BILL NUMBER: S7424

SPONSOR: MAY
 
TITLE OF BILL:

An act to amend the state finance law, in relation to funding of state
university of New York programs by state agencies

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this bill is to increase New York State's indirect cost
reimbursement rate for the State University of New York's state spon-
sored programs and to minimize contract delays.

 
SUMMARY OF PROVISIONS:

Section 1: Makes sure that when SUNY runs a research program for the
state, it gets back at least 26% of the program's direct costs to help
cover overhead and other necessary expenses that can't be charged
directly.

Section 2: Allows New York State agencies to award contracts directly to
              

the Research Foundation for SUNY (on SUNY's behalf) if doing so will
save money, increase efficiency, or produce better results,

Section 3: effective date.

 
JUSTIFICATION:

For 80 years, under the federal government's framework for research
funding, the costs of undertaking research and research related programs
at US universities has been bifurcated into direct and indirect costs
(also known as Facilities & Administration or F&A).

Direct costs are the salaries, supplies, and project equipment that
benefit and can be clearly assigned to a specific project, program, or
activity. Indirect costs (IDC) are the expenses that benefit multiple
programs, but cannot reasonably be allocated to any one individual
project with accuracy such as certain research infrastructure (e.g.,
shared laboratories and equipment), information technology resources,
utilities, compliance and data security, award administration, and other
costs necessary to conduct research and meet sponsor requirements.

Each SUNY campus has its own approved rate agreement, which is applied
to direct expenditures on sponsored projects to reimburse that campus
for F&A. The applicable rates are negotiated with the federal government
based on actual cost data that is submitted in a cost proposal. These
rules governing cost treatment are clearly specified and enshrined in
federal regulations. The federal negotiated IDC rates of most SUNY
university centers are around 60%. Of this, administrative costs (the
"A" in F&A) have been capped for many years at 26%; despite an exponen-
tial growth in regulatory compliance requirements for federally funded
research activities.

Meanwhile, most state agencies typically provide an IDC rate of 8-10%,
which is obviously much lower than the federal rate. This unusually low
IDC rate creates significant issues for SUNY campuses and often means
that campuses are unable to accept state grants. When campuses are
unable to recover their full IDC rate, those costs are still incurred,
and campuses are forced to subsidize the losses resulting from New York
State programs with other campus funds. For campuses that have a large
portion of New York State programs, supporting these programs is
increasingly unsustainable and creates a significant financial burden.
Through direct funding of SUNY in the state budget, much of the cost of
research facilities (the "F" in F&A) is covered, but administrative
costs are not. This bill will ensure that SUNY campuses are reimbursed
for the minimum administrative costs of supporting and delivering impor-
tant New York State programs in health, education, safety, workforce
development, environmental protection, energy, microelectronics, and
more.

Through SUNY faculty and students, many New York State programs are
delivered to New York residents. When a SUNY campus is selected to
deliver a program, agencies often choose to use an inter-agency Memoran-
dum of Understanding (MOU) and budget transfer. This requires an addi-
tional contract between the SUNY campus and the SUNY Research Founda-
tion, which is dependent on the MOU to perform the work. The resulting
inefficient process essentially doubles the administrative burden and
ultimately diverts funding and resources from program deliverables.

 
PRIOR LEGISLATIVE HISTORY:

None.

 
FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to contracts
awarded on or after the effective date of this act.