Cost Sharing Policy and Procedure
1.0 - Purpose
To provide guidance regarding the circumstances in which cost sharing is permitted by the University; including what kind of services, expenditures, or assets may be cost shared.
To provide information to the University of Texas at Dallas (UTD) community regarding the contractual, financial, and administrative implications that result from the commitment to cost share.
To establish procedures which give UTD the ability to provide information to sponsoring agencies which demonstrates that the university has fulfilled any cost sharing commitments it has made as a condition of obtaining external sponsorship.
2.0 - Scope
The following document comprises The University of Texas at Dallas Policy on cost sharing and the procedures for monitoring project-by-project cost sharing and reporting such cost sharing to sponsoring agencies. The policy is effective for proposals submitted and awards received on or after May 1, 2002.
3.0 - Definitions
Cost sharing is that portion of the total cost of a research or other externally funded project that is not funded by the sponsor. Depending on the circumstances, cost sharing may be considered committed (mandatory or voluntary) or uncommitted.
Committed Cost Sharing
Specifically identified and described in the proposal budget and made a condition of the resulting award. Sponsors require that committed cost sharing be tracked, documented, and in some cases certified and reported.
- Mandatory Cost Sharing
Required by the sponsor as a condition of an award. Mandatory cost sharing results either from statutory requirements or from agency policy requirements.
- Voluntary Cost Sharing
Not required by the sponsor, but is offered by the grantee institution as a demonstration of its commitment to the project. When voluntary cost sharing is included in the proposal budget, it is considered committed cost sharing once the award has been made.
Uncommitted Cost Sharing
Any contributions to the project above the amount committed and budgeted for in a sponsored agreement. Uncommitted cost sharing does not have to be tracked, documented, or reported.
4.0 - Policy
It is the policy of the University of Texas at Dallas (UTD) that committed cost sharing is proposed, approved, administered, and accounted for in a consistent and reasonable manner. Committed cost sharing on a sponsored project is a binding obligation that must be satisfied in accordance with the sponsor's requirements. UTD’s policies and procedures with regard to cost sharing are intended to comply with the requirements of OMB Circulars A-110, A-21, and are consistent with the cost sharing requirements of the federal sponsors of research at UTD.
Proposals for sponsored projects should contain formal cost sharing commitments only when cost sharing is required (mandatory) by the sponsoring agency and stated as an eligibility criterion for the project for which funding is sought.
Federal regulatory requirements for cost sharing include:
- Federal funds cannot be used to meet cost sharing requirements on federally funded awards.
- Costs can be claimed as cost sharing only once.
- Costs claimed as cost sharing must be verifiable, necessary, allowable, and reasonable for the award on which they are being claimed.
5.0 - Methods of Cost Sharing
The cash method of cost sharing involves commitment of UTD’s funds made available in support of a project. Sources include School/Divisional funds, Provost's funds, and funds from gifts and Endowed Chairs.
A common source of cost sharing that is found in UTD proposals is the effort of faculty that is devoted to a sponsored project, but not paid by the sponsor. When effort is used as a cost sharing method, the associated fringe benefit should be included in the calculation.
Third Party Contributions
"Third party" refers to an organization other than UTD that is contributing to the costs of the project. Examples include donations of equipment from manufacturers and funding commitments from sub-recipient institutions (typically other universities with whom UTD faculty are collaborating).
Third party contributions may also include supplies/materials, equipment, volunteer services and others, as long as the items meet the sponsor's criteria for cost sharing. The value of the cost sharing includes the direct cost of the item(s) plus indirect costs that would be applicable if the item were charged directly to a grant or cooperative agreement.
6.0 – Procedure
6.1 - Proposal stage
At the proposal stage, where there is a formal cost sharing commitment (mandatory or voluntary), the source(s) and amount of the cost sharing will be identified in the proposal certification form. The Proposal Certification Form will reflect the approval of the UTD’s official(s) responsible for the source of funds that will be used for cost sharing, e.g., the Provost, the Dean, the Department Chair or the Principal Investigator.
