Cost Sharing

Policy CADS-2
Date Issued: June 19, 1998

Purpose:
This document describes the University's policy on cost sharing on research, training and other projects sponsored by external funding agencies, including both federal and private sponsors. The policy will provide guidance to faculty on the circumstances under which cost sharing is permitted and the responsibilities of the University and the project director in situations where the University makes a cost-sharing commitment to the Sponsor.

Effective Date: The policy is effective July 1, 1998. However, departments should be aware that this written policy reflects long-standing practices at the University.

Definition of Cost-Sharing:

Cost sharing is defined as the portion of the total project costs of a specific sponsored agreement that is borne by the University, rather than the sponsor. Cost sharing represents a reallocation of department, college or school resources to specifically support an externally sponsored agreement. Examples of cost sharing include contributions of personnel effort and associated fringe benefits, contributions of other direct costs associated with a project but not funded by the project and indirect costs budgeted at less than the University's negotiated rates. It is the responsibility of the department to provide resources for cost sharing of direct expenses, if permitted. Indirect expenses may not be cost shared without the approval of the Vice Provost for Research and Graduate Education.

Cost sharing is classified as either mandatory or voluntary. Cost sharing that is classified as "mandatory" is a cost contribution required and quantified by the grant sponsor in an explicit communication to the grantee as a condition of the award. This definition includes the "matching funds" requirements which are typical of federal land grant appropriations and SBA's small business development center awards. Cost sharing is classified as "voluntary" when it is not a requirement of the sponsor and the University voluntarily proposes to cost share an expense.

Both of these types of cost sharing (mandatory and voluntary), which should appear in the proposal/budget, must be documented by the institution, and may require financial reporting as evidence that requirements have been met. Federal agencies may consider faculty effort mentioned only in a proposal's narrative as a cost sharing commitment. Therefore, if its mentioned in the narrative, then the cost sharing effort should be noted on the Research Foundation's proposal record form and on the proposal's budget sheet. For large complex grants, where a multiple of personnel are involved in providing mandatory cost sharing, the cost sharing will require separate tracking in the accounting
system. Where salaries are cost shared, both types of cost sharing require tracking in the effort reporting system, as well as appropriate adjustments in the indirect cost calculation.

The term "cash match" is sometimes used to mean cost sharing of costs that are incurred by the university. The third party "in-kind" cost sharing are costs incurred by an organization, other than the university, on behalf of a sponsored agreement conducted by the university.

An agreement to cost share whether mandatory or voluntary represents a commitment of scarce university resources to provide the stated service or assets during the performance of the project. Principal Investigators are urged to discuss proposed cost-sharing arrangements well in advance of submission of the grant proposal with the head of their department and the Office of Sponsored Programs.

Requirements:

To be acceptable for cost sharing, as a direct costs, a cost must: -be allowable according to the principles of OMB Circular A-21;
(a) they must be reasonable and not specifically unallowable;
(b) they must be allocable to sponsored agreements as a direct cost (as opposed to indirect costs);
(c) they must be consistent with university policy;
(d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to type or amounts of cost items; and
(e) must be consistently treated as a direct cost.

-be directly related to the project objectives; costs which are treated as indirect costs, as specified by OMB Circular A-21; may not be used as direct cost to provide a cost share contribution.

In addition, cost-shared expense must not:
-be included as cost sharing for any other project;
-be paid by any federal sponsor under another award, unless the sponsor approves it in writing.

Mandatory Cost-Sharing: Mandatory cost sharing is still a requirement of some private and government sponsors. The mandatory cost sharing for private sponsors is often a requirement that no salary be charged to the grant for the effort of the Principal Investigator or key personnel. However, mandatory cost-sharing can include any direct cost budget item and indirect costs, depending upon the specific requirements of the sponsor. The University accepts mandatory cost sharing requirements when all of the following conditions have been met:
-The cost sharing requirement is in the written policies of the sponsor and those policies are available to the Office of Sponsored Program upon review of the proposal;
-the cost sharing requirement is indicated on the University of Connecticut
Research Foundation's Proposal Record form; and
-the Department Head and Dean have reviewed and approved the proposal to signify the Department, College or School's ability and willingness to provide the required cost sharing resources (e.g. percent of Principal Investigator's salary to cover the effort devoted to the project).

Failure to meet a required match generally means a corresponding lost of a sponsor's program funds. If this occurs departmental resources will have to be used to cover the unmatched program expenses.

Voluntary Cost-Sharing: The Board of Trustees has indicated that cost sharing is permissible. It is the policy of the University to assume a cost sharing commitment only when required by the sponsor or by the competitive nature of the award, and then to cost share only to the extent necessary to meet the specific requirements. Principal Investigators are strongly encouraged to reflect the total anticipated costs of a project on the proposal budget. Proposals which voluntarily offer to make time or other resources available at no cost to the sponsor is generally discouraged by the University. The university accepts voluntary cost sharing on grant or contract proposal when all of the following conditions have been met:
-The cost sharing requirement is indicated on the University of Connecticut Research Foundation's Proposal Record form;
-the Department Head and Dean have reviewed and approved the proposal to signify the Department, College or School's ability and willingness to provide the required voluntary cost sharing resources (e.g. percent of principal investigator's salary to cover the effort devoted to the project); and
-the proposal once submitted to the Office of Research Administration is approved by the Vice Provost for Research and Graduate Education with respect to the cost sharing offered.

