57 Overhead Rates

PDAD&C #57, 2004-05

MEMORANDUM

To: PDAD&C
From: John R.G. Challis, Vice President, Research & Associate Provost
Date: March 1, 2005
Re: Overhead Rates
______________________________________________________________________________________

The University’s Policy on Research Contracts and the Recovery of Indirect Costs of Research includes two Schedules, A and B, which outline the overhead rates applicable to, respectively, research contracts and grants.  Under the Policy, the Vice-President is authorized to adjust these rates from time to time “in response to changing circumstances.”  The Committee on Academic Policy and Programs was notified of these changes at the January 12, 2005 meeting in accordance with the policy.  The effective date of the new schedules, as outlined below, is March 1, 2005.

        The changes are as follows:

        University Research Incentive Fund.  Since the program has ended, the overhead rates for it have been deleted from the Schedule.

        Ontario Centres of Excellence.  Under the University Collaboration Agreement between all the Ontario universities and OCE Inc., signed earlier this year, the applicable overhead rate on OCE-funded projects was raised from 30% to 35%.  (As the new footnote indicates, the University will be seeking a 5% supplement from the Research Performance Fund.)

        Research Grants from Companies, Consortia, Government Departments and Agencies.  The overhead rate is being raised from 15% to 20%.  Since the federal Indirect Cost Program provides an overhead rate of approximately 20% to most universities, we should not be charging a lower rate to industry or government agencies.  This is consistent with a recent policy adopted by the Ontario Council on University Research.

        This is the first of a series of planned amendments to the research overhead rates.  Canadian universities have agreed that the indirect costs of research are – at a minimum –  40% of the direct costs.  The aim of the University of Toronto is to move progressively toward recovering all of these indirect costs from all of our research sponsors.  We are currently working to have the federal Indirect Cost program increased from approximately 20% to 40%.  At the same time, we will be increasing the overhead rates charged on industrial and government department grants by 5% per annum, reaching 40% in 2009.  In addition, where current rates fall short of 40%, we will be indicating to sponsors that the difference constitutes a University of Toronto subsidy to the research project in question; and that we cannot provide such a subsidy indefinitely.



APPENDIX A

OVERHEAD RATES ON RESEARCH CONTRACTS


Standard Rate

        40% of total direct costs

Government of Canada Rate

        (a)  Government Departments and Agencies

                65% of on-campus salaries, wages and benefits
                30% of off-campus salaries, wages and benefits
                2% of travel and living expenses

        (b)  Canadian International Development Agency (CIDA)

                54% of salaries, wages and benefits

        (c)  International Development Research Centre (IDRC)

                13% of total direct costs

Government of Ontario Rates

        (a)  Government Departments and Agencies

                30% of total direct costs*

        (b)  Ontario Centres of Excellence (OCE)

                35% of total direct costs*

U.S. Federal Government Rate

44.3% of total direct costs, excluding capital expenditures and subcontract amounts in excess of $25,000 each.

* supplemented by payments from the Ontario Research Performance Fund to reach a maximum of 40%.


APPENDIX B

OVERHEAD RATES ON RESEARCH GRANTS


Companies, Industrial Consortia and Government * Departments and Agencies

        20% of total direct costs

Foundations (where applicable)

        10% of total direct costs


* except U.S. federal government, for which contract rate (see Appendix A) normally applies