USGS Home Page

U.S. Geological Survey Manual

U.S. Geological Survey Instructional Memorandum

No.: APS 2004-10

Issuance Date: March 15, 2004

Expiration Date: September 30, 2004

Archive Date: October 24, 2008

Subject: Cost Sharing in Fiscal Year (FY) 2004

Reference: This IM is replaced by Financial Operating Procedures Handbook Chapter 7 Reduced and Special Rates.

Instructions: This Instructional Memorandum supersedes APS 2003-09

1. Definition. Cost sharing refers to situations in which the U.S. Geological Survey (USGS) performs a project for an outside customer, but does not recover the project's full costs from the customer. In other words, USGS shares the project's costs. Cost sharing does not refer to cooperative projects carried out under the authority of 43 U.S.C. 50. The Water Resources Cooperative Program operates under the authority of 43 U.S.C. 50. Many cost sharing situations involve common services or bureau costs. For some projects, however, USGS also shares direct costs, including facilities costs.

2. Policy. The USGS fundamental policy objective is to record the full costs of each project in the Federal Financial System (FFS). Full costs include direct costs, common services costs, and bureau costs. For projects that involve cost sharing, USGS also seeks to record the total costs paid by the customer and the total costs paid by USGS.

3. Budgeting for Projects that Involve Cost Sharing. Cost centers use BASIS+ and FFS to budget for a project that involves cost sharing.

First, the cost center calculates the total costs that the customer will pay. The calculations depend on the cost center's agreement with the customer. The agreement might involve a cap or limit on overhead, that is, common services costs and bureau costs; require USGS to pay facilities costs or some portion of direct costs; or limit the customer’s total funding for a project that USGS also intends to fund from appropriations.

If the agreement involves only a limit on overhead, the cost center could multiply direct costs by one plus the limit on overhead. For example, if the agreement limits overhead (that is, common services costs and bureau costs) to 15 percent, the cost center would multiply direct costs by 115 percent (1.15) to calculate the costs the customer would pay.

Example:
Limit on Overhead = 15 percent
Direct Costs = $80,000
Costs Covered from Customer = $80,000 x 115 percent = $92,000

Second, the cost center calculates the project’s full costs, that is, direct costs, facilities costs; common services costs; and bureau costs. A cost center could use a worksheet, such as the worksheet attached, or use the budgeting tools built into BASIS+ to estimate the costs.

Example:
Common Services Rate = 25 percent
Facilities Rate = 10 percent
Bureau Rate = 11 percent
Direct Costs = $74,000
Direct Costs $74,000

Direct Costs

$74,000

Plus Common Services and Facilities

x 135 percent

 

$100,000

Plus Bureau Costs

x 111 percent

Total Projects Costs

$111,000


Third, the cost center establishes a project in BASIS+ with at least two accounts. One account is funded by reimbursements. Its funding and its total costs at the end of the year equal the amount the customer will pay. The account is tied to the USGS program (program element) whose mission the reimbursable work advances. The burden rate for the account would be the cost center’s normal burden rate for reimbursable work. The burden rate includes the cost center’s standard common services rate, facilities rate, and the bureau rate. (During FY 2004, several cost centers are piloting a different approach to budgeting and recording costs for projects that involving cost sharing. They will establish their accounts differently.)

Example:
Common Services Rate = 25 percent
Facilities Rate = 10 percent
Bureau Rate = 11 percent
Burden Rate = 25 percent + 10 percent + 11 percent + ((25 percent +10 percent) x 11 percent) = 49.85 percent

Note: Chapter Seven of the USGS Business Practices Handbook explains how to calculate a burden rate.

If the customer does not pay for all the project's costs, the cost center establishes an account funded by appropriations. The account is funded for the direct costs and common services costs that USGS pays. The account is not funded for bureau costs since USGS uses the funds appropriated for the Science Support budget activity to pay the bureau costs associated with appropriated work. The account is not funded for facilities costs since USGS uses the funds appropriated for the Facilities budget activity to pay the facilities costs associated with appropriated work. The account is tied to the USGS program that is sharing costs. Normally, this is the same USGS program (program element) that the reimbursable account is tied to, that is, the program whose mission the reimbursable work advances. The burden rate for the account is the cost center’s normal burden rate for appropriated work. The burden rate includes the cost center’s standard common services rate.

