FUNDING STREAMS INITIATIVE SUMMARY REPORT

Transcription

1 FUNDING STREAMS INITIATIVE SUMMARY REPORT Indirect Cost Recovery Report to the Funding Streams Budget & Tax Workgroup Summary Current process and treatment: Indirect cost recovery (ICR) funds from extramural activities are collected by the campus and transmitted to OP at fiscal year end. The allocation of ICR is currently made by OP to the campus based on the overhead generated through federal and private contract and grant activity in the previous year The UCSD allocation of federal ICR funds derives from agreements between the University and the State, as well as OP s policy. State indirect costs are currently retained at OP except for the Cellular Institute for Regenerative Medicine (CIRM). Under the current process, ICR is returned to campus as a combination of funds, including 19900, 19933, 05397, 07427, and (CIRM). Future process and treatment: Distribution: all funds returned to campuses. Campus will have to swap the portion of the ICR for other funds (estimated $30M). Current Attachment 1 shows the fund flow of federal indirect cost recovery during the years % of the federal ICR generated in Garamendi funded research buildings goes directly back to the source campus to pay the debt service and O&MP costs related to those facilities. The balance remaining after the Garamendi allocation is split, with 19.9% going to an Off the Top fund (69750) and the remaining 80.1% balance distributed between the UC General Fund (55%) [19900 and 19933] and Opportunity funds (45%) [05397 and 07427]. UCOP retains 6% for administration, Systemwide programs, and initiatives with the remaining 94% returned to the source campuses. o The Off the Top funds are used to help cover the costs of contract and grant administration. o The Opportunity funds are available to fund high priority needs at the University s discretion. The UC General fund is used by OP to cover the 2000 base budget, with only the growth over the 2000 base distributed as funds. Local Resource Allocation Process Current allocation of revenue and budget: Attachment 2 shows the 2010/11 allocation of 2009/10 indirect cost recovery funds. The funds allocated to the campus from OP are subject to campus ICR funding agreements, including campus Garamendi, lease funding arrangements and the SIO ship rate funding agreement (total $16M in 2010/11). OP has directed that a portion of the ICR funds ($151K ) be used to fund several local programs, including the Pre Tenure Award Program, the U/G Scholars Program, Pre Graduate Mentorship Program and the E. Cota Robles Fellowship Program. OP has also designated $7.462M to be used to cover inflationary costs in the general funds budget. ICR funds are also subject to special budget committee allocations, which currently include next generation network (NGN) [$200K in 10/11] and energy funding ($7M in 10/11). FY 10/11 is the last year of NGN funding. FSIWG - Indirect Cost Recovery Page 1 of 4 April 18, 2011

