ࡱ> RTQ BbjbjWW 4J55:xxxxx  h:       $!$`5 x5 xxJ uuuFxx u uuumlSRu` 0 u %Y %uu> %xHu5 5 u  % >: TO: Deans, Department Chairs and Directors FROM: Carol B. Lynch, Vice Chancellor for Research DATE: July 12, 2001 (Updated October 2009) RE: Policies and Procedures for the Reimbursement of Costs Incurred by Departments and Institutes in Support of Research Introduction Since 1983 the DA-ICR program (Departmental Administration Indirect Cost Recovery) has provided general fund support in proportion to indirect cost recovery generated from a unit's sponsored programs. The purpose of this memorandum is to update and clarify the policies and procedures of the program. The policies are stated first and the detailed procedures are listed at the end of the policy statement. POLICY STATEMENT 1. Indirect cost recovery (ICR) or facilities & administrative costs (F&A) is revenue deposited to the general fund that comes from charging an indirect cost to agencies sponsoring research. A portion of the revenue from these indirect cost charges is returned to the departments in the budget process, and is called Departmental Administration ICR (DA-ICR). The portion of campus ICR that becomes DA-ICR is calculated from the campus indirect cost rate (see Procedure 1 for more information). Twenty-nine percent of campus ICR is returned to the units at present, after certain deductions are made. The remainder is allocated to other campus activities and costs that support research activities. 2. The purpose of the DA-ICR program is to provide budget adjustments that reflect the changes of sponsored research and other sponsored programs. A unit receives budget allocations that are based, in part, on the amount of ICR received from its sponsored project expenditures. A unit's DA-ICR allocation will increase if the unit's ICR has increased over the last year relative to other units, assuming that other factors remain the same. This is a continuing support budget increase. See Procedures 2 and 3 for more information on DA-ICR allocation algorithms. 3. The DA-ICR is the amount budgeted for the support of sponsored research and other sponsored programs. The DA-ICR allocations represent the amount allocated solely for support of sponsored projects. Annual increases in support budgets are made for staff cost of living and merit increases. Therefore, an assessment against the DA-ICR allocation is made for a share of these annual increases (sometimes called "central pots"). This assessment is calculated by finding the ratio in each unit of its ICR allocation to the total support budget. This ratio is called the "percent ICR-funded", and it is applied to the total central pots of the unit to determine the assessment to the DA-ICR allocation. The new revised policy places a cap of 69% on the percent of central pots funded from ICR. See Procedure 2.d for more information. 4. Those sponsored research and other sponsored programs that assess full indirect cost rates may share in the DA-ICR. Because underrecovery of indirect costs that support research represents a real cost to the campus, the campus reserves the right to exclude projects with lower or waived ICR from the DA-ICR allocation. 5. Units that share support costs of sponsored projects may share in the ICR for purposes of the DA-ICR program. Credit for each sponsored project is given to the unit that provides the administrative support for that project or project principal investigator. The support may include administrative functions such as administering personnel or payroll policies, assigning workloads, or preparing budgets or account statements. The support could also include work performed by graduate secretaries, staff assistants or support/technical staff. Support for staff who work in stores or shops may be included if their salary is paid from general funds. Credit may not be assigned for work performed by research assistants paid from sponsored projects or staff whose salary is included in the price structure charged to sponsored projects. Division of credit for the indirect cost recovery should be determined prior to the time a proposal is submitted to a funding agency. [Link updated April 2014] Guidelines for inter-unit DA-ICR distributions can be found at  HYPERLINK "/vcr/node/1585/attachment" /vcr/node/1585/attachment The Office of Contracts and Grants (OCG) will mark on OCG's Proposal Routing Form any division of credit for the ICR and OCG will, on an annual basis, provide this information to the campus cost accountant for inclusion in the DA-ICR calculations. See Procedure 2. Disputes about distribution of DA-ICR should be referred to the Vice Chancellor for Research for resolution. 