6.2 - Award Acceptance and Initiation stage
Awards with cost sharing requirements should be identified in the financial system, and on the Award Summary prepared and distributed by the Office of Sponsored Research (OSP). The process is as follows:
- Office of Sponsored Programs (OSP) receives notice of an award with committed cost share.
- OSP contacts Principal Investigator’s school fiscal officer and requests that a cost share account be created in the accounting system and budged.
- School fiscal officer creates cost share account and notifies OSP.
- OSP creates sponsored project account and links it with the cost share account.
- Cost sharing accounts that are established from State accounts will have to be re-budgeted each fiscal year, as these accounts do not roll into the new fiscal year automatically.
- The Budget Office will monitor the cost sharing accounts only for over-expenditures.
- The related sponsor account will not be opened until the budgeted funds for the current fiscal year have been moved to the cost share account. For subsequent years, if the budgeted funds are not moved to the cost share account, the related sponsor account will be frozen one month after the start of each fiscal year (September).
- If the fiscally responsible department/center does not provide the cost sharing amounts required in the agreement, a proportionate reduction will normally be made in the sponsoring agency's account budget.
6.3 - Post Award stage
For awards that include committed cost sharing, UTD is required to maintain documentation of the cost sharing and, in certain instances, to submit formal reports of the cost sharing to the sponsor. When reporting to sponsors is required, the terms of the award indicate the frequency of reports (generally annually and/or at end of the project). Contract and Grant Accounting (C&GA) uses the cost share account information in the financial accounting system to create sponsor required formal cost sharing reports.
- Fund balances in the cost share accounts will be carried over to the next fiscal year if the contract is not closed out.
- Cost share accounts will be held to the same approval process as the sponsor accounts.
- Time and Effort reports will be produced on salary costs which are subject to the Time and Effort certification policy and procedure.
- Generally, funds from the sponsoring agency and cost sharing funds should be spent at about the same rate throughout the project, for example, when 10% of sponsoring agency funds have been spent, 10% of cost sharing funds should have also been spent. This provides even support by both parties throughout the project and prevents problems at the end of the project. This may not be possible if cost sharing funds are for equipment.
- In accordance with UTD’s close-out procedures, sponsored research awards are final billed 60 to 90 days after the end of the period of performance unless an extension has been granted or a risk memo has been submitted pending an extension. After all receivables are collected on the final bills, any remaining funds in the cost share account will be returned to the school/department funding the cost sharing.
7.0 - Roles and Responsibilities
It is the responsibility of the:
Principal Investigator to:
- Ensure compliance with the Cost Sharing Policy
- Identify cost sharing commitments in proposals
- Obtain approval for cost sharing commitments from the Dean, Department Chair, Provost or other UTD officials as appropriate
- Obtain documentation of third-party contributions
- Assure that committed cost sharing effort is provided and documented
- Ensure that division personnel involved in financial administration of sponsored projects are familiar with the Cost Sharing Policy
- Commit Divisional funding, as appropriate, to meet cost sharing requirements
- Monitor awards to assure that cost sharing requirements are met and recorded and that the account budgets are not overrun
- Cost share account overruns will be the responsibility of the School/Department responsible for the account
Office of Sponsored Projects to:
- Advise principal investigators and divisional administrators of the cost sharing requirements associated with particular grant or cooperative agreement programs
- Review proposals prior to submission to assure that formal cost sharing commitments are fully documented and that all necessary approvals have been obtained
- As part of the award initiation process, inform investigators, divisional personnel and central administrative departments of the details of the cost sharing requirements associated with particular awards
- As necessary, negotiate revisions to cost sharing requirements with sponsoring agencies
Contract and Grant Accounting to:
- Monitor awards, in conjunction with the PI and the school business officers, to assure that cost sharing requirements are being met
- Report and certify cost sharing to sponsoring agencies as required
- Inform principal investigator or cognizant official when cost sharing requirements are not being met
Controller’s Office to:
- Assure that cost sharing is correctly reflected in the UTD’s indirect cost rate calculations
Last Updated: August 8, 2012