The underlying philosophy at the University of Iowa is to reimburse funding sources for indirect costs incurred. For example, general administration is funded 100% through the General Education Fund. So, as indirect costs are assessed to grants, the offsetting indirect cost recovery for general administration as well as sponsored programs and grant accounting functions are recorded as revenue to the General Education Fund to offset the costs of these functions. As another illustration, the University Hospital funds 9.29% of our total research related F&A costs.  Therefore, we attempt to return 9.29% of our recoveries to the University Hospital.

The combination of the money received from state appropriations, tuition income, and F&A cost recoveries comprises the General Education Fund operating budget of the University and is budgeted annually to various units and for various purposes.  Details of how the General Education Fund F&A recovery was managed in FY 2016 is in General Education Fund FY 2016 Proforma Summary (Budget to Budget), labeled as “other”.

When the state appropriates any salary support to the University, it does not include salary increases for General Education Fund supported persons who are a part of the F&A administrative cost pool. Therefore, F&A recoveries, other revenue sources and reallocation must cover these increases. General Education Fund FY 2016 Proforma Summary (Budget to Budget) illustrates this point.

One of the largest component of F&A is “collegiate and departmental administration” (37% of all F&A recoveries).  Within the General Education Fund these recoveries are assigned to separate collegiate units and rise or fall each year based upon collegiate sponsored research levels.

A percentage of all F&A cost recoveries are non-General Education Fund.  These recoveries are returned directly to the campus units which bear the costs or are distributed to improve research facilities for units which contribute to these administrative cost pools, the basis for the University's cost recovery.

A portion of the F&A recoveries attributable to non-General Education Fund indirect costs of research are pooled to support the research enterprise.  This category is called Academic Research Support and is used for initiatives such as Department of Psychology improvements and expansion, College of Public Health facility debt service, Clinical Trials Statistics facilities in University Capitol Centre, capital and debt service costs of the Medical Education Research Facility, the Carver Biomedical Research Facility, and the Pappajohn Biomedical Discovery Building.  Each of these are done in cooperation with the deans of the respective colleges.  In the future the University is committed to support a substantial portion of the capital cost of an addition to Seashore Hall for Psychology and the College of Pharmacy addition where these recoveries will have a financial role.  Most of the expense within the Academic Research Support category is in the form of debt service for new research and research support facilities cited.

Three departments within the College of Engineering receive 100% of all recoveries returned related to their sponsored activities.  Long-standing agreements with these units are the basis for this treatment.  Facilities costs for these units are supported directly by grants or other funding sources, and these units do not receive General Education Fund return distributions of collegiate and departmental administrative recoveries.  These departments are the Center for Computer Aided Design, National Advanced Driving Simulator, and Iowa Institute of Hydraulic Research.