You raise an interesting question and one that I argued at
great length with the U.S. Department of Education several
years ago.  I thought that an 8% IDC limit on training
grants meant that the difference between our instructional
rate and 8% was cost share.  This was particularly important
when we had to cost share/match some funds.  Their position
was that only allowable costs could be used as cost share.
Since the difference was in unallowed costs, they could not
be used as cost share.  Neither I nor COGR could get them to
budge.  Jane's response reflects the updating of this
rationale with the times.

------------------------------

Date:    Tue, 21 Jul 1998 15:53:55 -0400
From:    Rusty Okoniewski <xxxxxx@GNV.IFAS.UFL.EDU>
Subject: Unrecovered Overhead used as matching

I have an issue that begs for both a policy question
response
and a practical approach.  I would especially like to hear
from
Land-Grant Institutions, but any thoughts would be welcome!
So
here goes:

 *****Policy Question******
 Has anyone had a difficult time with a federal agency (in
our
 case, USDA)
refusing to accept unrecovered F&A as an allowable match
when
the F&A programatically allowed is less than the negotiated
rate?
 Originally published guidelines (in effect at the time the

 proposal was
submitted) for the program in question (USDA Challange
Grant)
had mentioned several specifics of what may or may not be
used
for the matching committment including the difference
between
the institution's negotiated rate and USDA published rate.
However, under the new USDA-AREER  funding, the agency
(USDA)
has reneged on the initial guidelines as published and is
insisting on using what appears to be selected parts of law
as
it has deemed desirable.
 This is making for some difficult times in reworking
budgets,
 etc. under
the "new" rules. (Especially with the matching components!)
Has
anyone else had this problem and how did you deal with it?

 ******Practical Approach Question*****

In the USDA's response to our inquiry, we were informed that
the
Agriculture Secretary's legal counsel interprets the
limitation
to apply both to indirect and to the use of indirect for
matching.

While our institutional counsel works with the USDA, we are
faced with what we believe are our only options:

1. Hold up (or perhaps, withdraw) proposals that have hard
deadlines;

2. Go ahead and charge the difference between the 19% and
our
negotiated 44.5% federal rate as unrecovered indirect and
let
the legal counsels of both USDA and our institution work it
out;

3. Submit proposals with itemized operating expenses
(usually
dealt with as indirect costs) as matching, (presuming we
will
have enough that qualify under CAS)

or

4.   Agree to this new reduced rate and proceed.

If you have other thoughts, suggestions or information of
how
your institution or others are coping with this very
significant
reduction in indirect match and USDA/CSREES' mid-process
creation of a special fee, please advise.

Rusty Okoniewski, Interim Director,
IFAS Sponsored Programs
University of Florida
McCarty Hall-D (Bldg. 498)
P.O. Box 110110
Gainesville, FL 32611-0110 USA
E-mail: xxxxxx@gnv.ifas.ufl.edu
Voice: (352) 392-2356
Fax: (352) 392-8479
Suncom: 622-2356

------------------------------

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*   Western Michigan University        *
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