Summary of Federal Laws

 

OMB Circulars

 

OMB Circular A-21

 

Cost Principles for Educational Institutions

 

Establishes cost accounting principles and specifies the allowability of costs.  Revisions at 61 Fed. Reg. 20,880 (May 8, 1996) make the four cost-accounting standards of the CASB applicable to awards to institutions.  Revisions to OMB A-21 with respect to documentation requirements for large research facilities in order to include them as part of indirect costs are contained at 63 Fed. Reg. 29,786 (June 1, 1998).

 

Clarification of the rule on tuition remission costs was announced by the Office of Management and Budget in a January 5, 2001 memorandum.  The memorandum clarifies that "bona fide employer-employee" relationship does not require the graduate student to be an employee of the institution for IRS tax purposes in order for the allowance of tuition remission costs under a federal contract.  The clarification states:

In recognition of the dual role of students (as both students and researchers) engaged in research and the resulting benefits to sponsored agreements (as recognized in Section A.2c of OMB Circular A-21) and research overall, tuition remission and other forms of reasonable support that are associated with student status and provided to individuals participating in the necessary work of a sponsored agreement are allowable provided that:

• The individual is conducting activities necessary to the sponsored agreement;

• Tuition remission and other support are provided in accordance with established educational institutional policy and consistently provided in a like manner to students in return for similar activities conducted in nonsponsored as well sponsored activities and

• During the academic period, the student is enrolled in an advanced degree program at a grantee or affiliated institution and the activities of the student in relation to the Federally-sponsored research project are related to the degree program.

 

Accordingly, tuition remission and other forms of support that satisfy these criteria are allowable, regardless of whether the tuition remission or other form of support qualifies as wages for tax purposes.

The above-referenced memo also clarifies that voluntary uncommitted cost sharing should be treated differently from committed effort and should not be included in the organized research base for computing the facilities and administrative (F&A) rate or reflected in any allocation of F&A costs.

Online Access:  All OMB circulars can be accessed online.

See also Special Rules for Educational and Nonprofit Institutions, by Debra Zumwalt and J. Stephen Lawrence, Jr. (2d ed., Federal Publications 1997).

Updated 1/30/01 (tuition remission clarification)
links updated 6/19/08 rab