OSU Extension

Connecting The Ohio State University to Ohioans Ohio State University Extension OSU Extension [http://extension.osu.edu]

Section I: Overview of Cost Recovery

A. Background and Philosophy

This section outlines Extension's basic philosophy toward cost recovery as it relates to program delivery. Terms that are not immediately familiar or clear may be found in the Terminology Appendix.

Extension programs and services benefit society as a whole or as broad cross-sections of that society. (Program areas described at: http://extadmin.osu.edu/ Programs are targeted toward individuals and families, community and government groups, and businesses and industries. Delivery of these programs enhances our social and physical environments.

Extension is frequently asked to provide customized programming for exclusive or private audiences. With its existing resources Extension cannot support the growing demand for this customized programming without compromising its mission of providing educational programs for the public good, however.

To meet this need, Administrative Cabinet established guidelines and strategies to assist its professionals when they need to recover some costs associated with programs and services for the public good as well as recover full costs for customized programming for exclusive audiences. When a small easily defined exclusive group benefits from Extension's efforts, Extension will take steps to recover the full costs related to providing programs and services.

Extension has been charging fees to cover some of the costs of existing programs for a long time. Sometimes, the costs of some Extension programs and services targeted for specific audiences have been fully recovered through grants, contracts, agreements, and MOUs.

Partial or full cost recovery provides opportunities for Extension to meet the needs of Ohio residents:

  • Respond to specific requests from exclusive audiences for customized, high quality programming.
  • Assure that Extension does not unfairly undercut private providers of commercial services by providing a "free" publicly subsidized alternative.
  • Assure that public funding for Extension programs and services that benefit society as a whole or as broad cross-sections of that society is available for that purpose
  • Expand or improve program delivery, accessibility, and implementation beyond the public’s usual expectations.

B. Public Good and Private Good

80% could go to the individual generating those funds, and 20% stays with the unit. The individual and unit leader are free to decide on a different split depending on the circumstances and unit goals and priorities.

>Can be used to support the project expenses related to the general administration and support services that cannot easily be determined for each project.

May include accountant, payroll, human resources, communications, computer support, value of space and utilities, and equipment depreciation.

May be used to support the temporary replacement of employees other duties while working on a sponsored project.

May be used to support ongoing goals of the unit.

Programs and services that Extension offers for the public good are not always easily distinguished from those offered for the benefit of an exclusive group. Customized programming for exclusive audiences or individuals may be easier to identify, however. The chart below illustrates the major differences between the programs and services available for the public good and those provided for a targeted private or exclusive good.

Public Good

Private or Exclusive Good

Anyone may attend

Attendance is restricted to a specific group by request

The program/content/delivery development is part of on-going program efforts and may be broadly applied and utilized

Programs/services require customizing the curriculum/product for a specific group beyond what is typical for public Extension programming

Materials developed are available broadly and may be shared with others

Materials are available only to those identified by the specific group

Time needed to develop the program is reasonable and part of the overall plan of work

Time needed to develop the program exceeds what is reasonable and available within the professional's planned work

Time needed to deliver the program is reasonable within the professional's work assignment

Time needed to deliver the program exceeds what is reasonable and available within the professional's assignment

Subject matter expertise fits Extension priorities and is immediately available

Subject matter appropriate for Extension, but current employees may not have the expertise to develop and conduct the program

No formal certification or credits offered

Academic credit and/or some type of Continuing Education Unit's or Certification may be involved

Extension offers many targeted public good programs and services that fall somewhere between these two categories. When an Extension program or service is not defined clearly as a public good, or private good, or exclusive good, Extension professionals must use their judgment to determine the extent to which costs associated with the program or service should be recovered.

Decisions about recovering costs associated with Extension programs and services should be part of every Extension professional's program planning process. By utilizing cost recovery practices, Extension is able to continue to provide high quality programs and services for the public good, and at the same time, respond to requests from exclusive audiences for customized, high quality programming.

