Cost Sharing
PURPOSE
This statement explains cost sharing, the different types of cost sharing and the proper documentation for each type. It also contains the procedures which will be followed to verify that cost sharing commitments are being fulfilled and to periodically obtain cost sharing data from campus for financial reporting purposes. Also included in this statement are examples of costs that are not allowable as cost sharing.
GENERAL GUIDELINES/APPLICABLE POLICIES
Definitions
Cost sharing is the portion of total project costs not borne by the sponsor. Other terms also used to express more specific methods of cost sharing include matching, third-party and in-kind contributions.
Cost sharing that is required by some sponsors (such as EPA) is called mandatory cost sharing. Cost sharing included in proposals that is not required by the sponsor is referred to as voluntary cost sharing. However, it is the University's policy not to volunteer cost sharing. Once cost sharing has been included in a proposal and that proposal has been accepted by the sponsor, the University has an obligation to provide the cost sharing proposed, regardless of whether it was mandatory or voluntary. The terms required or committed cost sharing are used to describe this obligation.
Post-Award Situations Which Require Cost Sharing
Cost sharing may become a requirement through reductions in award amounts (as compared to what was requested in a proposal) unless comparable reductions are made in the scope or objective of the work. The reasons for reductions in award amounts should be clearly documented during negotiations with sponsors to avoid unplanned or unnecessary cost sharing. Examples of reasons for a reduction in award amount include original cost estimate was too high, the scope or objective of the proposal was reduced, or the sponsor wants the University to bear more of the project cost.
Principal investigators and other University employees who spend a significant amount of time on sponsored projects that is not reimbursed by the sponsor must document this as cost sharing. This is true even if their time was not included in the proposal or award agreement as cost sharing. Federal regulations require that significant cost sharing, regardless of whether it was required by the sponsored agreement, be documented to ensure accurate financial reporting.
Cost sharing may also be required to maintain the committed level of effort on sponsored projects when re-budgeting results in significant decreases in salaries of the principal investigator or other personnel funded from the project that could impact the outcome of the work.
Applicable Regulations
University cost sharing must meet the following criteria in order to be allowable:
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Cost sharing must be verifiable from University records.
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Expenditures documented as cost sharing must be necessary and reasonable for the proper and efficient accomplishments of project objectives.
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Expenditures documented as cost sharing must be the types of charges that are allowable according to federal cost principles (See "Unallowable Cost Sharing"and"Allowable Costs").
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Cost sharing cannot be used or reported more than one time. If cost sharing benefits more that one project, it should be prorated in an equitable manner among the projects (e.g., based on % of each project's cost total to the combined projects' costs).
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Expenditures supported by a federal project may not be used as cost sharing for another federal project unless specifically approved by the awarding agency.
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Mandatory cost sharing must be disclosed in approved budgets when required by the agency.
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If the requested funding is reduced then there should be a corresponding reduction of the cost sharing on a pro-ratio basis. This should occur during negotiations and prior to official acceptance of the award.
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The following are unallowable as cost sharing:
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Academic support positions charged outside of the instruction budgets (101) such as Deans.
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Space unless specifically leased or constructed for the award.
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Equipment or supplies unless specifically purchased for the award.
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Any cost incurred outside of the award period.
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Equipment usage unless specialized rates are developed and applied uniformly.
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Cost that are unallowable in accordance with federal cost principles identified in OMB Circular A-21 (i.e. advertising , entertainment, stipends and scholarships for research awards, etc).
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Documentation Requirements for Cost Sharing
For documentation and reporting purposes, the University has classified cost sharing into the following categories:
Effort
The effort of University employees for whom the University will fund salaries and related fringe benefits for the time that they work on a sponsored project. During the proposal process the University Employee Labor Cost Sharing (DOR-ELCS) form is completed to tentatively identify those individuals who will contribute a portion of their time to the project objective. Once an award is funded the University Employee Labor Cost Sharing (DOR-ELCS) form is completed to identify the approved individual contributing to the project.
Time and Effort Reports are required to document the percent of effort contributed to the project. The total effort reported on the reports must be 100% inclusive of teaching, sponsored program cost charged directly to an award and applicable cost sharing. (See Time and Effort statement for more information).
It is the responsibility of the Principal Investigator/Project Director (PI/PD) to assure that the committed level of effort for cost sharing is being met.
Non-Salary Matching Total Direct Cost
This includes supplies, travel, equipment, tuition and other total direct costs (except salaries and fringe benefits) which the University will fund. Documentation such as purchase orders, vendor invoices, journal vouchers, payment authorizations, travel authorizations and travel reimbursements should be maintained by the PI/PD.