2 FUNDING STREAMS INITIATIVE SUMMARY REPORT The remaining funds are distributed 60% Academic/40% Administrative. The Academic distribution is based on a rolling two year average, with a portion of the Academic share allocated to the Library (5.3%) and the Academic Senate (3%). The remaining Academic share funds are distributed to the VC areas based on actual recovery. Future Each location will retain all indirect cost recovery funds generated from its own contract and grant activity, including state ICR. Attachment 3 shows the projected ICR return to the UCSD campus based on 2009/10 indirect cost recovery funds. Attachment 4 shows the projected ICR local distribution based on 2009/10 indirect cost recovery funds with the OP proposed tax amount of 1.64% applied to both direct and indirect costs. The UCSD local distribution to campus units is based on the existing model. This is provided as an example only of what the tax might look like to each VC unit if the tax were applied based on fund source. Direct costs of research cannot be assessed the OP tax, therefore, it is shown here as being paid from the ICR funds. Attachment 5 shows the projected clinical trial and CIRM ICR distribution with the OP proposed tax amount of 1.64% applied to both direct and indirect costs (based on 2009/10 amounts). Known or Potential Issues Identified Campus must swap the funds previously allocated as to a UCGF number. OP has provided three funds that campuses may use, one or all (19933,19941,19942). Need to decide whether to combine fund numbers or keep them separate. Should CIRM continue to have a separate fund number? Campus has the latitude to combine the non GF ICR funds into one fund number but must still ensure expenditure of 19.9% on contract and grant administration.. Campuses have been instructed to establish a permanent budget for CIRM, however, the CIRM funding is expected to expire in 2017 Campus must decide whether to revisit local distribution model with the return of additional ICR. Campus must decide whether Clinical Trial fund, CIRM funds and ARRA funds should be subject to 1.64% OP tax. The campus must decide whether to address that ICR funds are currently designated to fund a portion ($151K) of several local programs, including the Pre Tenure Award Program, the U/G Scholars Program, Pre Graduate Mentorship Program and the E. Cota Robles Fellowship Program The campus must decide whether to address that ICR funds ($7.462M in 10/11) are currently embedded in the general funds budget as inflationary costs. Recommendations The campus should swap the portion of ICR for funds and maintain that fund as ICR only, including CIRM (i.e. separate from other funding streams). PROS: Creates more transparency for the campus community regarding the allocation and use of ICR funds. CONS: Changing to (or other fund) eliminates reimbursement from central benefits pool FSIWG - Indirect Cost Recovery Page 2 of 4 April 18, 2011

3 FUNDING STREAMS INITIATIVE SUMMARY REPORT Permanently budget CIRM funds centrally and allocate on a current year basis to specific organizations identified only as CIRM funds. PROS: Allows the campus to continue to track and report CIRM overhead related expenditures. CONS: Loses the historical tag of fund Combine the educational and opportunity funds share of the ICR into fund and keep the separate fund number (69750) for contract and grant administration. PROS: One less fund number eases administration. Keeping fund number also eases the administration of ensuring the 19.9% is budgeted and expended for contract and grant administration. CONS: One time workload involved with changing funds for personnel, etc. FSIWG - Indirect Cost Recovery Page 3 of 4 April 18, 2011

4 FUNDING STREAMS INITIATIVE SUMMARY REPORT Attachment 1 -Federal Indirect Cost Recovery Flow from Gross FederalIndirect Cost Recovery Garamendi Funding Returned to Source Campuses Remainder 19.9% Off-the-Top Fund 949{, Returned to Source Campuses 80.1% 6% UCOP Common Fund 45% University Opportunity Fund Q491. fi Returned to Source Campuses Designated Campus Programs, Systemwide Programs, UCOP Common Fund 55% GeneralFunds Base General Funds Base Budget Growth Since Returned to Source Campuses as Funds 6% Designated Campus Programs, Systemwide Programs, UCOP Support FSIWG - Indirect Cost Recovery Page4of4 Apri/18, 2011

