Cost Sharing

The federal government defines cost sharing as the portion of sponsored project costs not borne by the sponsor.  There are three types of cost sharing:

Mandatory Committed Voluntary Committed Voluntary Uncommitted
Required by the Sponsor
  • Award/proposal terms and conditions specifically require cost sharing or cost sharing is agreed to between the institution and the sponsor when accepting a sponsored agreement.
  • There is a sponsor statutory requirement for cost sharing related to the award.
  • Quantified and documented in the award or proposal budget, justification, or narrative (including scope of work).
Effort or other costs are not required by the sponsor, but are quantified and offered by the institution in the sponsor budget or narrative with no corresponding funding is requested or awarded.
  • There are no sponsor terms and conditions or sponsor statutory obligations related to cost sharing, but effort and/or other costs are quantified and documented in the award or proposal budget, justification, or narrative (including scope of work).
Effort or other costs not required by the sponsor but offered by the institution without measurement and with no corresponding funding requested or awarded. Effort, as needed, or support, as required. After the award has been accepted, effort or other costs are provided above what was requested or awarded.
  • There are no sponsor terms and conditions or statutory obligations related to cost sharing and effort and/or other costs are not quantified or documented in the award or proposal budget or narrative (including scope of work).
  • Cost sharing that is voluntary committed becomes voluntary uncommitted if the sponsor exempts the institution from cost sharing requirements in the award notice.
Reportable
  • Auditable
  • Allowable
  • Must be monitored and documented
Reportable
  • Auditable
  • Must be monitored and documented
Not reportable
  • This effort is excluded from effort reporting requirements
  • Other costs do not require documentation

The reporting and audit requirements for mandatory committed and voluntary committed cost sharing necessitate tracking the actual commitment and funding for a sponsored project against the contractually committed amount. Cost sharing will only be tracked if there is a compliance requirement

To accomplish the monitoring requirements, an unrestricted cost sharing fund will be used (restricted/unrestricted is an attribute of fund) allowing the PeopleSoft/Research Administration System (RAS) to ignore this activity for billing purposes while still using the same RAS Project. In addition, a unique cost sharing expense Account will be used to monitor the commitment activity.

Chartfields Used with Cost Sharing

Fund
4900
Fund Class
Current
UCOP Fund Group
410290 - Other Sources/Other
Description
Cost sharing fund
Account
51311
Account Type
Expense
Description
Cost sharing expense

Business Process

The business process for Projects with cost sharing requirements is as follows:

  1. As part of the post-award process for new contracts, the department submits the Cost Sharing Budget Template including funding chartstring information to CGA:
    • The unrestricted cost sharing Fund
    • Dept ID
    • Project ID
    • Activity Period (if funding is from another sponsored project)
    • Function
    • Flexfield
  2. As part of the post-award activation process CGA will:
    1. Create the budget journal to allocate the project to both the sponsored Fund and the cost sharing Fund
    2. Create a financial journal template to be used to allocate the cost sharing percentage of the payroll and non-payroll expense from the funding source chartstrings to the cost sharing Fund/Project.
  3. Departments (via HR Service Centers) set up the cost sharing distribution line(s) in the payroll system for the PI and other staff members using:
    • Sponsored Fund/Dept ID/Project/Function plus Flexfield if you are using
    • Cost sharing Fund/Dept ID/Project/Function plus Flexfield if you are using
  4. On a monthly basis CGA will post a financial journal (for the time period) to:
    1. Debit the funding source chartstring 100% of the amount of the cost sharing expense
    2. Credit the cost sharing Fund the amount of the cost sharing expense

Example

The following example demonstrates the journal entries associated with a $100,000 award for research into neural stem cells & brain tumor origins that has a $10,000 cost sharing commitment. 25% of the cost sharing will be funded from a gift designated for stem cell research and 75% from a medical comp plan fund (general use project).

Step #2a: Budget Journal allocating the cost sharing expense
Amount Account Fund Dept ID Project Act Per Function Description
$2,500 CS Offset (51332) Cost Share (4900) Neurology 123456A 01 Research from 3080711
($2,500) CS exp (51331) Cost Share (4900) Neurology 123456A 01 Research from 3080711
$7,500 CS Offset (51332) Cost Share (4900) Neurology 123456A 01 Research from 3796962
($7,500) CS exp (51331) Cost Share (4900) Neurology 123456A 01 Research from 3796962

 

Step #3: Financial Journal recording payroll expense for Cost Sharing Fund (from PPS distribution line)
Amount Account Fund Dept ID Project Act Per Function Description
$1,000 Salaries Cost Share (4900) Neurology 123456A 01 Research  
($1,000) Cash            

 

Step #4: Financial Journal initiated monthly by CGA to fund cost sharing
Amount Account Fund Dept ID Project Act Per Function Description
$250 CS exp (51331) Priv Gift Neurology 3080711   Research

to 123456A

($250) CS exp (51331) Cost Share (4900) Neurology 123456A 01 Research from 3080711
$750 CS exp (51331) Med Comp Plan Neurology 3796962   Research to 123456A
($750) CS exp (51331) Cost Share (4900) Neurology 123456A 01 Research from 3796962

 

When all transactions are complete, the Cost Sharing fund (in steps 3 and 4) and the Cost Sharing expense account (step 4) have a net zero balance.

If you have questions about cost share, contact the CGA Service Team handling your award.