Overhead and F&A
Questions about rates should be directed to your departmental analyst for unrestricted funds, your grants analyst for restricted funds, or directly to Mary Corcoran, Assistant Vice Chancellor and Assistant Dean for Finance, School of Medicine.
Overhead Change Requests
Any requests for School support, including reductions in F&A from established rates, must include a letter laying out the case for institutional support, signed by the faculty member, their department head, and division director if applicable. Attachments are to include any policy statements from the granting agency, a copy of the grant budget, and a copy of the statement of work, or at a minimum a copy of the abstract. These documents are to be submitted by the department through the School of Medicine SharePoint site at insidesom.wusm.wustl.edu. Please allow adequate time for consideration.
School of Medicine overhead rates
Overhead on Unrestricted (WU ledger 1) Income is based on revenues at the time it is received.
General support quasi endowments: 10% of the spending distribution
Clinical Practice Funds/Fee for Service:
- On-Campus: 11.5%
- Off-Campus: 7%
- New Practice Sites (3 Years with approved change request): 6%
- Drugs used in Clinical Practice:
- Medicare: 2%
- Non-Medicare: 5%
- 5% – Affiliated Services (Surplus Sharing arrangement in effect)
- 10% – Other hospitals including other BJC hospitals (No Surplus Sharing arrangement)
Industry clinical trials (overseen by CCS): 20.6% *
*Note that this rate is the equivalent to a rate of 26% of expenditures on restricted funds (20.63/79.37=26) and is often referred to as being that rate.)
CME & Other Educational activities: 8%
External Services: 20% overhead on revenues (no distribution to the department)
Overhead on Restricted (WU ledger 2) Income is based on expenses at the time it is expended.
|Type of Project||Research||Research Career||Research Training||Instruction||Other Sponsored Activities|
|Industry-deviation from these industry rates requires Dean’s approval, regardless of company policy or guidelines.||50.0 TDC||50.0 TDC||50.0 TDC||50.0 TDC||50.0 TDC|
|Voluntary Health Agency/Foundations/Other||50.0 TDC||50.0 TDC||8.0 TDC||38.0 TDC||36.0 TDC|
McDonnell Genome Institute
Note that MGI is a specific facility. Off campus rates do not apply. For non-Federal rates, refer to the section above.
|Type of Project||Research||Research Career||Research Training|
|Federal Government||25.5 MTDC||25.5 MTDC||8% TADC|
Other Specific Purpose Funds
Non-government grants: 50% overhead based on expenditures: (½ to department & ½ to Dean)
Endowments: Overhead is 33.3% of revenue, ½ of which or 16.6% is reallocated to departments.
BJHF/SLCHF/CDI: (no distribution to department)
- Wet Lab: 20%
- Other: 10%
- Equipment: 10%
*Note: In situations when overhead is not accessed on the gift or grant the Department is expected to “make up” the amount of overhead from unrestricted funds that would have gone to the Dean.
What are Overhead rates and how do they work?
Overhead rates are negotiated on behalf of the entire University by the Central Fiscal Unit for Federal funds. In addition, there are rates that are applied uniformly on behalf of all units of the University. Since the University operates on a “reserve system” there is flexibility given to the Dean of each school in day-to-day administration.
Federal rates are negotiated with the Department of Health and Human Services, Division of Cost Analysis (HHS, DCA). The University submits a proposal based on its audited financial statements, and in accordance with a set of guidelines issued by the Federal Office of Management and Budget (OMB A-21). The proposal is subject to review and further audit at the discretion of the Federal negotiators. The objective of the negotiation from the Federal side is not to reimburse all costs, but to strike a balance between what the institution incurs in costs and what Federal agencies should be expected to pay in support of sponsored programs based on current regulations. This rate is expressed as a ratio of Facilities and Administrative Costs (F&A) to Modified Total Direct Costs (MTDC), a subset of the costs incurred in direct support of a sponsored project. In a September 2010 report, the Federal General Accounting Office (GAO-10-937) has observed that HHS, DCA typically negotiates rates that average 4 points lower than the calculated rate. Further, the administrative components are typically 5 points lower than the actual cost to the institution because of caps on the rate. In addition, there are costs that are required to be excluded from the proposal before it is submitted (e.g., alumni and development costs).
In applying the rates on the accompanying rate sheets, rates for restricted funds are not directly comparable to rates for unrestricted operating funds. Rates on restricted funds are calculated based on qualifying expenditures and rates on operating funds are calculated as a percentage of revenue. Consider the following example. A restricted corporate grant or gift of $150 has an F&A rate of 50%. $100, 2/3rds of the grant or gift, is available for direct expenditure. The practice at the School of Medicine is to split the non-Federal F&A paid at 50% with the department. That means that $25, 1/6th, stays with the central unit of the School and $25, 1/6th, goes to the departmental entity that initially received the gift. Note that it is incorrect to say that 50% of the gift goes for overhead or F&A costs. Compare this to a rate of 20% of unrestricted revenue for a recharge center, which recovers facilities costs, and some central administrative costs, but does not recover departmental administrative costs. In our example, if $125 is received for services, $100 would be recovered for the direct services, and $25 would go to recovery of overhead costs (25/125=.20). Although the rate of 20% of revenue is a lower percentage, it does work similarly in recovery of central costs.
From time to time, institutional resources are used to cost share sponsored projects. This happens at both the departmental and School level, but most of the time this is at the departmental level. At the School level, this can take the form of accepting less than published rates. The most common cases involve voluntary health agencies and foundations (VHA) where the VHA publishes a maximum that is lower than our rates. In cases where there is a published policy, uniformly applied, the Office of Sponsored Research Services has delegated authority to accept the lower VHA rate provided the rate is not less than 20% for laboratory based research, 8% for training grants, and 10% for other sponsored projects. Any reduction from the established rates must be personally approved by the Dean of the School.
Office of Finance
Washington University School of Medicine
Mailing Address: 660 S. Euclid Avenue | CB 8092 | St. Louis, MO 63110-3739
Office Location: 4590 Childrens Place | Suite 9400 | St. Louis, MO 63110-3739
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