Documentation of Cost Sharing Commitments:

1) Professorial and No Professional Staff Effort:
The documentation of contributed professorial and professional activity for sponsored
programs is accomplished by the University's Assigned Work Activity Confirmation
system. At the University "PARS" (Personnel Activity Reporting System) is the
common acronym used for this system. This system surveys professorial and
professional staff on an annual basis, covering the first through the last pay period of a
fiscal year. An additional survey is conducted at the end of a sponsored program's
budget period to cover the period from the last annual survey to the budget period.

The pre-printed cost sharing information which may appear on the Assigned Work Activity Confirmation form is obtained from the Research Foundation's proposal/award database. The database contains cost sharing information obtained from the Proposal Record form. If the Principal Investigator indicated that contributed effort would be provided to the project on the Research Foundation's Proposal Record form, the percentage of contributed effort appears in the cost sharing column on the Confirmation form. If actual effort contributed differs from the percentage indicated, the Principal Investigator must enter the correct percentage. The Principal Investigator is responsible for reviewing the estimated information which appears on the Confirmation form. If data is inaccurate or missing the Principal Investigator is responsible for making necessary changes and/or additions.

2) Classified-Non-Professional (Student) Staff
Contributed effort of classified/non-professional (student) staff should be recorded on the quarterly and end of budget period Confirmation form by the Principal Investigator. The effort contributed by classified staff and students must be of direct benefit to the sponsored program, and must not be for routine administrative duties that are normally included in the University's departmental administration function.

3) Third party Cost Share:
Third-party "in-kind" contribution counting towards satisfying a cost sharing or matching requirement must be approved in writing by the appropriate third party before a proposal is submitted. Third-party contributions must be monitored by the Principal Investigator and written documentation provide by the third-party contributor of their in-kind contributions.

4) Other Expenses:
The University discourages both mandatory and voluntary cost sharing of other (nonpayroll) expenses, because of the difficulty of tracking and documenting non-payroll expenses. However, if cost sharing of these type of expenses is provided in the sponsored agreement the costs must be documented in the same way as direct charges to the sponsored agreement (e.g. payment invoice, travel reimbursement).

5) Major car Complex Awards:
When documenting matching/cost sharing for major or complex awards, such as federal land grant appropriations, national undersea research center and sea grant college program, it is required that the matching/cost sharing be recorded in the University's financial records system.

Research Equipment Match:

Dean, Department Head, or I Facility Director: Funds needed for equipment match required by the sponsor are the responsibility of the faculty member's dean and department head or facility director. As is customary, all cost-share commitments, from all parties including the dean and department head or facility director, must be documented in writing in the usual manner on the regular University routing sheet at the time of submission of the proposal.

Research Foundation:
The Foundation's policy on research equipment cost-share on federal grantis designed to use a pool of internal funds to leverage additional research dollars from federal agencies. This cost-sharing pool is available for the purchase of research equipment costing at least $20,000, under the following general conditions: the research equipment must be part of a matching funds package that accompanies a request being submitted to a federal agency, and the federal agency must absolutely require a research equipment cost-share. Because there are limited funds for the program, it may not be possible to make commitments to all applicants.

The Foundation's program guidelines on research equipment cost-share on federal grants state that:

-Cost-sharing for other budget items, and proposals to other entities, are not eligible.
-The instrumentation must be research equipment, as opposed to instrumentation for instruction and/or administrative needs.
-Proposal must meet a minimum threshold of $20,000 worth of requested research equipment (single item, or group of items)
-The percentage cost-shared allowed is 25% of the total purchase price of the research equipment, to a maximum of $50,000.
-Highest priority will be given to those proposals that absolutely require (usually in writing) cost-sharing on research equipment as part of the submission to the federal agency.
-if funds are available, consideration will also be given to research equipment on proposal to federal agencies where the requirement for a cost-share is not so absolute but, in the Director's view, the awarding of the federal grant would result in a major improvement of the research climate at the University. Such special matches will be rare.
-The Foundation expects proposals to include research equipment cost-sharing on the part of the department head and the dean and, if applicable, the director of a facility, center, or institute. Such cost-sharing is seen as evidence of a strong commitment to the equipment by the research areas involved. In the case of requests for research equipment intended to become part of a fee-for-service entity, the director of the Research Foundation will seek assurance that the faculty at large will have a means to access the equipment.
-If the research equipment component of the subsequent federal award is reduced, the cost-share will also be reduced, proportionally.

- 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 the sponsored program's activities. 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 another organization, outside the University, furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount for 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 item as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing or match share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation.
-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.
-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.
- The value of loaned equipment shall not exceed its fair rental value.