Policy 2114: Facilities and Administration (F&A) and Fringe Benefit Rate Proposal Preparation and Negotiation

Subject Area: Financial Reporting
Responsible Office: Financial Services
Sponsor: Chief Financial Officer
Originally Issued: February 1981
Revised: February 2010, December 2014, February 2021
Refer Questions To: Carla Bucci, 773-702-3691

Purpose: To establish responsibility for preparing F&A and Fringe Benefit Rate Proposals and negotiating such rates with the University’s Federal cognizant agency.

Introduction

Facilities and Administrative (F&A) costs (also referred to as “Indirect Costs”) are those that are incurred for common or joint objectives and therefore cannot be identified with a particular activity. Financial Services calculates F&A rates for research, instruction and other sponsored activities and submits those calculations as a proposal to the University’s cognizant Federal agency, the Department of Health and Human Services (DHHS). Using the University’s Proposal as a starting point, the University and DHHS eventually arrive at a negotiated rate agreement.

Fringe Benefit costs are those that are incurred for providing employees with allowances and services in addition to regular salaries and wages.  Examples of fringe benefits are health insurance, retirement, tuition remission, and workman’s compensation and unemployment. Financial Services annually calculates fringe benefit rates for benefit eligible and benefit ineligible employee categories. The Federal benefit eligible and ineligible rate proposal is submitted to the University’s cognizant Federal agency, the Department of Health and Human Services.  Using the University’s Proposal as a starting point, the University and DHHS eventually arrive at a negotiated rate agreement.

Policy

1. Financial Services is responsible for preparing the F&A and Fringe Benefit rate proposals submitted to its Federal cognizant agency.
2. University departments will provide to Financial Services information that is needed to complete the proposals.
3. The proposals will be prepared in accordance with Federal regulations.
4. The proposals are reviewed by Financial Services staff and in some cases consultants prior to their submission to the Federal cognizant agency.
5. Financial Services will respond to data requests and coordinate any site visits from DHHS.
6. The University will negotiate F&A and Fringe Benefit rates with DHHS resulting in official rate agreements signed by both parties.