Cost Sharing Policy
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It is the policy of New York University (NYU, “the University”) that cost sharing must be identified and tracked in accordance with federal and other sponsor requirements. Cost sharing is that portion of a project or program cost that is not reimbursed by the sponsor (whether Federal or non-Federal) and as such, represents a commitment of institutional resources that would otherwise be devoted to other University purposes. As a matter of longstanding policy, NYU discourages unnecessary and unsupported cost sharing. As described in Memoranda 01-06 – Clarification of the Office of Management and Budget (OMB) A-21 Treatment of Voluntary Uncommitted Cost Sharing and Tuition Remission Costs (http://www.whitehouse.gov/omb/memoranda_m01-06), there are three forms of cost sharing:
- Mandatory – may be required by the sponsor as a condition of the award and becomes an obligation once an award is made;
- Voluntary Committed – may be offered by NYU and becomes an obligation once an award is made;
- Voluntary Uncommitted – Faculty effort over and above that level which is committed and budgeted for in a sponsored agreement. It need not be included in the time and effort system and is not separately tracked.
Cost sharing may be required by the sponsor as a condition of the award (mandatory cost sharing) or it may be offered by NYU (voluntary committed). Mandatory and voluntary committed cost sharing becomes an obligation once an award is made. Federal regulations require that Mandatory or Voluntary Committed Cost Sharing be treated consistently and uniformly in documenting, accounting and reporting. They should comply with NYU’s (DS-2) Federally approved cost accounting practices and be reflected in the University’s Time & Effort Certification. The expenses associated with cost sharing or matching contributions must be allowable in accordance with OMB Circular A-21, Cost Principles for Higher Education and/or University and sponsor policies.
Purpose of this Policy
The purpose of this policy is to provide guidance for proposing and administering cost sharing on sponsored projects, in accordance with Federal and other sponsor requirements.
Scope of this Policy
This policy is applicable to all schools, departments, units and personnel of the University involved in administering sponsored awards.
Procedures for Implementation
Obtaining Approvals for Cost Sharing
The Office of Sponsored Programs (OSP) is responsible for determining whether proposed cost sharing complies with the requirements of the sponsor guidelines and determine whether it is mandatory or voluntary. The approval of all sources of the cost sharing contributions (e.g., Department Chair, Dean, Provost, third party collaborator) is required at the time of the proposal.
NYU Restrictions on Cost Sharing
As a general rule, the contribution of a Principal Investigator's (PI's) academic year effort as voluntary committed cost sharing is subject to the following NYU restrictions:
- 1% of the academic year salary of the PI is an entitlement, per award, when no other salary is charged. It is the minimum required of all PI's for each project (mandatory for Federal grants only);
- When no summer salary may be requested (if the PI is already fully committed or the sponsor has prohibitions) or for 12-month appointments, up to 5% academic year salary may be cost shared with the approval of the Chair and the Dean;
- Any voluntary cost sharing of PI effort above 5% on a single grant or 10% cumulatively (in the sum total of all awards) requires the written permission of the Chair, Dean and Senior Vice Provost for Research;
- Cost sharing of other costs is also discouraged and requires the approval of the Chair, Dean and the OSP.
These are the methods of calculating cost sharing:
- The faculty effort multiplied by the institutional base salary and associated fringe benefits and F&A rate for the grant;
- The difference between the rate for the grant and NYU’s negotiated rate may be considered as waived F&A rate. See the Facilities and Administrative Costs Waiver Policy in the Sponsored Programs Administration Post-Award Handbook.
Documentation of Cost Sharing in the Proposal Budget and Narrative
PI's should discuss cost sharing requests with their Chairs and Deans and when applicable with the Senior Vice Provost for Research. Approval is conveyed by the NYU Cost Share Form, which must accompany the proposal to OSP. Cost sharing commitments may be included in the budget, the budget justification and the proposal. Care should be taken so that statements about unbudgeted key personnel involvement or tasks will not be inadvertently construed as voluntary cost sharing commitments. Where the proposal describes casual consultation that will enhance the likelihood of the success of the project, such consultation may be included in the narrative portion of the proposal, but not in the budget section. In these cases, no quantifiable effort should be stated in the narrative:
- Effort commitments described in a proposal become a commitment when awarded. If the project is awarded as proposed, no adjustments to the budget or cost sharing or matching/in-kind will be necessary.
