projects administration, departmental administration, and general university administration support, etc.  "Sponsored Project Administration" supports processing of sponsored projects in offices such as Office of Vice Chancellor for Research, Office of Sponsored Programs and Research Administration, Grants & Contracts, Office of Government Costing, Institutional Review Board, etc.  General University Administration provides support for offices such as Purchasing, Accounts Payable, Human Resources, Accounting, Payroll, etc.  Departmental Administration (the largest administration cost pool) includes support of dean, department, and unit business offices.  The University does not have the ability to subsidize these costs and therefore the sponsors must share in the burden of these costs.

Q. What are the cost components of UIUC's current F&A rate for 2012/2015 and how does UIUC's research rate of 58.6% break down?
A. Go to Facilities & Administrative - Urbana-Champaign webpage on the Government Costing website then in the "Other Information" box select "F&A Rate Component Chart - FY13-FY15 58.6% Rate".  Click here to access the webpage:  http://www.obfs.uillinois.edu/government-costing/facilities-administrative/Urbana-Champaign/.


Fringe Benefit Rates

Q. Where do I go to find a current listing of the UIUC fringe benefit rates?
A. Go to the following website: http://www.obfs.uillinois.edu/rate-schedules/urbana-champaign/.

Q. Why is my sponsored project charged fringe benefit rates when an employee has opted out of health insurance?
A. Rates are assessed against salaries of employees who in an employee class that is benefits eligible.  The governing cost principles in the Code of Federal Regulations (Uniform Guidance Title II CFR Part 200) require consistent treatment of costs.  For consistency, the University treats the employee class as a group and applies the same general costing standards and benefit assessments to all individuals within that group.  Even though individual employees in the group may be in a particular circumstance with regards to benefits eligibility at a point in time (e.g. has opted out of a plan), these individual circumstances can change and shift throughout the employee's time at the University. 

Q. What is the employee health, life, and dental (HLD) fringe benefit rate, why is it assessed on my project, and what is it based on?
A.  The HLD rate is used in Banner to assess University funds (nonexempt funds) for their contribution towards the health, life and dental insurance premiums.  The State of Illinois, Department of Central Management Services (CMS) pays the entire "employer share" of the insurance premium.  Monthly, the University of Illinois reimburses CMS for the "locally funded" (e.g. ICR, sponsored projects, gifts, etc.) portion of the employer share of the premium.  In addition, CMS negotiates the health plans available for employees and establishes the premiums to be charged under each of the plans.

Q.  What is SURS and what is the rate based on?
A.  The State Universities Retirement System of Illinois (SURS) notifies the University what the SURS retirement rate is on an annual basis.  SURS is the retirement system established for the benefit of staff members and employees of Illinois state educational institutions and scientific agencies.   It is financed by employee contributions, employer contributions (state appropriations and contributions from trust and federal funds), and investment earnings.  "Employer" (state) contributions are determined through annual actuarial valuations. Actuaries use demographic data (such as employee age, salary, and service credits), economic assumptions (such as estimated salary increases and interest rates), and decrement assumptions (such as employee turnover, mortality, and disability rates) in performing these valuations. For more information go to the SURS website: http://www.surs.com/.

Q.  What is the termination rate, why is it assessed on my project, and what is it based on?
A. Termination salaries are payments for accrued but unused vacation and sick leave paid upon termination, in accordance with University policy.  Sponsored projects are assessed on a "pay-as-you-go" predetermined "termination rate" so that any one project is not burdened with large payouts.  This practice had been requested and approved by the federal government and requires an annual rate calculation, audit, and federal negotiation.  The termination rate was developed with concurrence of the federal government to address their desire to discontinue direct charging the termination salaries directly to federally sponsored projects and instead provide for such costs as a benefit assessment.  The application is consistent across all sponsored projects, not just federally funded so that the federal government is not discriminated against with costs higher than those charged to other sponsors.  Annually, a calculation of the termination rate is developed that in simplest terms represents:  Total fiscal year cost of termination payouts divided by the Salary Wage Base of eligible employees equals the Annual Termination Rate. 

Q.  What is the workers compensation rate, why is it assessed on my project, and what is it based on?
A. University employees' with an injury arising out of and in the course and scope of their employment duties is eligible for Workers' Compensation benefits.  Workers' Compensation insurance includes four types of benefits - disability (loss of income) benefits, medical care benefits, survivor (death) benefits, and rehabilitation benefits.  The University has been self-insured for its Workers' Compensation liabilities since 1918.  Payroll assessments provide the funding for claim payments for injured employees whose wage sources are "local" or "grant/gift" accounts.  To obtain more information on what the workers compensation rates are based on visit the University Office of Risk management website:  https://www.treasury.uillinois.edu/risk_management/workers_compensation/.


Tuition Remission Rates

Q. Where do I find the current tuition remission rate?
A. Go to the following website: http://www.obfs.uillinois.edu/rate-schedules/urbana-champaign/.

Q. What is the tuition remission rate, why is it assessed on my project, and what is it based on?
A. Tuition remission is considered a direct cost of sponsored projects and is allowable under federal cost principles.  This campus follows the accepted method to assess using the average rate basis.  Currently the rate is applied against sponsored projects funds only.  Tuition remission rates is calculated annually by taking the "cost of tuition for graduate students with tuition waivers (fall, spring, and summer semesters)" divided by the related "Salaries paid to the graduate students who receive tuition waivers ".  The tuition remission rate assessment against the salaries of graduate assistants who receive tuition waivers results in the direct cost expenditure on the sponsored project. 

