Research Policy Analysis and Coordination
State of California
In coordination with the California State University, UC will gradually increase indirect cost recovery for on-campus projects funded by State of California agencies up to 40% Modified Total Direct Costs (MTDC).
- 25% of the UC indirect cost (IDC) rate for state agencies comprises the core administrative component. This component does not recover facility costs necessary to sustain UC activities on campus.
- For on-campus projects, facilities costs will be added each year in increments of 5% until a total Facilities and Administrative (F&A) rate of 40% MTDC is reached.
- For projects performed off-campus, only the 25% administrative component will be applied. The off-campus rate will not escalate as the administrative component is capped at 25% MTDC.
- The federal definition of MTDC, found in each of UC's federally-negotiated rate agreements, is used in all calculations.
Update - June 4, 2021
Per UC Chief Financial Officer Nathan Brostrom, the rate for on-campus projects funded by State of California agencies will not escalate on July 1, 2021. The rate will remain 30 percent from July 1, 2021 to June 30, 2022. It is currently anticipated that the rate will escalate to 35 percent effective July 1, 2022.
Update - April 15, 2020
Due to various interactions with the State on multiple levels and compounding economic variables existing at this time, UC Interim CFO Paul Jenny has directed UC to delay the 5% IDC rate escalation for state-funded on-campus projects for one year. That is, the rate escalation from 30% MTDC to 35% MTDC that was originally scheduled to occur on July 1, 2020 will now occur on July 1, 2021.
|25% through June 30, 2019||25%|
|30% through June 30, 2022|
|35% through June 30, 2023|
|40% starting July 1, 2023|
In a February 12, 2019 letter to the Chancellors and the ANR Vice President, Chief Financial Officer Nathan Brostrom confirmed that, in accordance with the first IDC rate escalation (from 25% to 30% MTDC), on-campus agreements from all State of California agencies except for the California Department of Food and Agriculture (CDFA),with an effective date of July 1, 2019 or later, shall require recovery of 30% MTDC. This rate does not apply to federal funding passed through a California State agency to UC, as further described below.
The original rate schedule for State of California agencies was established in RPAC Memo 16-01.
California Department of Food and Agriculture
In 2017, CDFA Secretary Karen Ross and CFO Brostrom agreed to a separate rate schedule for funding that originates from CDFA. Starting on July 1, 2019, IDC on funding originating from CDFA should recover indirect costs at 25% MTDC. Certain Marketing Orders and Commodity Boards are subject to differing rates as mutually agreed to by the UC CFO and CDFA.
For “training” activities, a reduced rate of 8% MTDC will be accepted, consistent with NIH's F&A limitation for institutional training grants. This rate may be used for training grants that are in support of UC's educational mission, and does not apply in instances where a UC campus provides training to a state agency.
Federal Pass-Through Funding from State of California Agencies
An appropriate F&A rate agreement, rather than the UC Rate, must be applied when a State of California agency is acting as a pass-through entity (PTE) of federal funding to UC. A PTE, a non-Federal entity that provides a subaward to a subrecipient to carry out part of federal project, is not authorized to make unilateral restrictions of indirect cost recovery.
- If a "subrecipient already has a negotiated F&A rate with the Federal government, the negotiated rate must be used" in a subaward, according to Q-134 of the Chief Financial Officers Council's Frequently Asked Questions (May 3, 2021).
- Individual UC campuses do not have delegated authority to reduce or waive the campus federally-negotiated rate for a pass-through from a State agency.
- Reduction of the campus F&A rate may not be “encouraged or coerced in any way by the Federal awarding agency or pass-through entity," according to Q-132 of the CFO Council's FAQ.