# Calculating Facilities and Administrative Costs

Procedure Date: December 2019
Revision: 4
Last Review: April 2022

To assist faculty and staff with completing grant proposal budgets, below is an explanation of the methods used for calculating facilities and administrative (F&A) costs, also called indirect costs, at the University of Nevada, Reno (University) and what to include in and exclude from the F&A cost calculation.

## Modified Total Direct Costs (MC)

Per the University's F&A rate agreement with the Department of Health and Human Services, F&A costs are to be calculated on modified total direct costs which consist of the following:

• All salaries and wages
• Fringe benefits
• Travel
• Materials, supplies, services and operating expenses
• The first \$25,000 of each subcontract (regardless of the period covered by the subcontract)

Modified total direct costs exclude the following:

• Participant support
• Equipment
• Capital expenditures
• Patient care
• Student tuition remission
• Rental at off-site facilities
• Scholarships and fellowships
• Each subcontract/subaward amount over and above the first \$25,000

## Total Direct Costs (TC)

Some sponsors have published policies or statutes limiting the F&A cost reimbursement to the University. When F&A cost reimbursement is limited to less than the University's full, applicable F&A rate, the sponsor required F&A rate should be applied to the total direct cost base rather than the modified total direct cost base (no exclusions) unless the program announcement states that a different method must be used for calculating F&A.

Example: A sponsor's published policy states that F&A costs cannot exceed 10% of the total project costs. In this case, it would be incorrect to apply a 10% F&A rate to total direct costs.

In the example below, total direct costs are \$90,000. If F&A costs will represent 10% of the total project cost, total direct costs will represent the remaining 90%. Once the total direct cost figure is known, the total allowable project cost can be determined by dividing the total direct costs by 90% (\$90,000/.9 = \$100,000). The maximum allowable F&A costs can then be figured: \$100,000 - \$90,000 = \$10,000. The F&A rate applied to the total direct costs can now be figured as well: \$10,000/\$90,000 = 11.11%.

Total Direct Costs: \$90,000
F&A (11.11%): \$10,000
Total Costs: \$100,000

## Salary and Fringe (SF)

Salary and fringe is used as the base on which F&A costs are calculated when sponsor program guidelines specifically state that F&A costs are only allowed to be calculated on direct salaries and wages including all fringe benefits.

## Exempt (EX)

Use this method when sponsor program guidelines indicate that specific expenses are to be excluded from F&A.

Always review program guidelines as many sponsors indicate what costs, including F&A, are and are not allowable. When a sponsor's policy requires the University to apply a less than full F&A rate, a copy of the sponsor's policy must be included with the proposal materials in InfoEd as supporting documentation.

See the F&A and fringe rate FAQ for answers to common F&A questions.