| Effective Date: 7/1/05 |
| Office of Origin: Controller |
Proper management of program income is essential to meet the fiduciary responsibilities of the University. Program income must be correctly accounted for, used, and reported in accordance with federal regulations and the terms and conditions of each sponsored agreement.
Cost Sharing: the portion of project costs not borne by the sponsor. Cost sharing may be either committed or uncommitted. If cost sharing is specified and quantified in the proposal narrative, budget, or budget justification, the University is committed even when not required by the sponsor. Costs incurred by the University to fulfill cost sharing pledges or commitments must coincide with the budget period of the sponsored award. For additional information on cost sharing see the UCSF 400-17 Cost Sharing Policy.
External Sale of Education-Related Activities: the assessment and collection of external revenue by a University unit for products or services provided to external users. If the products or services also are provided to internal users, the activity is a Recharge (see definition below) rather than an External Sale of Education-Related Activities. For additional information on this topic see the UCSF Guidelines and Requirements for Funds Received from Extramural Sources. External revenue is defined as funding that cannot be generated through a recharge in the UCSF general ledger system. Program Income revenue is realized by cash, check or credit card and the Program Income fund credited via a deposit.
Facilities and Administration (F&A) costs: the types of costs that cannot be readily identified with or related to a specific activity as defined in OMB Circular No. A-21 Cost Principles for Educational Institutions. F&A costs include operation and maintenance of plant and campus general administrative services. F&A costs were formerly known as indirect costs.
Material Transfer Agreements (MTA): contractual documents for the transfer of institutionally developed proprietary materials to other parties or the receipt of materials from an outside entity. When UCSF receives revenue under an MTA associated with a sponsored award, all revenue realized must be treated as program income in accordance with this policy.
Program Income: gross income earned by the University that is either directly generated by the sponsored project or earned as a result of a sponsored project during the period of time the sponsored project is active. Federal policy for program income is set forth in the Office of Management and Budget (OMB) Circular No. A-110, Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations and applies to federal, federal pass through, and other sponsor-funded programs.
Examples of program income include, but are not limited to, income from:
Registration fees charged to participants for a workshop or conference funded under a sponsored award;
services provided under an award such as selling the test performed by a Program Project core laboratory to outside groups; and
rental or usage fees such as those earned from fees charged for use of computer or laboratory equipment purchased with sponsored award funds. See Program Income FAQ 's for a more extensive list of examples of program income.
Federal regulations define the following four methods for recording program income:
Additive Alternative: Program income realized is added to (i.e., supplements) the funds committed to the project by the federal or other awarding agency. The program income funds shall be used to support related project or program objectives.
Deductive Alternative: Program income realized is deducted from the total project allowable costs in determining the net allowable costs on which the federal or other sponsor share of costs is based. Under the deductive method, the total amount available to support the project remains unchanged from the original federal or other sponsor award.
Combination Alternative: Program income realized up to (and including) $25,000 is used as specified for the additive alternative and any amount of program income realized above $25,000 is used as specified by the deductive alternative.
Matching Alternative: Program income realized is used to finance the non-federal share of the project (i.e., meet cost sharing commitments).
Program Income Fund: a fund, separate from the sponsored project fund, established for the purpose of recording program income. A program income fund must be established for each sponsored project generating program income and must bear the same OMB Circular No. A-21 and annual report functions and the same facilities and administrative rate as the associated sponsored project.
Recharge: the assessment and collection by one University unit of income for products or services provided to other University units (internal users). Recharges are direct costs to users as defined in OMB Circular No. A-21 Cost Principles for Educational Institutions and the UCSF recharge policy 250-11 Recharges and Common Cost Allocations. Recharges also may provide products or services to external users, as defined below.
Internal Users: Funding sources that can be recharged on the UCSF general ledger including other UC campuses. For program income activities acting as recharges, the program income fund is credited via a recharge journal.
External Users: Funding sources that cannot be recharged on the UCSF general ledger. The Program Income fund is credited via a deposit (cash, check, or credit card).
Sponsored Project: a project, funded by a grant, contract, or cooperative agreement, under which the University agrees to perform a certain scope of work, according to specified terms and conditions, for a specific budgeted monetary compensation.
A. Recording of program income recharges/revenues and expenditures
- Program income must be correctly accounted for, used, and reported in accordance with federal regulations and the terms and conditions of each sponsored agreement. When program income is anticipated, the responsible UCSF department should initiate the establishment of a program income fund to record the program income realized from either external revenue or internal transfers. The fund should be established in the Sales & Service fund range (6xxxx). Any sales/use tax collected must be properly recorded in accordance with Controller’s Office policies available at: UCSF Accounting Department.
- If internal only or both internal and external charges are anticipated: The program income activity acts as a “Recharge” and must comply with campus recharge policies. See Program Income Procedures.
- If external only charges are anticipated: The program income activity acts as an “External Sale of Education Related Activities” and must comply with applicable campus costing polices. See Program Income Procedures.
- When two or more funding sources are involved in the generation of program income (e.g., two sponsored programs, or a sponsored program and a non-sponsored program), the program income must be prorated based on the direct participation of the funding sources. See Program Income Procedures.
- All expenses funded through program income (e.g., labor, services, products, etc.) should be charged to the sponsored project fund only and must comply with all federal regulations as well as University of California policies and procedures on direct costing. See University of California, Direct Costing Procedures, References, Introduction (A-47).
Facilities and administrative (F&A) costs must be assessed against the program income fund direct expenses at the same rate as applied to the associated sponsored fund.
Program income funds must be expended prior to expending federal or other sponsor funds. Upon termination of the sponsored project all program income earned during the project period (life) must be liquidated. The resulting net allowable expenses remaining on the sponsored project fund represent the federal or other sponsor obligation.
If the activity generating the program income continues after the sponsored project terminates, it converts to either an External Sale of Education Related Activities or a Recharge, and a new fund must be established in the Sales & Service fund range (6xxxx). The new fund will be assessed F&A costs consistent with the UCSF recharge policy 250-11 Recharges and Common Cost Allocations. There will be no further obligation to the federal government or other sponsor for program income earned after the completion of the sponsored project.
It is the responsibility of the department to verify that all expenses, recharges and revenues realized under a sponsored project, including program income, are properly recorded in accordance with this policy and other relevant University regulations, and that the necessary cost transfers to liquidate program income are done in a timely manner and are consistent with the terms of the sponsored fund.
B. Budgetary Control
- Department heads are responsible for maintaining budgetary control of all expenditures under their jurisdiction.
- It is the responsibility of the Extramural Funds department to make budgetary adjustments between the sponsored fund and the associated program income fund.
V. Related Policies
· Recharges and Common Cost Allocations (Policy 250-11)
· Cost Sharing Policy (Policy 400-17)
· UCSF Guidelines and Requirements for Funds Received from Extramural Sources