5 Schedule 4a 2010/11 ALLOCATION OF 2009/10 RESEARCH INDIRECT COST RECOVERY I. Summary of 2010/11 Indirect Cost Recovery Allocations to UCSD A. Allocation to UCSD 1. Federal Indirect Cost Recovery Gross Federal recovery $ 140,696,500 Less: Garamendi allocation retained by UCSD - detail below in section III.B. (12,279,500) Net Federal recovery available for Office of the President (OP) allocation $ 128,417,000 Less: OP adjustments 1999/00 "Base" of the Federal UC General Fund $ (28,368,000) OP Support allocation - 6% deduction (6,003,000) Federal UC General Fund Inflationary Block adjustments - Since 1999/00 (7,462,000) OP designated programs (151,000) Total OP adjustments (41,984,000) Less: Campus adjustments - self supporting investments Research facility funding arrangements (Campus Garamendi) $ (11,708,800) One-Time Savings from Debt Restructuring (Campus Garamendi) 3,401,800 (1) Net Research facility funding arrangements (Campus Garamendi) (8,307,000) Lease funding arrangements (3,054,600) SIO Ship-rate funding arrangement (1,171,300) Total Campus adjustments - self supporting investments (12,532,900) Net Federal recovery available for allocation $ 73,900, State Indirect Cost Recovery Gross State recovery $ 1,623,700 Less: State recovery retained by OP (1,623,700) Net State recovery available for allocation - 3. Private and Local Indirect Cost Recovery Gross Private and Local recovery $ 34,811,000 Less: Educational Fund base and inflationary adjustments retained by OP (6,849,000) Net Private and Local recovery available for allocation 27,962,000 Total Net Indirect Cost Recovery Available for Allocation $ 101,862,100 B. Special Budget Committee Allocations 1. Less: NGN Funding from Indirect Cost Recovery (200,000) 2. Less: Energy Funding from Indirect Cost Recovery 3.8 points of 54.5% ICR Rate (7,028,000) Total Net Indirect Cost Recovery Available for Unit Allocation $ 94,634,100 II. Distribution of UCSD Allocation to Campus Units A. Campus Distribution to Academic & Administrative Areas The academic/administrative % split is set to reflect the 2006/07 net allocation percentage. B. Allocation within the Academic Area Academic Share Administrative Share 60.0% 40.0% Academic share of net recovery allocation - per section II.A. 60.0% $ 56,780,500 LIBRARIES: The Libraries' allocation of $3,009,000 is based on 5.3% of the Academic share. 1. Start-up funding of $6 million (one-time) is proposed for the first two years of Research Cyberinfrastructure Initiative (RCI): a. $3.4 million funding from Research ICR (Schedule 4) resulting from debt restructuring of some Campus Garamendi facilities and b. $2.6 million from student fee income, reflected in Sources & Uses (Schedule 7). A funding plan to support a permanent budget, beginning in 2011/12 and ramping up to $3.6 million in 2015/16, needs to be revisited. Page 4a - 1 CBO 12/2/2010

6 Schedule 4a 2010/11 ALLOCATION OF 2009/10 RESEARCH INDIRECT COST RECOVERY ACADEMIC SENATE: The allocation to Academic Senate - Committee on Research (COR) of $1,603,000 is based on 3% of the Academic share, less the campus supplement of $100,000, which has been phased down in $100,000 increments per year with 2010/11 being the final year. ACADEMIC UNITS: The remaining funds are allocated based on generation of indirect cost recovery by Academic Units for the prior two-year period. The 2008/09 and 2009/10 fiscal years are used in this year's allocation distribution. ACADEMIC ALLOCATION TABLE: The table below shows gross recovery by VC Unit, minus Garamendi and Campus arrangements. The net recovery is the basis for the relative share allocated to each Academic VC. Unit 2008/09 % 2009/10 % Two-Year Average Allocation 2010/11 General Campus Federal $ 40,379,985 $42,712,477 (Garamendi/Campus Adj.) (5,601,371) (7,887,217) State 261, ,914 Private/Local 12,383,247 14,522,499 Subtotal $ 47,422, % $ 49,649, % 33.8% $ 17,633,000 Health Sciences Federal $ 74,891,155 $81,880,125 (Garamendi/Campus Adj.) (18,828,411) (15,951,011) State 482, ,559 Private/Local 13,838,229 15,152,092 Subtotal $ 70,383, % $ 81,533, % 52.6% 27,440,600 Marine Sciences Federal $ 15,072,216 $15,642,380 (Garamendi/Campus Adj.) (1,991,350) (1,774,164) State 897, ,535 Private/Local 5,419,623 5,135,034 Subtotal $ 19,398, % $ 19,853, % 13.6% 7,094,900 Total $ 137,204, % $ 151,037, % 100% $ 52,168,500 Libraries 3,009,000 Academic Senate 1,603,000 Total Academic Allocation $ 56,780,500 C. Allocation within the Administrative Area Administrative share of net recovery allocation - per section II.A. 40.0% $ 37,853,600 CAMPUS RESERVE: The Campus Reserve's allocation of $3,028,300 is based on 8% of the total Administrative share. The 8% split is fixed to reflect the 2006/07 ICR allocation percentage within the administrative area. ADMINISTRATIVE UNITS: The remaining funds are distributed based on the relative share of the 2009/10 Core Funds budget exclusive of Purchased Utilities. Unit Percent of Total Allocation 2010/11 Chancellor's Organizations 7.4% $ 2,584,900 External & Business Affairs 40.3% 14,037,700 Resource Management & Planning 46.3% 16,116,000 General Campus - OCGA/TTIPS 6.0% 2,086,700 Subtotal 100% $ 34,825,300 Campus Reserve 3,028,300 Total Administrative Allocation $ 37,853,600 Page 4a - 2 CBO 12/2/2010