Example:
Total Project Costs = $111,000
Reimbursable account funding = $93,404 (what the customer pays)
Bureau Rate = 11 percent
Common Services Rate = 25 percent
Facilities Rate = 10 percent

 

Reimbursable
Account

Appropriated
Account

Science
Support

Facilities

 

Total

Direct Costs

$62,332

$11,743

 

$74,703

Common Services Costs

$15,583

$2,936

 

$18,519

Facilities Costs

$6,233

$1,174

$7,407

Bureau Costs

$9,256

0

$1,744

$11,000

Total

$93,404

$14,678

$1,744

$,1,174

$111,000

 

 

 

 

 

Note: The USGS uses the funds appropriated for Science Support to pay the bureau costs attributable to projects, or portions of projects, funded by appropriations. These bureau costs are not recorded in the FFS account(s) tied to the project. The USGS uses the funds appropriated for Facilities to pay the facilities costs attributable to projects, or portions of projects, funded by appropriations. These facilities costs are not recorded in the FFS account(s) tied to the project. The costs remain in one of the standard facilities accounts, the REN account or the OMC account.

For projects that involve cost sharing, cost centers have the same options for facilities costs that they have for other reimbursable projects. To the extent that the reimbursable customer is to pay for facilities costs, the cost center can use the facilities rate to distribute facilities costs to the reimbursable account. The cost center can also treat facilities costs as distributed direct costs and use some other mechanism to distribute them among projects and accounts.

Cost centers can use funds from the Facilities budget activity to pay the facilities costs chargeable to the appropriated account in a cost sharing situation. If the cost center did not have sufficient Facilities budget activity funds to cover these costs, which is the most likely situation, the cost center establishes a second facilities account for these costs and funds the account with other appropriated funds.

4. Recording Costs for Projects that involve Cost Sharing. The cost centers records direct costs in one or both of the accounts associated with the project. If the cost center chooses to record direct costs only in the reimbursable account, it uses standard vouchers periodically to move direct costs from the reimbursable account to the appropriated account. At the end of the year, the reimbursable account has a zero balance; that is, costs equal funding. At the same time, the appropriated account also has a zero balance; that is, costs equal funding.

5. Documenting Projects that involve Cost Sharing. Cost centers prepare a worksheet that describes the total costs of the project, the costs paid by the customer, and the costs paid by USGS. The worksheet explains how USGS determined the funding for the several accounts tied to the reimbursable agreements. The worksheet contains at least the level of detail included on the attached sample worksheet. Cost centers forward the worksheet to the appropriate Fiscal Services office and file a copy of the worksheet with the reimbursable agreement.

A field appears on the New Account screen in BASIS+ where a cost center indicates whether an account funded by appropriations involves sharing costs. To tag an account funded by appropriations to indicate that it involves cost sharing, the cost center sets the value for cost sharing on the New Account screen to Yes (Y). For all other accounts, the value for cost sharing is No (N). No is the default value for this field. The value entered into BASIS+ in the cost sharing field will appear in FFS as the second place in the project category field on the PROJ table.


(signed) Carol F. Aten
_________________________________________
Carol F. Aten
Chief, Office of Administrative Policy and Services

Cost Share Worksheet


Return to Instructional Memoranda Page
Return to Survey Manual Home Page
U.S. Department of the Interior, U.S. Geological Survey, Reston, VA, USA
URL: http://www.usgs.gov/usgs-manual/im/archive/aps-2004-10.html
Contact: APS, Office of Policy and Analysis
Issuing Office: Office of Fiscal Services
Content Information Contact: Jim Hubbard, 703-648-4092, jim_hubbard@usgs.gov
Last modification: 11-Jan-2013@16:38 (kk)
Privacy Statement