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FIXED PRICE RESIDUAL FUNDS POLICY

FIXED PRICE RESIDUAL FUNDS POLICY. Includes procedures and examples for determining the distribution of residual funds in accordance with FSU policy. Andrea Durham , Training Specialist Sponsored Research Accounting Services. CReATE v05-2012.

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FIXED PRICE RESIDUAL FUNDS POLICY

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  1. FIXED PRICE RESIDUAL FUNDS POLICY Includes procedures and examples for determining the distribution of residual funds in accordance with FSU policy. Andrea Durham, Training Specialist Sponsored Research Accounting Services CReATEv05-2012 © 2012 Florida State University. All rights reserved

  2. FIXED PRICE RESIDUAL FUNDS POLICY • What are Residual Funds? The remaining funds in a fixed price project at the completion that are ready for final closeout. • Why does FSU have a policy? A policy is necessary to determine the distribution of the residual funds.

  3. A fixed priced project should be closed out as soon as possible after: • The project expiration date • All deliverables have been completed and accepted by sponsor • All expenditures and commitments have been cleared (no encumbrances remain) • All cash has been received from sponsor • Property & equipment, if any, has been properly assigned.

  4. In determining the amount of a project’s residual funds, SRAS needs to: • Verify the final calculation of F&A (Indirect) costs earned based on the rate/base in the approved agency budget. If necessary make an adjustment for any difference. • Review the “reasonability” of total expenditures when compared to the work performed.

  5. Residual funds, under policy, will be distributed as follows: • The first $75,000 will be transferred to a "PI Research Support" account. These funds will be used by principal investigator (PI) for furthering FSU’s research mission. • The PI support account will be established in primary PI's name. If there is more than one PI on a project, the primary PI may make funds available to other PIs. Funds will not be prorated among PIs and set up in separate accounts.

  6. After transferring the first $75,000 to the PI’s Research Support account: • Any remaining balance will first be used to recover any shortage of F&A costs actually recovered under the project compared to the amount of F&A cost from using FSU’s negotiated federal rate. • If a project is performed off-campus, the off-campus rate will apply (26%). If project is performed on-campus, the on-campus rate will apply (currently 47% except for the MagLab).

  7. After transferring first $75,000 to the PI’s Research Support account, cont’d • Any difference between F&A costs charged to the project and F&A costs that could have been earned at the federal F&A rate will be charged to the project. • This will result in additional F&A monies being available for distribution in accordance with FSU’s SRAD policy.

  8. If after transferring initial $75,000 to the PI and charging F&A at the full federal rate, any remaining funds will be distributed as follows: • Fifty percent (50%) to the PI Research Support account. Again these monies will to be used to further University’s research mission • Fifty percent (50%) to VP for Research. These funds will also be used to support University faculty research programs.

  9. Example of Fixed Price Residual Funds distribution • A grant was awarded for $402,500. The budget for direct costs (DC) totaled $350,000 for salaries and fringe benefits and indirect costs (IDC) totaled $52,500 at a 15% TDC rate. A total of $230,000 was actually expended. AwardActual Expenditures DC $350,000 DC $200,000 IDC $52,500 ($350K x 0.15 TDC) IDC $30,000 ($200K x 0.15 TDC) • Total $402,500 Total $230,000

  10. What is the Residual Funds amount? $402,500 Award Total (230,000)Actual Expenditures • $172,500Residual Funds • The first $75,000 goes to the PI. After that, Indirect Costs are recalculated as follows:

  11. How is difference between amount of indirect cost based on awarded rate and full federal rate calculated? • The grant was awarded for $402,500. A total of $230,000 was expended ($200,000 salaries and fringe benefits and $30,000 IDC at 15%). $200,000 MTDC Expenditures 0.47 IDC Full federal rate • $ 94,000 IDC Amt @ Full federal rate • (30,000) IDC charged @15% • $ 64,000 Additional IDC earned

  12. How Are Residual Funds distributed? $75,000 PI $172,500 $64,000 Additional IDC SRAD Residual $97,500 $16,750 PI (50%) $33,500 $16,750 $402,500 Award (230,000) Expenditures $172,500 Residual Funds OVPR (50%)

  13. If PI leaves FSU and funds remain in PI Research Support project: • Ordinarily, such residual funds will be transferred to the VP for Research. However, the Department Chair may request that the funds be transferred to the Department’s SRAD Allocation account. Approval is at the discretion of the VP for Research. In either case, these funds must be used to support University research programs.

  14. Questions

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