7 Schedule 4a 2010/11 ALLOCATION OF 2009/10 RESEARCH INDIRECT COST RECOVERY III. Summary of 2010/11 Distribution A. Permanent Distribution Allocation Allocation Model Model Permanent Unit 2009/ /11 Distribution General Campus $ 16,316,600 $ 17,633,000 $ 727,000 Health Sciences 23,165,000 27,440,600 3,257,600 Marine Sciences 6,480,700 7,094, ,900 Libraries 2,645,000 3,009, ,000 Academic Senate 1,297,000 1,603, ,000 Academic Subtotal $ 49,904,300 $ 56,780,500 $ 4,975, % 60.00% Chancellor's Organizations $ 1,768,600 $ 2,584,900 $ 729,700 Campus Reserve 2,661,600 3,028, ,300 External & Business Affairs 13,145,800 14,037, ,000 Resource Management & Planning 13,876,500 16,116,000 1,700,100 General Campus - OCGA/TTIPS 1,817,000 2,086, ,900 Administrative Subtotal $ 33,269,500 $ 37,853,600 $ 3,317, % 40.00% Subtotal $ 83,173,800 $ 94,634,100 $ 8,292,500 Special Budget Committee Allocations 6,594,000 7,228, ,000 Total Permanent Allocation $ 89,767,800 $ 101,862,100 $ 8,692,500 B. Special One-Time Allocations - deducted from Model allocation at I.A.1. Unit 2009/ /11 Permanent Change General Campus $ 5,575,000 $ 7,740,800 $ 3,299,400 Health Sciences 18,111,700 15,372,200 (471,300) Marine Sciences 1,921,300 1,699,400 (221,900) Total Special Allocations $ 25,608,000 $ 24,812,400 $ 2,606,200 C. Total Distribution Unit 2009/ /11 Permanent Change General Campus $ 21,891,600 $ 25,373,800 $ 4,026,400 General Campus - OCGA/TTIPS 1,817,000 2,086, ,900 Health Sciences 41,276,700 42,812,800 2,786,300 Marine Sciences 8,402,000 8,794, ,000 Libraries 2,645,000 3,009, ,000 Academic Senate 1,297,000 1,603, ,000 Academic Subtotal $ 77,329,300 $ 83,679,600 $ 7,781, % 70.06% Chancellor's Organizations $ 1,768,600 $ 2,584,900 $ 729,700 Campus Reserve 2,661,600 3,028, ,300 External & Business Affairs 13,145,800 14,037, ,000 Resource Management and Planning 13,876,500 16,116,000 1,700,100 Administrative Subtotal $ 31,452,500 $ 35,766,900 $ 3,117, % 29.94% Subtotal $ 108,781,800 $ 119,446,500 $ 10,898,700 Special Budget Committee Allocations 6,594,000 7,228, ,000 Total Distribution $ 115,375,800 $ 126,674,500 $ 11,298,700 Page 4a - 3 CBO 12/2/2010