6. DA-ICR allocations will be made directly to the applicable department, institute, or college/school accounts (in the last case where departments do not exist). If the college/school/Institute department chairs/directors agree to a centralized distribution plan, the dean may reallocate DA-ICR allocations among the departments and retain some portion. Arrangements of this type must have the approval of the Vice Chancellor for Research. Centers that report to department chairs may make agreements for sharing DA-ICR allocations at the discretion of the department chair. In cases where the centers host research carried out by faculty from several units, the responsibility for distribution between two or more units lies with the administrator who has authority for those units. 7. The first priority for distribution of DA-ICR is to cover the research support needs of the unit. The DA-ICR is reimbursement for indirect costs of the department, and should first be applied to these costs. Any excess ICR allocations may then be distributed by the unit within the range of appropriate expenditures as described next. See Procedures 4 and 5 for more information. 8. DA-ICR budgets should be distributed within the unit so that there is a reinvestment in the support of research and other sponsored programs. The budget should add to the departmental administration indirect costs, thereby increasing future allocations of ICR to research. See Procedure 5 for examples of appropriate types of expense. PROCEDURES 1. Accounting and Budget Services will calculate the DA-ICR percentage of campus ICR using the most recently negotiated indirect cost rate. The portion of campus budgeted ICR that becomes the DA-ICR is calculated by finding the ratio of departmental administration costs to all campus indirect costs. This ratio is converted to a percentage and applied to the total sponsored research ICR budget to determine the total DA-ICR to be distributed to the departments. This is the current "29%". The following is an explanation of indirect costs that comprise the indirect cost rate and how the rate relates to the DA-ICR. There are seven categories of costs in the indirect cost rate. Some portion of each category of cost is allocated to the indirect cost rate, which is then charged to sponsored research projects. The cost pools are: - Depreciation or use allowance on buildings and equipment - Operations and maintenance costs of the physical plant - Library costs - Sponsored projects and administration costs, e.g., Office of Contracts and Grants - General and general administration costs, e.g., the Chancellor's Office - Student administration costs, e.g., Financial Aid Office - Departmental administration costs Departmental Administration costs (DA) are defined as those costs incurred in the academic departments (including deans' offices) representing administrative or support activities that have some benefit to the research function. The ICR that results from DA costs is returned to the units that incur the costs. The percentage of the total indirect costs that are calculated to be DA costs defines the percentage of the campus indirect cost recovery that is returned to departments through the DA-ICR. 2. Accounting and Budget Services will calculate the ICR for each unit. Any shared ICR between units as reported by OCG is also included in the calculations. The Budget Office will then apply the following algorithms and allocate the DA-ICR to each unit. DA-ICR budgets are adjusted each fiscal year based on the percent generated (unit ICR/campus ICR) by each unit during the twelve-month period ending the preceding March 31st. The campus ICR budget for sponsored research for the new year is estimated by Accounting and Budget Services. a. Estimated DA-ICR = 0.29 x (total campus sponsored research ICR budget nondiscretionary expenses) b. Unit DA-ICR allocation = percent generated x estimated DA-ICR c. Gross DA-ICR adjustment = DA-ICR allocation for budget year minus DA- ICR allocation for previous year d. Percent ICR-funded = DA-ICR allocation/unit support budget (not to exceed 69%) e. Staff compensation increases (central pots) = the sum of the estimated salary survey, and anniversary (merit). f. DA-ICR funded staff compensation increases = percent ICR-funded x staff compensation increases g. Net ICR adjustment = gross DA-ICR allocation minus the DA-ICR funded staff compensation increases. This may be a negative number. 3. The adjustment in the ICR allocation is made in two parts, as follows: a. The ICR contribution to classified staff compensation is calculated by multiplying the percent ICR-funded for each unit times the total estimated cost of the staff compensation increases for that unit as indicated in 2.f. above. This amount of the ICR allocation is applied directly to the individual staff positions and benefits accounts by Accounting and Budget Services. b. The remainder of the adjustment, either positive or negative, is added to the operating expense budget (budget pool 550) in the unit's support account or other departmental account if no support account has been established. This is the net ICR adjustment defined in 2.g. above. c. The DA-ICR amount allocated will be shown in a unit's ICR allocation FOPPS. A recharge is made in the units support account to offset this memo account. d. In previous years there was a 'spring bonus' if the campus ICR was greater than budgeted. In order to help units budget ICR revenues more clearly, and to avoid a last-minute allocation near the end of the year, the Budget Office now bases allocations on the actual prior year ICR and these are made only once. Any increases in ICR revenue will be picked up in the following year's distribution calculation. 