Q. Who determines the tuition remission rate to be charged?
A. The Office of Government Costing calculates the tuition remission rate and provides campus management with an overview and analysis of the rate calculations.  Campus management which entails, the Graduate College, Office of the Vice Chancellor for Research, and the Office of the Provost Vice Chancellor for Academic Affairs, and the OBFS Interim Assistant Vice President/Chief Business Officer makes the final decision as to the tuition remission rate that will be negotiated and charged.


Service Center Activities & Rates

Policy

Q. Where is the University policy related to service activities for UIUC located?
A. The service activity policy for UIUC is called BFPP 22.4.2 and can be accessed on the OBFS website:  http://www.obfs.uillinois.edu/cms/one.aspx?portalId=77176&pageId=913804.

Q. What are the implications of not establishing and submitting rate calculations?
A. In the event of an audit, unsupported service charges are likely to result in UofI's repayment of those amounts (plus the associated F&A recovery) and the service fund will be held responsible.  Also, charges to sponsored and non-sponsored projects/funds may not be processed.

Q. What if the users are mostly/entirely non-sponsored projects (non-grant), am I still required to follow the same university and federal requirements?
A. The requirements still apply.

Q. Why are service center rate calculations and established user rates required?
A. Service Center rates are often charged on sponsored projects.  As such, they must conform to
University (BFPP 22.4.2) and federal (Code of Federal Regulations: Uniform Guidance, Title II CFR Part 200) requirements.  And, like any other sponsored project cost, in the event of an audit, documentation must exist to support these charges. 

Service Center Fund

Q. When is a service center fund required?
A. When the objective is to recover the costs of providing a product/service by charging users, then it
is necessary to establish a service center fund and follow the service center activity requirements.  However, we do not establish a service center fund when the service is a one-time occurrence.

Q. Is there a threshold for being defined as a service center and establishing a service center fund?
A. No.  If your service is not a one-time occurrence and will be on-going, it does not matter whether you have $250,000 in revenue or $2,500 you will need to establish a service center fund and follow the recharge center requirements.

Responsibilities

Q. Who is responsible for accurate and appropriate service rate calculations and maintaining supporting documentation? 
A. Each individual service center is responsible for accurate and appropriate rate calculations and supporting documentation.  The Office of Government Costing is responsible for reviewing rate calculations for reasonableness and accuracy; providing guidance, advice, and assistance to service centers; and approving rate calculations if these criteria appear to have been met.  However, the deans, directors, and department heads of the service centers are ultimately held accountable for the service centers operations and proper rate setting.

Equipment Depreciation

Q. Can I include university equipment purchased on federal funds in my service rate calculation?
A. Internal Users (UofI) - No.  When assets are purchased with federal funds you are not allowed to include the cost or depreciation in service rate calculations.
A: External Users - Yes.  When charging external users we fully load the external rate, including federal depreciation.  Equipment used on active federal sponsored projects are not eligible for inclusion in service center rate calculations.

Q. Can I include the full cost of capitalized equipment in my rate calculation in the year of purchase?
A. No.  University and federal policies require the related depreciation to be included in the rate calculation, not the full cost of the equipment.  This is because the equipment is used by the service center over multiple years and therefore benefits users and the center over the useful life of the equipment. 

Q. Can depreciation expense be included in rate calculations for equipment that is past its useful life but still active and in use?
A. Internal Users (UofI) - No. 
A. External Users - Yes.  As value is still being derived from the item (even though it has no remaining book value), a service center may include depreciation expense into its rates for the asset in external rates only.  The amount should be calculated as: original purchase cost (less any sponsored funding) divided by the original useful life.

Q. Can I build the cost of a future equipment replacement into my rates (Projections)?
A. If your plan is to purchase the asset in the upcoming year, you can include the related depreciation using the straight-line half year convention depreciation method in accordance with the depreciation included in the University's financial statements.   Note that you must actually purchase the asset in the upcoming fiscal year (i.e., the one you are calculating the rates for), not time periods beyond. 

Rates

Q:  Where can I find templates of rate calculations?
A: Go to the following webpage and refer to the "Templates & Reports" box located on the right side of the webpage:  http://www.obfs.uillinois.edu/government-costing/service-Activities/Urbana-Champaign-service-activity/.

Q. In terms of establishing the User Rate versus the Calculated Rate, what User Rate may I charge?
A. Internal Users (UofI) - The User Rate charged to internal users can be less than or equal to the calculated rate, but cannot be greater than the calculated rate.   
A: External Users - The User Rate charged to external (non-UofI) users must be the fully loaded rate (including subsidies, depreciation related to assets purchased on sponsored project funds, the appropriate F&A rate, etc.) or the market rate whichever is greater. 

Q. Can I charge my internal department users less than other U of I department users?
A. Only if you charge the difference (internal rate less your unit's discounted rate) to your unit's institutional funds and are not passing the unfunded costs to the remaining users.  This procedure will ensure that break-even rates are charged consistently to all internal users.  The unfunded departmental "discount" cannot be passed on to other users through increased rates to cover the shortfall.

Q. Can I adjust my prices mid-year?
A. Absolutely. If your calculations going into the year prove to be significantly different than the service center's actual expenses or usage(base), you should feel free to re-calculate rates and submit your revised worksheet to the Office of Government Costing for a high-level review.  

Surplus/Deficit

Q. How is the service center surplus/deficit calculation handled for a center that provides multiple goods/services?
A. The surplus/deficit should be allocated across all service lines included in the service center fund. The department should perform manual year to year calculations of net income (revenue less expenses) by individual service line and then calculate percents to total to use in performing the allocation of the surplus/deficit to the individual service lines.

Last Updated: May 5, 2016

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