8 Attachment 3 OP Funding Streams Model Indirect Cost Allocation Comparison Using 2010/11 Allocation of 2009/10 Indirect Costs Generated 2010/11 Future Additional Projected ICR Available Federal Indirect Cost Recovery Gross Recovery 140,696, ,696,500 - Less Garamendi (12,279,500) (12,279,500) - OP Base (28,368,000) - 28,368,000 6% Incremental Tax (6,003,000) - 6,003,000 Inflationary Block (2) (7,462,000) 7,462,000 OP Designated Programs (2) (151,000) 151,000 Campus Garamendi (11,708,800) (11,708,800) - One-Time savings from Debt Restructuring 3,401,800 (3,401,800) Other Adj (Lease/SIO Ship) (4,225,900) (4,225,900) - Net Federal Recovery 73,900, ,482,300 38,582,200 State Indirect Cost Recovery Gross Recovery 1,623,700 1,623,700 - Less: OP (1,623,700) - 1,623,700 Net State Recovery - 1,623,700 1,623,700 Private/Local Indirect Cost Recovery Gross Recovery 34,811,000 34,811,000 - Less OP Base/Inflationary Adj (6,849,000) - 6,849,000 Net Private/Local Recovery 27,962,000 34,811,000 6,849,000 Total Net Indirect Cost Recovery 101,862, ,917,000 47,054,900 Other Local Ajustments (1) (7,228,000) (7,228,000) - Total Net Indirect Cost Recovery 94,634, ,689,000 47,054,900 Notes (1) Special Budget Committee Allocations = $200K NGN funding + $7M Energy funding (2) These funds are currently distributed throughout the campus' budget. They would be available as part of the funding for redistribution if the allocation model is revisited. Additional funds from other sources would be needed to fill in general fund gap. FSIWG - Indirect Cost Recovery 4/18/11

9 Attachment 4 OP Funding Streams Model Indirect Cost Allocation Comparison with OP Proposed Tax Using 2010/11 Allocation of 2009/10 Indirect Costs Generated Additional Projected Current Future ICR Available Federal Indirect Cost Recovery Gross Recovery Less Garamendi 140,696,500 (12,279,500) 140,696,500 (12,279,500) - - OP Base (28,368,000) - 28,368,000 6% Incremental Tax (6,003,000) - 6,003,000 One-Time Savings from Debt Restructuring 3,401,800 3,401,800 - Campus Garamendi (11,708,800) (11,708,800) - Other Adj (Lease/SIO Ship) (4,225,900) (4,225,900) - Net Federal Recovery (A) 81,513, ,884,100 34,371,000 Inflationary Block (2) (7,462,000) 7,462,000 OP Designated Programs (2) (151,000) 151,000 OP Proposed Tax Directs- 1.64% - (8,217,700) (8,217,700) OP Proposed Tax Indirects- 1.64% - (2,106,000) (2,106,000) Net Federal Recovery (B) 73,900, ,560,400 31,660,300 State Indirect Cost Recovery Gross Recovery 1,623,700 1,623,700 - Less: OP (1,623,700) - 1,623,700 Net State Recovery (A) - 1,623,700 1,623,700 OP Proposed Tax Directs- 1.64% (234,700) (234,700) OP Proposed Tax Indirects- 1.64% - (26,600) (26,600) Net State Recovery (B) - 1,362,400 1,362,400 Private/Local Indirect Cost Recovery Gross Recovery 34,811,000 34,811,000 - Less OP Base/Inflationary Adj (6,849,000) - 6,849,000 Net Private/Local Recovery (A) 27,962,000 34,811,000 6,849,000 OP Proposed Tax Directs- 1.64% (2,426,392) (2,426,392) OP Proposed Tax Indirects- 1.64% - (570,900) (570,900) Net Private/Local Recovery (B) 27,962,000 31,813,708 3,851,708 Total Net Indirect Cost Recovery (A) 109,475, ,318,800 42,843,700 Total Net Indirect Cost Recovery (B) 101,862, ,736,508 36,874,408 Other Local Ajustments (1) (7,228,000) (7,228,000) - Total Net Indirect Cost Recovery (B) 94,634, ,508,508 36,874,408 Allocation to Academic Area 60% 56,780,500 78,905,105 22,124,605 Allocation to Administrative Area 40% 37,853,600 52,603,403 14,749,803 Current Future Delta Academic Distribution 60.0% 56,780,500 78,905,105 22,124,605 Health Sciences 52.6% 27,440,600 38,059,200 10,618,600 Marine Sciences 13.6% 7,094,900 9,840,400 2,745,500 General Campus 33.8% 17,633,000 24,456,300 6,823,300 Total 52,168,500 72,355,900 20,187,400 Libraries 5.3% 3,009,000 4,181,971 1,172,971 Academic Senate 3.0% 1,603,000 2,367, ,153 Administrative Distribution 40.0% 37,853,600 52,603,403 14,749,803 Chancellor's Organizations 7.4% 2,584,900 3,581, ,300 External & Business Affairs 40.3% 14,037,700 19,503,200 5,465,500 Resource Management & Planning 46.3% 16,116,000 22,406,900 6,290,900 General Campus - OCGA/TTIPS 6.0% 2,086,700 2,903, ,000 Total 34,825,300 48,395,000 13,569,700 Campus Reserve 8.0% 3,028,300 4,208,300 1,180,000 FSIWG - Indirect Cost Recovery Notes (1) Special Budget Committee Allocations = $200K NGN funding + $7M Energy funding - Based on FY 10/11 allocation model - Assumes no deviations from current distribution methodologies, although methodologies may need to be addressed - Academic distribution based on rolling 2-year average of IDC generated for FY 08/09 & FY 09/10 - Does not include CIRM, ARRA or clinical trial indirects. (2) These funds are currently distributed throughout the campus' budget. They would be available as part of the funding for redistribution if the allocation model is revisited. Additional funds from other sources would be needed to fill in general fund gap. 4/18/11

