Last Updated: January 11, 2016 12:24:08 PM PST
Find links to information you need to understand for cost sharing on sponsored projects, and guidelines for using the Cost Sharing System (CCS).
Avoid cost sharing commitments when possible
- Is costly to the university
- Creates significant administrative workload
- Reduces cost recovery of both direct and indirect (F&A) costs
- Creates potential liability for the university
Cost sharing background
In cost sharing, the university commits resources to projects that are funded by external sources, usually in the form of contracts or grants. UCSD's cost sharing resources can include:
- Staff time
- Cost of supplies and materials
- Equipment costs
- A combination of the above
- Other types of costs
The sponsoring agency does not reimburse the expenses associated with the cost shared activity but is paid by the university or another party involved in the project, such as a subcontractor.
Cost sharing commitments must be carefully recorded to meet the tracking and reporting requirements of federal regulations.
Generally, the same rules that pertain to the allowability of costs charged to a Sponsored Project apply to those costs that are used to meet the cost sharing commitment. The Principal Investigator (PI) must determine costs used for sharing.
Costs to meet the cost sharing commitment can take the form of an expense, which may include:
- An individual's salaries and benefits commitment above 5%
- Lab supplies and other allowable expenses
- Facilities and Administrative (F&A) costs associated with the cost shared direct costs
The department chair or director providing the resource must approve use of the expenditure transactions posted to the operating ledger. Costs can only be used once.
Note: If charging costs directly to the project would have generated F&A, the total cost sharing commitment should include the associated F&A costs, calculated at the applicable negotiated F&A rate.
Commitment of other assets
Costs can also be the commitment of other assets or resources for which cost may or may not be reflected on the University's financial ledger as an expense, such as equipment depreciation costs.
Some non-expenditure and externally donated resources may possibly be used for cost sharing under very limited circumstances. Use requires the approval of the Vice Chancellor, Resource Management and Planning.
For more information, see the UCOP Contract and Grant Manual (PDF).
Sources of allowable costs
Costs allowable as a University contribution to direct costs may come from the following non-federal sources and generally other sponsored projects:
- Departmental research funds
- Gift or endowment funds
- University-paid sabbatical leave salaries
- Salaries and benefits of faculty and other University-paid staff members directly engaged in the project
- Applicable F&A costs
Costs considered unallowable, under applicable cost principles or sponsor guidelines, should not be used to meet your cost sharing commitment without agency approval. Examples of such costs include:
- Maintenance and operation of physical plant
- General purpose equipment, buildings, land, and their improvements, unless approved by the agency
- General administration
- Departmental and research administration
- Student services
Departments should consider the risks of audit disallowance in their decision. Ask yourself, "Could I pay for this expenditure with the federal project funding?" If the answer is no, you probably cannot use the cost as cost sharing without agency approval.
Other costs that are not allowable include:
- Expenditures previously cost shared
- Salary in excess of a salary cap. If a sponsor imposes a cap on the level of salary eligible for reimbursement as a direct project cost, the amount of salary in excess of the cap is not allowable for cost sharing.
- Income earned under the award. Such income may not count as cost sharing unless expressly authorized by the sponsoring agency.
General Campus Matching Funds Program Guidelines - a guide for PIs in submitting requests for cost sharing.
Cost Sharing System
Use the Cost Sharing System (CSS) to record, track and review cost sharing transactions.
Cost Accounting Standards
Follow the Cost Accounting Standards (CAS) 501 as incorporated in OMB Uniform Guidance or 2 CFR 200. These standards require consistency between proposed formal cost sharing estimates and actual expenses and reporting. See Sponsored Project Cost Accounting Standards for details.
When non-UCSD entities are involved in a project, obtain evidence of their cost sharing expenditures. Enter this information in the Cost Sharing System as a miscellaneous transaction so that it will be included in the Cost Sharing Contribution Report.
Changes in type or timing
Principal Investigators (PIs) can change the type or timing of cost sharing — usually without agency approval — if the change agrees with the terms and conditions of the award.
- If the changes impact the project — such as change in its scope, likelihood of success, reduction of PI cost shared effort, etc. — the changes may require agency approval.