- Matching is the requirement by some sponsors that grant funds be matched in specific proportion with funds from NYU or another party, whether received from another sponsor or committed by a collaborating organization.
- In-kind services committed as matching must be documented and may require a certification of fair market value. If the awarded amount is less than the proposed amount, the committed cost sharing should be adjusted accordingly. This is true if the award budget requires a change in the scope of work. Such revisions will require University and subsequent sponsor approval.
- If the level of effort committed to the sponsor drops below re-budgeting limits (generally 25% for Federal sponsors), either:
1) Sponsor approval is needed for the reduced effort commitment.
2) A corresponding cost sharing budget must be created and the cost shared effort confirmed in the T&E certification. This may only occur in exceptional circumstances and will require prior University approval. Sponsored Programs Administration (SPA) should be notified if the salary is less than the effort committed, so that a cost sharing chartfield can be set up.
The PI should notify the Department Administrator (DA) of the reduction in effort. The DA should communicate the change to OSP through a Request for OSP Action form. OSP will request sponsor approval, if reduced effort is requested. Both types of changes require the approval of the Chair/ Dean. The second type of change requires Senior Vice Provost approval, as indicated above.
Federal Standards for Acceptable Cost Sharing
Under Federal awards, items committed as cost sharing must meet all of the following criteria in accordance with OMB Circular A-110 Section §__.23 (http://www.whitehouse.gov/omb/circulars_a110/#23):
- Are verifiable from the recipient’s records. Auditable records should be maintained for all types of cost sharing;
- Are not included as contributions for any other Federally-assisted project or program;
- Are necessary and reasonable for proper and efficient accomplishment of project or programmatic objectives;
- Are allowable, allocable and reasonable and are treated consistently as a direct cost under OMB Circular A-21;
- May include unrecovered indirect costs only with sponsor approval;
- Are not paid by the Federal Government under another award, except where statutorily authorized by that sponsor;
- Are provided for in the approved budget, when required by the Federal sponsor;
- Are incurred during the project period of the grant or contract.
Appropriate Justification for Cost Sharing
The following are illustrations of when cost sharing may be appropriate in sponsored projects:
- Mandatory cost sharing is required by program guidelines;
- Voluntary committed cost sharing is necessary to enhance the likelihood of success of a competitive proposal.
Sources of Cost Sharing
The following non-sponsored (and in rare cases sponsored) sources would be considered appropriate sources of funds that the University may use to meet cost sharing commitments:
- Gifts (Fund 22)
- Endowment Spending (Fund 21)
- Startup funds (Fund 20)
- Appropriated school and/or departmental funds (Fund 10 or Fund 20)
- Third Party or In Kind Contribution (cash or donated goods or services)
- Other sponsored awards, when permitted (Fund 24 or 25)
Costs Not Acceptable for Meeting Cost Sharing Commitments
The following costs may not be used to meet cost sharing commitments:
- Costs pledged as cost sharing for another funded project (except as specifically approved by all parties);
- Costs under Federal awards funded by another Federally-sponsored program unless authorized by Federal statute;
- Costs funded by the same funding source as the sponsored project, unless specifically approved in the sponsored project;
- Costs of construction or renovation of University buildings, except with express sponsor approval;
- Costs that are included and reimbursed through the indirect cost rate (administrative salaries, office supplies, library expenses and operations and maintenance expenses);
- Salary dollars above the NIH cap. See: http://grants.nih.gov/grants/guide/notice-files/NOT-OD-08-035.html or http://grants.nih.gov/grants/policy/salcap_summary.htm
- Overdrafts (unallowable under OMB Circular A-21);
- Costs deemed unallowable according to award terms and conditions;
- Unfunded salary for effort that extends beyond the contractual appointment period (i.e., unfunded summer months for faculty with nine-month academic appointments);
- Any costs not deemed to be necessary and reasonable for the proper and efficient accomplishment of project or program objectives.
