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INDIRECT COST

Terms

  1. Indirect Costs

OMB Circular A-21 defines indirect costs as those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, instructional activity or any other institutional activity.

  1. Educational Institutions have the following indirect cost categories: depreciation and use allowances, general administrative and general expenses, sponsored project administration, operation and maintenance expenses, library expenses, departmental administration expenses, and student administration and services.

  1. Major functions

    Major functions of an educational institution are instruction, organized research, other sponsored projects and institutional activities.

Calculation of Institutional Rate

The Institutional Indirect Cost Rate is a formula based calculation where pools of costs are identified as either direct or indirect. A cost is allocable to a cost pool if it can be assigned to the cost pool based on a relationship of cause and effect, benefit derived, or logic and reason. A cost may be allocable but unallowable for the purpose of calculating the indirect cost rate based on OMB Circular A-21.

Once calculated, the Institutional Rate is negotiated with our cognizant federal agency, Department of Health and Human Services. A rate agreement is drafted to finalize rates for all prior years negotiated and indicate the type, effective period and rate for each location (rate) contained in the agreement. The rate should be re-negotiated after effective period lapses.

In some instances, grantor agencies can limit the amount of indirect costs which equates to a rate less than the negotiated institutional rate.

Allocation of Indirect Costs Received

Effective September 1, 2011

NON-CENTER ACCOUNTS

40%       Business Affairs Division

35%       Division of Research

10%       Principal Investigator

15%       College or Administrative Cost Center

 

CENTER ACCOUNTS 

40%        Business Affairs Division

30%        Division of Research

10%        Principal Investigator

16%        University Center

4%          College or Administrative Cost Center

Accountability and Transparency

 

The Office of the Vice President for Research will require each PI, college and university center to provide a brief annual report on the expenditure of indirect costs funds.

 

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