Reduction to Cost Share Amounts
- Reduction to proposed amount: When formal cost sharing is proposed as a percentage of the total award, the amount of proposed formal cost sharing may be adjusted downward when the total award amount ultimately received is less than the amount requested.
- However, if your formal cost sharing commitment is based on a percentage of the total award, and if the award amount is not fully spent or is reduced during the life of the award, the total commitment should be reduced proportionately, unless otherwise noted in the award terms and conditions.
- Reductions in the amount of formal cost sharing commitments will be reflected in the Cost Sharing System based on COEUS information. The department should justify and document these changes for audit purposes and work with OCGA to update COEUS accordingly.
- Formal cost sharing commitments stated as a percentage of a participant’s effort or a specific expenditure commitment (such as for equipment), may not be reduced without written approval from the agency.
If you request a no-cost extension of an award that includes cost sharing, do not create additional cost sharing commitments.
- The original commitments, contained in the original proposal budget, text, or award documents, remain unchanged unless you include additional cost sharing in the extension request and the agency has explicitly approved it.
- You can complete existing cost sharing commitments during the approved extension.
Recording, updating, reviewing
In general, record cost sharing expenditures as often as you record research expenditures.
- If the award terms and conditions do not specify a certain rate of distribution of cost sharing expenditures, cost sharing commitments may be met and recorded at any point during the project.
- Cost sharing commitments must be met during the life of the project.
- PIs and sponsoring units are responsible for ensuring that cost sharing commitments are met. Failure to expend cost sharing in a timely manner can have adverse consequences, especially for awards with large amounts of cost sharing.
- Best practice is to enter the transaction monthly into the Cost Sharing System.
- Keep these points in mind as you consider making a cost sharing commitment.
- Make the minimum commitment necessary, which will reduce the University's tracking and reporting burden.
- Before making a commitment to cost sharing, determine the resources that will be used to fulfill it.
- Remember that a commitment of University resources usually requires the knowledge of the Management Services Officer (MSO) or Department Business Officer (DBO) and approval from the department chair or director.
- Remember that you may use expenditure sources only once to support a cost sharing commitment.
- Calculate the formal cost sharing commitment.
- The PI and department must calculate and document the cost sharing commitment's financial impact to the University and include this information in the proposal text and budget.
- Show salary commitments in the proposal budget as a percentage of an individual's time, not a dollar amount.
- For non-payroll cost reporting, use actual dollar amounts.
- Document the commitment.
- Summarize the information on the Request for Extramural Support (RES) form or in ePD.
- Include the following supporting documentation as needed:
- A clear description and dollar estimate of the amount of cost sharing that is being committed. Use OCGA published formulas for salary calculations and benefit rates.
- The type of cost sharing being committed: expenditures such as salary, benefits, equipment, supplies, or other expenses.
- Written documentation for any 3rd party cost sharing, if other non-UCSD entities are responsible for cost sharing on the project.
- Identification of appropriate funds to cover the cost of the cost sharing commitment is encouraged but not required.
Note: Without specific agency approval, other federal funds may not be used to meet cost sharing commitments. Unrestricted non-federal funds are typically used to meet cost sharing commitments. As noted above, a commitment of University resources usually requires the approval of the department chair or director.
- If the award has no cost sharing, check the "NO" box on the proposal RES form/ePD for the questions regarding cost sharing.
- Submit the RES form, the proposal, and the supporting documentation to OCGA or though ePD process.
- Accept and confirm any cost sharing once the award is made.
- Cost sharing commitments become final only upon the University's acceptance of the award.
- By accepting an award with formal cost sharing, the University incurs an obligation to document, track, and report the financial contributions to the project.
- Upon notification of award acceptance, the department should verify the existence and amount of any formal cost sharing.