4. The department heads/directors/deans will distribute the net ICR adjustment. Note that the demands on the department support functions must be taken into consideration first. These may include increased staff or technical support, promotions, office or lab supplies, equipment repairs or purchases and faculty travel. Principal investigators may share in DA-ICR distributions only if the research support indirect costs of the unit are maintained. DA-ICR distributions are made to the unit(s) sponsoring the research work. Each unit may develop its own policy with respect to sharing these resources with the principal investigators. Before sharing is undertaken, however, the unit administration must ensure that all unit accounts will remain within budget even if it is necessary to use some of the DA-ICR funds to accomplish this goal. The unit administration must retain the right to retrieve unused DA-ICR funds from principal investigators if the units budgets are not in balance or to tax future DA-ICR allocations in order to clear any deficits in any unit account. Moreover, the University reserves the right to apply DA-ICR funds to cover any departmental deficits. 5. Accounting and Budget Services will review annually the support account expenditures to determine if they are allowable and can be included in the indirect cost rate. Following are examples of appropriate objects of expense: - Administrative/technical support staff - Supplies and travel expenses in the support account - Student hourly assistants to the support account - Purchase or repair of general purchase equipment - Faculty travel - Postage, telephones and office supplies - General purpose computers In contrast, the following types of expenditures will dilute the DA cost category and serve to decrease the allocations to research. These transactions are not advisable for DA-ICR funds: - Add staff or faculty to the general instruction account - Add student hourly assistants to the general instruction account - Add graduate assistants performing research and teaching - Pay tuition remission or student stipends - Transfer funds to auxiliary (self-funded type) accounts or gift accounts - Incur expenses not normally allowed in federal grant terms Classified/Propriety Projects A section of the Laws of the Regents of the University states that: Academic freedom is defined as the freedom to inquire, discover, publish and teach truth as the faculty member sees it, subject to no control or authority save the control and authority of the rational methods by which truth is established . . . . . . Members of the faculty must have complete freedom to study, to learn, to do research, and to communicate the results of these pursuits to others. The University has a policy and procedure that must be followed for any proposal or project that involves either a federal government classified material or classified contract issue or an industrial entity's requirement for restriction or prohibition of publishing the results of the project (i.e., proprietary research). This policy is also interpreted to apply to any delay of publication by a sponsor that exceeds six months. The University policy provides that only the CU President is authorized to approve "secret research" which means either classified or proprietary research. At issue is the University's ability to publish or disclose the results of the project or, sometimes, even the existence of the project. In order to be endorsed by the Campus, such projects must clearly not involve any aspect that is detrimental to the Campus' ability to meet its mission as a public university and as a State of Colorado institution. Also, it must be clear that academic freedom, the right to publish, and students' theses are not adversely affected. The Boulder Campus has a protocol required for endorsing a request to the President of the University for granting an exception to the policy:  HYPERLINK "http://dirwww.colorado.edu/VCResearch/researchpolicies/classifiedresearch.html" http://dirwww.colorado.edu/VCResearch/researchpolicies/classifiedresearch.html OCG keeps track of all exceptions approved by the President and submits an annual report (usually in August) to the Vice President for Academic Affairs listing all awards still in existence that have been approved. 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