10 Attachment 5 OP Funding Streams Model Indirect Cost Allocation Comparison with OP Proposed Tax Using 2010/11 Allocation of 2009/10 Indirect Costs Generated Current Future Additional Projected ICR Return Clinical Trial Indirect Cost Recovery Gross Recovery 2,872,000 2,872,000 - OP Proposed Tax Directs- 1.64% - (218,200) (218,200) OP Proposed Tax Indirects- 1.64% - (47,100) (47,100) Net Clinical Trial Recovery 2,872,000 2,606,700 (265,300) Academic Distribution - Health Sciences 90% 2,614,200 2,372,700 (241,500) Administrative Distribution 10% 257, ,000 (23,800) External & Business Affairs 5% 128, ,000 (11,900) Resource Management & Planning 5% 128, ,000 (11,900) CIRM Indirect Cost Recovery Gross Recovery Less: Energy Funding 3,107,000 (214,000) 3,107,000 (214,000) - - Net CIRM Recovery (A) 2,893,000 2,893,000 - OP Proposed Tax Directs- 1.64% - (131,400) (131,400) OP Proposed Tax Indirects- 1.64% - (51,000) (51,000) Net CIRM Recovery (B) 2,893,000 2,710,600 (182,400) Academic Distribution 60% 1,736,000 1,626,400 (109,600) Health Sciences 64.3% 1,024, ,000 (65,000) General Campus 35.7% 568, ,400 (35,600) Total 1,592,000 1,491,400 (100,600) Libraries 3% 52,000 48,800 (3,200) Academic Senate 5.3% 92,000 86,200 (5,800) Administrative Distribution 40% 1,157,000 1,084,200 (72,800) Chancellor's Organizations 7% 79,000 73,800 (5,200) External & Business Affairs 40% 429, ,000 (27,000) Resource Management & Planning 46% 492, ,800 (30,200) General Campus - OCGA/TTIPS 6% 64,000 59,900 (4,100) Total 1,064, ,500 (66,500) Campus Reserve 8% 93,000 86,700 (6,300) FSIWG - Indirect Cost Recovery April 18, 2011