Indirect Cost Recovery (ICR), also referred to as "overhead" and “Facilities and Administrative (F&A),” pertains to the funds received by the university for providing services in support of contracts and grants. The granting agencies pay these funds to the university as reimbursement for the indirect support offered to the grants and contracts.
What are Indirect Costs?
When crafting a grant proposal, researchers outline all the direct expenses associated with their research endeavors, encompassing support for graduate student researchers, necessary supplies, and dedicated staff time directly linked to the grant's objectives. Additionally, there are indirect costs associated with research that aren't directly tied to specific projects but play a supportive role on an institutional level.
These indirect costs include departmental administration, Sponsored Projects Office (SPO), extramural accounting, procurement, library services, facilities debt service, and the operation and maintenance of those facilities. Such expenses are categorized as facilities and administration (F&A) costs by the Federal Office of Management and Budget (OMB). Institutions recoup these costs by applying a predetermined percentage rate to a portion of the direct costs incurred through the grant. The negotiation of these percentage rates for each institution is conducted with the Department of Health and Human Services by our Costing Policy & Analysis team.
Budget Model Overview
Distribution Timing
Indirect Cost Recovery funds collected from research sponsors each fiscal year are centrally managed and distributed in the subsequent fiscal year. The distribution is targeted for the first quarter to ensure the timely allocation of resources.
Mandatory Deductions
The State of California and the University of California have an agreement governing the distribution of federal overhead recovery funds. Under this agreement, mandatory deductions are made from the total recovery amount before any further distributions are executed.
- Garamendi - The term “Garamendi” comes from state legislation authored by then-Senator Garamendi in 1990. The California law (Government Code 15820.21) provided a mechanism for institutions that invest in a new or renovated research facility to recover infrastructure costs to support the facility's debt service, utilities, and maintenance costs through the ICR generated within the facility.
- Support of contract and grant administration.
- Supplement to the Universities General Funds core budget.
Campus Approved Distributions
Research-focused initiatives to help support critical infrastructure and administrative functions. Approved distributions are cost-shared between the Central Campus and Research Control Points. Examples include:
- Recruitment and retention
- Environmental Health and Safety
- Contract and Grant software
Research Control Points
Funds distributed to the Research Control Point are responsible for determining how they will be invested across the departments within their unit. The ICR budget model does not dictate how the Dean/Vice Chancellor/Organized Research should allocate funds to departments or PIs; those decisions are made locally.
Central Campus
Funds are redistributed to support research, capital investments, and campus-wide initiatives.
Example include:
- Debt Service
- Facility Leases
- Long-Range Development Planning
- Development (Fundraising)
- Centrally Covered Benefits
- Insurance Costs
- Information Technology
Budget Model Detail
