AES Formula Funds - Costing Principles

May 31, 2013 Debra Cheung

The costing principles for AES federal formula funded projects (Hatch, Hatch/Multistate and Animal Health) are very similar to those of federally sponsored projects, as set forth in OMB Circular A-21 (relocated to 2 CFR Part 220). 

The best way to determine allowable/unallowable costs on federal funds is to review the document “Charging Practices for Federally Funded Grants and Contracts 2005 (Revised),” posted on the UC Davis Extramural Accounting website:  See pages 6-9 of the pdf for a very helpful list of allowable vs. unallowable costs on federal projects.

Please also note the following important special conditions for AES federal formula funds:

  • All costs must be allowable (directly related to the AES Hatch, Hatch/Multistate or Animal Health project account to which it is charged), allocable (capable of being split funded if applicable) and reasonable.
  • Indirect costs are not allowable.  Indirect costs include administrative and clerical salaries, utilities consumption, general operations and maintenance costs, etc.
  • Tuition remission and fee costs are not allowable (for example, Graduate Student Researcher tuition remission and fees).
  • Costs for renovation of existing facilities, capital (special purchase) equipment having a unit cost of $1,000 or more, general purpose equipment, and travel for Hatch research are subject to prior approval by the station Director (UC ANR Vice-President).  This approval authority has been delegated to UC Davis CA&ES Dean, and in turn re-delegated to departmental / division chairs.  Please ensure that your departmental or division chair reviews and approves all aforementioned costs prior to purchase, and that auditable records of approval are kept.


An important note about split-funding purchases

The percentage of a purchase cost charged to AES federal formula funded account(s) should be based on the percentage of estimated benefit to the project.  For example, charging 100% of the cost of a piece of equipment to one project account indicates that the equipment is dedicated to that project.   If it is estimated that only 50% of the use of a piece of equipment will benefit a particular project, then the related project account should only be charged for 50% of the equipment cost.  The other 50% must then be charged to other appropriate funding sources.   Incidental use of the equipment by other projects can be accounted for by charging a small fraction (e.g., 5%) of the cost to state general funds or other unrestricted funds.

One Recommended Use of AES Formula Funds: Direct charge of PI effort

The CA&ES Dean's Office strongly recommends that CA&ES departments take advantage of this option for all of their AES federal formula funds. 

It is allowable and appropriate to direct charge a portion of a PI’s AES distribution to his/her current, active USDA-NIFA AES federal formula funded project account(s).  Departments may request salary savings release of 19900 funds saved as a result of direct charging PI salary to AES project accounts.  Please note that for FFY 2012-13, the college will continue to provide 100% return on salary savings resulting from PI direct charge to AES-FFF accounts (the college will not retain 10% of the savings, as with sponsored research funding). 

Please note that regular benefits (BENF) for AES ladder-ranked faculty are NOT a real cost on on AES / FFF project accounts.  The college has requested and received permission to continue to DIVERT the benefits of AES-FFF direct charged PI salaries to the main departmental 19900 account, SUB6 funds.  We will be able to divert to the Full Accounting Unit (FAU) associated with the PI’s benefits, e.g., the chart / account / subaccount / sub6 / project code.  An example of an FAU to which benefits are diverted is: 3 / a**rgaa / subacct. if approp. / sub6 / pi_name.

However, please note that leave usage assessment (SB28/8550 = Leave Assessment - Salary; SUB6/8551 = Leave Assessment - Benefits) will initially show as a real cost on the AES-FFF accounts.  Thus, affected AES-FFF accounts will run in overdraft for approximately 6 months.   Please note that once direct charging has been completed for each account, the Dean's Office will allocate funding to each affected account to cover the 8550 and 8551 costs.  The Dean's Office will only cover overdrafts caused by 8550 and 8551 costs; any other unexpected or non-salary costs will need to be transferred to another allowable account by dept staff.


See Administrative Manual for the Hatch (Experiment Station) Act as Amended (March 2000):

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