Indirect Rate Development Process

Introduction

The NCAR Budget & Planning Office is responsible for developing the NCAR Indirect Cost Rate and Facility Usage Rates for inclusion with the UCAR indirect rate proposal to NSF. The NCAR Budget & Planning Office is also responsible for the oversight and monitoring of the NCAR indirect cost pool budgets as well as the internal budget allocation process to the NCAR labs.

Composition of the Pool

The NCAR Indirect Cost Pool consists of the NCAR Director’s Office, Division Indirect Costs including bid and proposal costs and general administration costs associated with the management and administration of each of the nine NCAR divisions; and allocation of the Communications Cost Pool; the Facilities Cost Pool; and the UCAR G&A Cost Pool. Prior year variance carry-forward is also included in the NCAR Indirect Cost Pool. The NCAR Director’s Office cost item consists of Director’s Office operations including the salaries and benefits of the NCAR Director and the Director’s Office administrative staff; the Associate Director’s salary and benefits and associated supplies and services, travel associated with the Associate Director’s functions; the Budget and Planning Office staff salaries and benefits and associated supplies and services, and travel.

Types of Costs

Costs included in this pool may consist of salaries, associated fringe benefits, materials and supplies, purchased services, travel and depreciation and interest related to general administration and general expenses that cannot be readily identified with a particular final cost objective.

Base

NCAR indirect costs are allocated on the basis of modified total direct costs (MTDC) to benefiting NCAR programs. MTDC consists of direct salaries and wages, fringe benefits, materials and supplies, purchased services, travel, and subcontracts up to the first $25,000 of each sub-grant or sub-contract per year. Excluded from the MTDC base are equipment, contract amounts above the first $25,000, and participant support costs. NCAR may, with prior approval from the NSF Program Officer, cosponsor the indirect costs of certain grants in which the sponsoring institution or agency does not allow the application of indirect costs. Although these grants are not included in the MTDC base, the associated MTDC costs from the cosponsored costs are included in the NSF program base.

Process

Pool Costs

1. Corporate guidelines and rate development schedules are provided to NCAR as a first step in the rate development process. Guidance may consist of salary and non-labor inflation assumptions and other guidance that may be necessary. Director’s Office and Associate Director operation costs are obtained from the Director’s Office Administrator in consultation with the NCAR Director and Associate Director. The Director of Budget and Planning provides detail cost estimates for the Budget and Planning Office budget. Division indirect cost budgets are developed directly by the Budget and Planning Office staff.
2. Prior year actual expenditures and current year budgets for each function within the Director’s Office are organized into spreadsheets as a basis for preparing the budget for inclusion in the rate submission. Staffing schedules are also updated for the latest personnel changes including projected salary increases for the current year and the following year. Inflation factors for non-labor costs and the new benefit rate are also incorporated into the budget calculation. Known one-time or new ongoing costs are determined at this time usually in consultation with the NCAR Director and Associate Director.
3. Division Indirect Budgets are calculated by the Budget and Planning Office using a set formula based on divisional MTDC levels. The NCAR Directors' Committee approves this formula. Each division indirect budget varies in relation to that division’s MTDC growth. As a division’s program grows (MTDC increases) the division's indirect budget increases. When the division’s program declines (MTDC decreases), the division’s indirect budget is reduced.
4. The NCAR Associate Director provides guidance to the Budget and Planning Office and reviews the rate submission during each step in the rate development process.

Pool Base

1. Modified Total Direct Cost (MTDC) information is provided to the Budget and Planning Office by each NCAR division.
2. The Budget and Planning Office develops summaries by division of prior year actual MTDC activity. This information is provided to each Division Administrator for review. The division administrator reviews the prior fiscal year MTDC actuals and makes adjustments based on anticipated program changes. Changes may be based on current spending activity and projected carryover estimates into the next year, proposals submitted for additional funds, anticipated new program activities, and anticipated completion of current projects. These updated estimates for the current year and the following year are provided to the Budget and Planning Office approximately four months prior to submission of the rate to the National Science Foundation.
3. Base estimates are reviewed by the Budget and Planning staff and are compared with additional base trend analyses developed by B&P. If time permits, NCAR divisions are provided preliminary base numbers for review and comment prior to or in parallel with the NCAR Associate Director’s review of the base.

Preliminary Rate Calculation/Allocation Estimates

Once all base and cost pool estimates have been reviewed, a preliminary rate is calculated using estimates for the Communications, Facilities, and G&A allocations if current allocation estimates are not available. The NCAR Associate Director approves the preliminary rate estimate prior to submission to the UCAR Budget Office.

Forward Preliminary Rate Information to the UCAR Budget Office

The preliminary rate information for the NCAR Indirect Cost Rate is forwarded electronically to the UCAR Budget Office, where the formal rate calculation is completed.

Benefits Rate

Cost Pool

Beginning in Fiscal Year 1997, two benefit rates are in effect. A full benefit rate is applied to expensed payroll of regular employees and a reduced benefit rate is applied to wages of casual employees and negotiated agreement payments. Pool components allocated to total expensed payroll, including casual wages and negotiated agreement costs:

• Employer share of FICA (A)
• Travel accident insurance (A)
• Unemployment insurance (A)
• Worker’s compensation insurance (A)
• Wellness seminars and programs beneficial to the entire staff (A)
• Employer cost of the bus pass program (Eco-pass) (A)
• Consulting services for retirement and investment (A)
• Variance carry-forward (A)

Pool components allocated to regular employee expensed payroll only:

• Employer share of medical and dental plan (B)
• Group life insurance (B)
• Employer share of retirement plan (TIAA/CREF) (B)
• Educational assistance (B)
• Long-term disability insurance (B)

Non-work time, including the following:

• Vacation used (B)
• Vacation liability (B)
• Holidays (B)
• Sick leave (B)
• Educational time (B)
• Military duty (B)
• Jury duty (B)
• Facility shutdown and other non-work time (B)

Allocation Base

Employee benefits are allocated on the basis of expensed payroll. Note, expensed payroll excludes salaries paid for non-work time. Beginning in Fiscal Year 1997, two benefit rates are in effect. One benefit rate is applied to regular employee expensed payroll, and a reduced benefit rate is applied to casual employee wages and severance payments/negotiated agreement costs. Benefits costs allocated to all employees are FICA, travel insurance, unemployment insurance, worker’s compensation, Wellness Program, free bus pass, consulting services, and the prior year variance carry-forward. All other costs in the benefits cost pool are allocated based on regular employee expensed payroll.

Rate Computation

Facility Usage Rates

• CISL GAU (PDF)
• EOL SUR (PDF)
• EOL AMR (PDF)
• EOL Machine Shop (PDF)
• Service Centers -CSCs (PDF)