Department Chair, Director, DBO, or MSO
- Approves cost sharing commitment and funding availability
- Validates cost sharing in the absence of the PI
Principal Investigator (PI) / Department
- Recommends whether to include formal cost sharing in the proposal
- Advises purchasing of subcontract cost sharing requirements
- Ensures that:
- The proposal text and budget accurately reflect their intent regarding cost sharing commitments
- The cost sharing portion of the Request for Extramural Support (RES) form/ePD is complete and submitted with each proposal
- Proposal budget costs and actual accumulating and reporting practices are consistent
- The level of accounting detail equals or exceeds the level of budget detail in proposals
- Required cost sharing data is entered in the Cost Sharing System (CSS)
- Records and information are available to support cost-sharing validations
- The university's cost sharing commitment is fulfilled for all cost sharing, including cost sharing from a sub-awardee and/ or secondary sponsoring units
- Supervises the department's reporting procedures
- Reports and validates all cost sharing effort on the CSS report
- PI (or MSO/DBO in his/her absence) validates in the Cost Sharing System
Office of Contract and Grant Administration (OCGA)
- Advises departments on appropriate cost sharing and analyzes proposals for compliance with cost-sharing requirements
- Coordinates the campus review and approval process for cost sharing
- Verifies that the cost sharing amount committed to by the department represents a reasonable estimate of the commitment stated in the award documents
- Activates, upon acceptance of an award, the cost sharing flag and enters the cost-sharing information in COEUS
- Requests approval for changes in referenced cost sharing from sponsoring agencies as needed
Office of Post Award Financial Services (OPAFS)
- Consults with department and/or OCGA as needed about cost sharing commitments, and communicates with them about any issues identified
- Monitors that cost sharing reported in the Cost Sharing System (CSS) represents a reasonable estimate of the cost sharing commitment
- Ensures that the amount cost shared is in compliance with cost accounting standards and agency policy
- Consults with and trains others in cost sharing policies and procedures
- Assists the campus community in the use and applicability of CSS
Vice Chancellor, Resource Management and Planning
- Reviews and approves cost sharing commitments that fall into the "other resources" category
Although federal reporting requirements for cost sharing activities vary from agency to agency, OMB Uniform Guidance or 2 CFR 200 requires ongoing tracking and validation of cost sharing activity.
- Formal cost sharing commitments, excluding personnel effort of 5% or less, must contain the total actual cost sharing amount.
- This amount will be reported to the sponsoring agency according to the terms and conditions of the award.
- At the end of the reporting period, the department ensures the commitment is met, validated, included wih the FER and submitted to OPAFS.
- OPAFS will include the cost sharing information in the project financial reports that are sent to the sponsoring agency.
Cost sharing information accumulated by the campus should:
- Demonstrate compliance with the terms of specific awards
- Support financial reporting to the agency on the entire scope of the project
- Satisfy consistency requirements of the Cost Accounting Standards (CAS), as they apply to costs that are proposed and accounted for
Cost Sharing Contribution Reports
These requirements and objectives can be met through the Cost Sharing Contribution Report produced by the Cost Sharing System (CSS), the university's official system for tracking, verifying, and reporting formal cost sharing.
The contribution report provides accumulated cost sharing by budget and/or project period and tracks start and end dates, ceiling amounts, and specified months for cost sharing.
UCSD uses CSS data and reports for:
- Cumulative cost sharing, monitoring, and expenditure reporting for a specific project
- F&A rate development
- CAS compliance review
- Determining the availability and source(s) of funding to meet cost sharing commitments
Reporting costs not captured by the Cost Sharing Systems
UCSD is also responsible for reporting non-UCSD costs. Non-UCSD entities provide UCSD with a cost sharing validation to pass along to the agency.
- A subcontractor on a UCSD award has committed cost sharing
- UCSD personnel funded by fellowships that are paid outside the payroll system
- UCSD personnel funded by Howard Hughes Medical Institute (HHMI) or Ludwig Institute for Cancer Research
- UCSD emeritus who are donating their time
The contribution report includes a validation that committed effort was completed on the project.
- A sponsoring agency typically recognizes committed effort as an estimate, not a firm monetary amount.
- The actual cost of the effort will constitute the reportable cost sharing on that project.
- If the expenditures differ significantly from the budget, an explanation and/or adjustment may be required.
Validating non-UCSD efforts
Effort not paid by UCSD must be validated by the individual or entity contributing the effort.
- Validation may be by letter, e-mail, or other available documentation.