Creating Cost Sharing Projects
It is the responsibility of the PI and the department to document the fulfillment of cost sharing. Cost sharing is documented through the creation of a separate project in the University’s accounting system which parallels the project established with sponsor funds. The following steps list the process for creating cost sharing projects:
- OSP verifies the inclusion of cost sharing for the award and includes a notation on the Notice of Award that is distributed to all parties;
- Upon receipt of the Notice of Award, SPA requires that the completed Cost Share Form (see Appendix 1) identify the source of the cost sharing (i.e., the PeopleSoft chartfield(s) from which the cost sharing will be funded, unrecovered F&A, or third-party contributions);
- The Cost Share Form is initially completed at the time of proposal submission. The same form can be used if the cost share amount has not changed due to the Notice of Award;
- Upon receipt of the completed Cost Share Form from the PI and/or Department, SPA will create a cost-sharing project to parallel the sponsored project;
- Once created, SPA will notify the PI and departmental administrator by email of the chartfield for the sponsored award and parallel cost share chartfield authorizing expenditures for the project;
- If salary is to be cost-shared, the department will need to work with their payroll coordinator to have the accurate payroll distribution set-up for future appointments. If an appointment has already been established, a salary account change must be submitted via the Personnel Action Submission System (PASS/xPASS) to re-allocate the salary to the new cost share program;
- For non-salary expenses that have already been charged to a project, it will be necessary to initiate a cost transfer through the Journal Entry Management System (JEMS) to redistribute the correct percentage of the expense to the cost share program code. All related future charges should be expensed directly to the regular and cost-share chartfield;
- The PI and/or DA should inform the department’s budget coordinator/officer of cost share commitments to ensure departmental or discretionary funds are budgeted on the cost share program after SPA has created the cost share project;
- A sponsored award will require multiple cost sharing programs to be set up when the related cost sharing is coming from multiple funding sources (i.e., more than one school or department or multiple sponsored accounts).
Cost Sharing Identified During Project Lifecycle
- In the exceptional instances where voluntary committed cost sharing that was not identified in the proposal or award arises during the course of the project period, the department must complete a Cost Share Form and obtain the necessary approvals as referenced in Appendix 2. If the thresholds established above are exceeded, approval of the applicable Dean and the Senior Vice Provost for Research is also required. The form should be forwarded to OSP by email. OSP will then forward it to SPA to establish a cost sharing program chartfield.
- Once established, the department should ensure that salary or non-salary expense re-allocation is appropriately charged to the cost sharing chartfield.
Documenting Third Party Cost Sharing (including Sub-awards / Sub-agreements / Subcontracts)
The department is required to maintain records identifying the cash contribution (which may arrive in the form of a gift, grant or contract) or non-cash contribution and its fair market value. Documentation sent to SPA should include a letter of intent (available through OSP) or letter of actual completion, which includes documentation of the basis for determining the value of personal services, material, equipment and other direct expenses as well as written acknowledgement of the contribution, including:
- Name & signature of donor (or sub-recipient)
- Date & location of contribution
- Detailed description of item/service
- Estimated value of contribution, how value was determined, responsible person making determination
- Source(s) of contribution
- Retention of a copy of receipt on file
Monitoring Cost Sharing Accounts
Cost sharing may occur as a one-time expense, or incrementally over the life of the project. It is the responsibility of the Principal Investigator (PI) to ensure that charges are incurred against the cost-sharing program as it occurs and in a timely manner.
Project Closeout and Financial Reporting to Sponsors
At project closeout, SPA will email the Cost Share Form to the PI and the department/school administrator for confirmation and verification of cost sharing amounts as recorded in the University’s general ledger.
PI’s and Departmental Administrators should work closely with SPA to ensure accurate reporting of cost sharing on financial reports to sponsors.
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