Cost Share Life Cycle for Sponsored Projects

“Cost Share” (sometimes referred to as “Match”) means the portion of project costs not paid by Sponsor funds, but instead from cash or in-kind funds from the University and/or other third parties.  See 2 CFR §§ 200.29 & 200.306.  Generally, under Federal research proposals, “Voluntary Committed Cost Share” (which is voluntarily pledged by the University and becomes a binding Cost Share requirement per 2 CFR § 200.99) is not expected and cannot be used as a factor during the merit review of applications or proposals.  See 2 CFR § 200.306(a).  With sponsor approval, the University’s waived Facilities & Administrative (F&A) costs may cover all or a portion of the University’s Cost Share obligations.

The University discourages Cost Share commitments when not required by the sponsor due to: (i) the high administrative burden of meeting Cost Share requirements; and (ii) the negative impact of Cost Share on the University’s F&A rates.  Cost Share contributions (not including third party Cost Share) are factored into the University’s standard F&A rate negotiations.  Standard F&A rates are calculated by taking the F&A costs from a selected period of time and dividing them by the total direct costs for the same period.  The ratio is the basis for the standard F&A rates.  Cost Share commitments for that same period are added to the total direct costs, which decreases the standard F&A rates.  Here’s an example:

• • F&A Costs / Direct Costs = $40,500 / $100,000 = F&A Rate of 40.5%
  • Factor in $20,000 of Cost Share Commitments
  • F&A Costs / (Direct Costs + Cost Share Commitments) = $40,500 / ($100,000 + $20,000) = F&A Rate of 33.75%

Factoring in Cost Share contributions reduces the University’s F&A rate, which means fewer resources for the University to support research.

Cost Share should be identified at the time of proposal submission via the Cost Share Form and Internal Budget in the Frevvo proposal routing process.  At a minimum, the Fund and Department (see Chart of Accounts Overview) for the accounts funding the Cost Share need to be identified on the Cost Share Form.  Voluntary Committed Cost Share should not be included in the Internal Budget, Cost Share Form, or the proposal.

Cost Share obligations are reviewed and documented in Part II of the Frevvo workflow.  When a Principal Investigator (PI) accepts an award in Frevvo, the PI also accepts all of the Cost Share obligations identified therein.

During the award setup process, an OSP Post-Award staff member verifies with the departmental/college administrator the Fund or Funds (e.g., Appropriated or Local) that will be used to meet Cost Share commitments. For each unique Fund, an additional Oracle Financials Cloud (OFC) Cost Share project will be set up and associated to the OFC award (i.e., for one OFC award, there can be multiple OFC projects, including Cost Share projects). For example, if a PI’s Appropriated salary/fringe, as well as Local funds are both used as Cost Share for an award, the award would end up with at least three projects: (1) the sponsored project; (2) the Appropriated Cost Share project; and (3) the Local Cost Share project.  All three projects would be associated to the award, funded, and budgeted according to the budgets provided in the award. All three projects will be added to the Human Resource list of values at the time of award setup to ensure salary/fringe can be charged to all of the projects.

All projects must be funded on the award in order to be budgeted; so if the University has received a $100,000 award with $10,000 in cost share, the total funded on the award would be $110,000. The funding would be split between sponsored, $100,000, and Cost Share, $10,000, projects which is what you will see in OFC’s Project Portfolio Management (PPM) module and the Budget vs. Actual Dashboard for Sponsored Programs. This indicates that, as stated in the award agreement, the total cost for the award will be $110,000.

With the appropriate funding applied to each project, an OSP Post-Award staff member then enters a budget for each project as identified in the award. The budget means the spending plan — not that the funds have already been transferred (e.g., from the Appropriated and Local accounts providing the Cost Share funds). Budgets for both sponsored and Cost Share projects control spending in the same way; if a transaction exceeds the available budget/tolerance, it will be stopped by OFC’s budgetary controls.

The award notification email will include all projects associated with the award and whether the project is sponsored or Cost Share. The projects will also be discussed at the new award meeting, including a review of the budget and Fund codes to ensure the projects and associated budgets were established as anticipated.

At the beginning of an award, the Cost Share plan should be discussed and any funding source changes for salary should be initiated to ensure costs are charged to appropriate projects when first incurred (see University Policy # 5090, Sponsored Programs Cost Transfer). During the new award meeting, the parties will discuss non-payroll expenditures that will be used for Cost Share, including the correct funding string, appropriate transactions to include, and the dates for spending. The PI should be prepared to discuss the general timeline of planned expenditures to inform the assigned Sponsored Projects Administrator (SPA) when to expect spending to occur and aid in monitoring for compliance and spending.

As transactions that are associated with the award are incurred, the correct funding string (Project – Expenditure Organization – Account Code –Task or “POET”) values must be used to code transactions to the appropriate projects — Cost Share transactions to the Cost Share project(s) and sponsored transactions to the sponsored project(s). Transactions should be reviewed monthly to ensure they are coded to the correct projects, and any errors should be promptly corrected at that time.

When allowable, F&A costs associated with the direct Cost Share costs are also utilized to meet the University’s matching commitment. In order to appropriately report those costs to our sponsors, the transactions will be created in the PPM module of OFC. These will show up as transactions in PPM, but the transactions will not create accounting or post to the General Ledger.

Cost Share projects are funded via Budget Transfers (Appropriated funding) and Surplus Transfers (Local funding). At least twice each year, December and June, the department/college administrator must review the fund balances in the Cost Share projects and submit Budget Transfers (using the Creating and Submitting a Budget Transfer Job Aid) or Surplus Transfers (using the Journal Entry Request Form and referencing Account Code 998980) as needed to bring the fund balances back to zero.  Please note that Budget Transfers and Surplus Transfers do NOT directly clear deficits on specific cost share projects in PPM.  Instead, they clear deficits in rolled up holding accounts.  This is discussed in detail in the Cost Share Transaction and Reconciliation Cycle guidance.

Cost Share projects will have the balances cleared as funds are provided by campus. The balances will be monitored by the assigned SPA.

Prior to submitting final financial reports or invoices, the assigned SPA will verify that Cost Share commitments have been met and all costs are accounted for in the projects associated with the award. Each project expenditure will be reviewed and validated for allowability for both the sponsored and Cost Share portions.  At 90, 60, and 30 days before a project ends, an automated email reminder will be sent to the departmental/college administrator to change recurring charges to a different funding source to avoid transaction errors and cost transfers after the award end date (see University Policy # 5090, Sponsored Programs Cost Transfer). After all final expenditures have posted to the Cost Share projects, the fund balances in the Cost Share projects must be brought to zero via Budget Transfers or Surplus Transfers as appropriate; this will be verified prior to closing the project.

Cost Share projects will go through the same review process as sponsored projects prior to closeout; this ensures that the PI and University are in compliance with all terms and conditions of awards. Expenditures may not be transferred off Cost Share projects after the final invoices and/or reports have been submitted to sponsors unless new information demonstrates that particular transactions are not allowable; in this rare situation, updated invoices and/or reports will be required.