Cost Sharing Clarification

On January 5, 2001 the Office of Management and Budget (OMB) issued a policy statement clarifying the OMB Circular A-21 treatment of “Voluntary Uncommitted Cost Sharing.” Voluntary uncommitted cost sharing (VUCS) is defined by OMB as “university faculty (including senior researchers) effort that is over and above that which is committed and budgeted for in a sponsored agreement.” This differs from (mandatory or voluntary) committed cost sharing which is cost sharing specifically pledged in the proposal’s budget or award.

The OMB clarification is consistent with MIT’s policy that cost sharing committed in a research proposal, whether offered voluntarily or mandated by the sponsor, becomes a condition of the award and must be captured in the accounting and payroll distribution system. The OMB clarification also states that (voluntary) uncommitted cost sharing represents “faculty-donated additional time above that agreed to as part of the award. ” This means that actual contributed effort in excess of that which was pledged in the research proposal should not be included in MIT accounting or payroll records. This interpretation by OMB is also consistent with the MIT policy on faculty effort reporting which states that effort reports should reflect only the activity for which the faculty member is compensated by the institution.

The OMB clarification also includes the following requirement:

“In addition, most Federally-funded research programs should have some level of committed faculty (or senior researchers) effort, paid or unpaid by the Federal Government. This effort can be provided at any time within the fiscal year (summer months, academic year, or both). Such committed faculty effort shall not be excluded from the organized research base by declaring it to be voluntary uncommitted cost sharing. If a research sponsored agreement shows no faculty (or senior researchers) effort, paid or unpaid by the Federal government, an estimated amount must be computed by the university and included in the organized research base. However, some types of research programs, such as programs for equipment and instrumentation, doctoral dissertations, and student augmentation, do not require committed faculty effort, paid or unpaid by the Federal Government, and consequently would not be subject to such an adjustment.”

MIT policy states that faculty should avoid making specific commitments to cost-share effort in research proposals unless it is required by the sponsor. Preferably, research proposals will include the following statement in lieu of a specific commitment: “MIT fully supports the academic year salaries of Professors, Associate Professors, and Assistant Professors, but makes no specific commitment of time or salary to this particular research project.”

Also, if a faculty member anticipates that she or he will devote a significant portion (i.e. 10% or more) of total academic year effort to a single project, this effort must be included in the research proposal and be separately accounted for and certified.

In the circumstance described in the OMB Clarification paragraph quoted above, when faculty do not include any effort, either cost-shared or direct charged, in a research proposal, MIT has negotiated an agreement with the Office of Naval Research which address the calculation of contributed effort. To cover these situations, MIT makes a calculation of cost-shared effort that makes any further action on the part of departments, labs and centers unnecessary.

In summary, the OMB cost sharing clarification closely parallels the MIT policies on cost sharing and faculty effort reporting and the clarification has little impact for MIT administrators and faculty. However, we continue to strongly encourage PIs to refrain from making explicit commitments to cost-share unless it is required by the sponsor since these commitments trigger a series of accounting and reporting requirements and have a negative impact on Institute F&A recoveries.