# 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.