Be prepared to provide auditors with supplementary information and records that might be needed to explain non-UCSD costs that were contributed and certified or validated.
Inaccurate or non-existent tracking and/or reporting may negatively impact the PI, department, and the university, possibly causing:
- A reduction of the agency award by the amount of any unmet formal cost sharing commitment
- A reduction in future funding
- A reduction of the campus F&A rate (each point of the rate equates to about $12 million per year)
- Additional audit disallowances
- Damage to the university's reputation
Records are maintained for audit purposes according to the university's Records Management Disposition Manual (PDF).
Formal Cost Sharing
Most discussion related to cost sharing, and all discussion in these Blink pages, refers to formal (tracked and reported) cost sharing. Formal cost sharing occurs in three ways:
- Formal/ Mandatory cost sharing: Required by agency policy or award terms and conditions.
- Formal/ Voluntary committed cost sharing: The university may voluntarily commit the use of its resources. With some agencies and under certain circumstances, these commitments become a requirement of the award and must be treated the same as mandatory cost sharing that must be tracked and reported.
Voluntary cost sharing becomes "formal" cost sharing only if one or more of the following criteria apply:
- Cost sharing is specifically identified and a monetary value or a percent of effort is established in the proposal budget
- Cost sharing is specifically identified in the proposal text
- Cost sharing is specifically identified and a monetary value or a percent of effort is established in the award document, either directly or by reference to the proposal
Unless at least one of the three critiera also applies, the following alone do not create a cost sharing commitment:
- Completing UCSD internal documents such as internal budgets
- Completing a list of current or pending support that associates a percentage of effort with a specific project
- Providing voluntary cost sharing that was neither specifically identified nor assigned a monetary value in the proposal budget, proposal text, or award document
- Formal/Statutory cost sharing refers to cost sharing that is required by law, stating that the grantee (university) must share in the cost of research projects. Statutory cost sharing is typically tracked by central administration. No entry is required in the Cost Sharing System (CSS), and departments do not report these costs.
Example: The National Science Foundation (NSF) previously required 1% cost sharing of research projects resulting from unsolicited proposals.
Informal/ Voluntary uncommitted cost sharing
If the criteria noted above for formal cost sharing are not met — such as when there is no monetary value or effort noted in the proposal budget, text, or award document — voluntary cost sharing remains informal and tracking or reporting is not required.
An example of voluntary cost sharing would be time spent on a project by a principal investigator that is above and beyond the amount of time committed or paid by the project or required by any formal cost sharing commitment. This time can be considered project collaboration or enhancement.
Project collaboration or enhancement is a voluntary commitment of university resources/ funding to supplement externally sponsored projects. Project collaboration or enhancement exists if the cost fits all of the following criteria:
- Is not quantified in the proposal budget
- Is not quantified in a narrative or transmittal letter, and support is described as resources available for the project
- Is not quantified and not required as a condition to the acceptance of the award
Cost sharing exceptions
Certain activities that may otherwise be considered formal cost sharing are exempted from reporting requirements, including:
- Formal cost sharing commitment of an individual's effort of 5% or less
- Commitments that are not specifically identified as a cost element, percent of effort, or some other measure that can be reduced to a dollar value
Example: University expenditures in support of research which are not separately budgeted, and which are not included or addressed in either the project proposal and/or in the award notice, are classified as departmental research.
Q. Who can Validate (confirm) cost sharing and why?
A. The most important component of meeting our cost share commitment involves the validation and recordation of the cost share commitments that have been made. The two major parts of this component include the establishment of where those financial records will be found (index(s) and the verification when final reports are issued that our cost share commitments have been reached. The supporting financial transactions and other records are to be included as a part of the final document record.
Our compliance requirements are to:
- Insure that we have a documented record of those contributions
- Insure that the same contributions are not re-applied; and to
- Have records available for instances when an audit selects an award containing cost sharing.
Managers (MSOs and DBOs) are responsible for assuring that commitments were met and the validation that we have documentation record(s). This is different from Effort Certification where we require PIs to review and certify effort in the period worked, but instead this is a documented record of all expenditures applicable to the cost share commitment made.
Note: Remember to include documentation records to support non-UCSD expenditures.