Rate Calculation

A rate is calculated for each of the cost components.  Each rate is expressed as a percentage of Modified Total Direct Cost (MTDC) which includes all direct costs except equipment, capital expenditures, patient care, tuition and fees, facilities rental and the portion of subcontracts in excess of $25,000.

The University of Iowa, like most other universities, calculates an F&A cost rate greater than the negotiated F&A cost rate.  The Ul has historically accepted some reduction of its calculated rate in the interest of reaching an agreement with federal negotiators.

The table below highlights the variance between the University's base calculation (2021), the negotiated rate, and the extended rate.
  UI 2021 Proposal UI 2021 with Adm. Cap Negotiated: Years '23-'26
          Building Depreciation 5.8 5.8 4.9
          Equipment Depreciation 2.2 2.2 1.8
          Interest 0.5 0.5 0.4
          Operation & Maintenance 23.1 23.1 19.3
          Library 3.6 3.6 3.1
          Utility Cost Adjustment 0.0 0.0 0.0
               Subtotal Facilities 35.2 35.2 29.5
          General Administration               6.7 6.1 6.1
17.4 15.9 15.9
          Sponsored Programs
4.4 4.0 4.0
28.5 26.0 26.0
Total Rate 63.7% 61.2% 55.5%

The recent increase in the University's F&A rate is solely attributable to the facility component of the rate since the University's and all universities reimbursement for administrative costs are capped by the federal government at 26%.  The primary reason the facility component increased is the University has invested significantly in new research facilities or modernized existing research space since the last rate negotiation. Research space costs are recovered through the F&A rate and not as a direct charge to grants and contracts.