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Cost Analysis & Rate Setting for Research Facilities
While fiscal administration at the ASC is largely shaped by federal regulation, the university looks for every opportunity to mitigate impacts to the costs borne by researchers. This approach can be seen most readily in the pricing of special services; before FY2018, the cost to PIs had not changed for about a decade and was well below the average at other Boston-area animal facilities.
Cost accounting at the ASC is performed through a collaboration with the Service Center Administration unit of Post Award Financial Operations, which is located within the Office of the Senior Vice President, Chief Financial Officer & Treasurer. It is done using a method that examines all inputs that go into the care of an animal and maintenance of the facilities by species and then distributes that cost based on the number of specific animals by species being housed.
These inputs cover both fixed and variable costs. Fixed costs include: facilities operations and maintenance (O&M), which amounted to about $3 million for the FY2018 rate calculation; and personnel costs, including salary and fringe benefits, which make up about half of the fixed costs. Variable costs include items like food and bedding.
Because this method distributes the costs of operating the facilities by the number of animals being housed, the animal census carries significant weight. There has been a steady reduction in the number of animals being housed at ASC since FY2016, which has caused an increase in per animal costs— most of the fixed costs in operating and maintaining the facilities do not decrease, and animal care and use personnel needs are adjusted.
A helpful analogy to consider in understanding this relationship is in the management of hotels. While the number of guests staying in a hotel may fluctuate based on demand, the costs of keeping the hotel open do not change. Rooms must still be heated, common spaces must still be lit, and personnel must still be paid to ensure the smooth operation of the building.
The university’s Animal Science Center currently employs approximately 70 people—from veterinarians to cage washers—in several locations across the university housing about a dozen species. Rates at BU are set annually; they are determined during the last third of the fiscal year (from February to May) and announced in the summer, with new rates effective at the beginning of the fiscal year on Sept. 1.
In the 1990s and early 2000s, the National Center for Research Resources (NCRR), formerly an individual center at the National Institutes of Health but now distributed across a number of NIH centers and institutes, established a committee to review and update the process for analyzing vivarium (animal facility) housing costs and establishing rates. The end result is the 2000 Edition of the Cost Analysis and Rate Setting Manual for Animal Research Facilities, which details what expenses are allowable on grants received by the federal government.
Service Center Administration Formula
In determining what costs can be factored into animal housing rates, the Service Center Administration, or SCA, uses the Office of Management & Budget’s Uniform Guidance document (previously called OMB A-21) to specify what items are allowable. (Examples of unallowable expenses include food for staff meetings or expenses related to the purchase of animals.)
In addition to allowable expenses, SCA also takes into consideration various University and Animal Science Center policies that may affect animal housing costs. These include 1) policies directly governing cost accounting within the University; as well as 2) those that impact operational or administrative processes (such as safety-related policies that require continuous, 24/7 monitoring).
Calculating Direct Costs
To arrive at the total direct costs for a particular species, SCA aggregates:
- Labor costs (including salaries and fringe benefits for all employees who provide direct care to the animals);
- Consumables (costs for animal feed and bedding, cage cleaning and animal health monitoring, and personal protective equipment);
- Depreciation of capital equipment used; and
- General expenses (those that can’t be allocated to a particular species but are pooled and then apportioned pro rata, such as the personnel costs of administrative staff or the purchase and maintenance of office equipment).
Calculating Facilities Costs
In calculating the facilities costs for a particular species, SCA includes:
- Utilities (electricity, steam, gas, and water and sewer);
- Maintenance (building and mechanical systems, labor, supplies, and contractors);
- Custodial (labor, supplies, and waste disposal); and
- Miscellaneous building costs, such as rent, payments in lieu of taxes (or PILOTs), and building and systems depreciation.
Procedural vs. Housing Space
To apportion these facilities costs, ASC makes a determination based on the amount of space that is dedicated to any given species by building and room. Space at the Animal Science Center is surveyed annually using a space management system and allocated as either 1) procedural (or research) space, which is where research activity happens; or 2) as housing space, or what is called “hotel space,” which is where animals are housed.
Note: Because procedural space is included in the University’s F&A rate, it is excluded from the per diem rates. Only housing space— which incorporates storage areas and secured corridors and common areas — is used to calculate the facilities costs that are then factored into the per diem rates that are passed on to researchers.
Using these direct and facilities costs, the total cost for each species is then calculated and then distributed based on the projected census— either by animal, cage, or tank.
Foundation and Other Grants Receiving University Subsidy
The manner in which an institution manages foundation grants can vary, and it is often dependent on the university’s ability to cover the gap between the indirect (F&A) costs incurred during the course of research and what a foundation or other funding entity is willing to cover. The Bill and Melinda Gates Foundation, for instance, will only provide 10 percent for F&A. (As a point of comparison, BU’s current F&A rate is 64.5%.) Some institutions will cover that gap; others, like BU, do not have the means to do so.
For this reason, BU is asking researchers to include the full cost of working with lab animals on their proposals to all funding entities that don’t include the full BU F&A rate in their award.
Comparisons with Other Animal Facilities
It is difficult to compare animal housing rates between facilities because the cost accounting inputs and formulae vary widely across institutions. For example, some institutions don’t include facilities operations and maintenance in their rate calculation; they absorb the cost, which amounts to a subsidy that researchers may not see. This alone can make our animal housing rates seem high when compared to other universities.
There is no single method that has been deemed optimal, or considered a best-practice, by the research administration community. The cost accounting and funding methods that BU uses are compliant with all applicable laws and regulations.