C. Guiding Principles

  1. Extension supports the recovery of costs associated with programs and services for the public good and those associated with developing and implementing high quality customized programming and services that result from specific requests from exclusive audiences. Cost recovery efforts must advance Extension's Mission of "Engaging people to strengthen their lives and communities through research based educational programming." Extension supports cost recovery processes that have:
    • Policies and strategies that are consistent with its land grant mission.
    • Consistent guidelines and tools for determining costs related to a specific program
    • Flexibility to allow the needs of specific program areas and audiences to be met
    • Consistent practices throughout the organization regardless of the unit or location
    • A fair system of distributing the revenues to benefit participating staff, faculty, and administrative support services, and inspire support for cost recovery efforts throughout the organization
    • Active administrative support and assistance
    • Broad communication and awareness on and off campus among faculty, staff, and customers
  2. Cost recovery increases program impact as it supports and encourages teamwork and interdisciplinary efforts.
  3. Cost recovery practices must be ethical and legal, and not compromise the integrity of the organization.
  4. Ohio Extension programs are customer and stakeholder driven. The process is efficient and user-friendly.
  5. Cost recovery practices are not intended to limit audience participation, impact, or involvement. Ohio State University Extension programs are open to all regardless of individual ability to pay or source of funding. (Excludes programs for private or exclusive use that are fully funded by that group or audience.)
  6. Cost recovery strategies value and honor current and future partnerships. Strategies are shared with traditional funding sources such as county commissioners and state legislators.
  7. All Extension professionals are responsible for recovering costs associated with Extension programs and services.
  8. Extension strives to help its employees simplify and standardize the development of budgets that will recover costs through the availability of worksheets, spreadsheets, guidelines, workshops, other training and tools.
  9. Decisions regarding a program's future and whether to continue it with base (institutional) funding are made in a timely and informed manner, since programs and services supported by fees do not continue without those fees. The program Assistant Director has the final responsibility for determining whether cost recovery programs are appropriate.
  10. The total cost of programming, including administrative and general overhead costs related to general Extension system support, should be identified and considered when determining the cost of programs.
  11. Cost recovery efforts may include the use of non-traditional employment models including part-time, short-term, non-tenured, and contract employees.
  12. Extension supports comparable/equitable pay for comparable work for all Extension professionals, regardless of source of salary and support funds, realizing that market forces may affect final compensation
  13. Incentives are provided for achievements of: 1) Individuals and teams that successfully generate additional dollars for the system through fees and grants: and 2) New types of program delivery by all Extension professionals.
  14. Agencies or individuals that work cooperatively with Extension in the development and delivery of Extension programs and activities that involve cost recovery may be reimbursed for their direct costs. Those involved in planning the program should agree on issues related to reimbursement while planning the program, prior to collecting any monies.

D. Levels of Cost Recovery

The type of audience for which the program is intended guides the extent to which fees should be charged to partially or fully recover program costs. There may be programs for the public good and the private good that are part of Extension's base plan of work and/or are beyond typical Extension programming. Full recovery of costs associated with any program or service beyond Extension’s typical programming should be seriously considered.

Cost recovery may be more clearly understood by viewing it as a continuum with relation to programs for the public good and the private good: 

No cost recovery > > Partial Cost Recovery > > Full cost recovery
Public good > > > > > > > > > > > > > Private good

 

 

Public Good Programs - Programs that are primary and fundamental to the mission of Ohio State University Extension. These programs may have no charge or may recover direct program costs.

Examples: Community meeting on the impact of new legislation on the local area; Financial Literacy classes open to the public; Workshop about after-school activities open to the public; Food safety class for high-risk individuals.

Targeted Public Good Programs - Programs/services that are targeted and content specific. These programs/services are based on existing programs, and are modified or customized for a specific individual, business, or narrowly defined group that is the primary beneficiary. These programs/services could be adapted for other audiences. These programs are offered with a fee that recovers the direct personnel costs, including salary, benefits, and travel.

Examples: Food safety workshop adapted for restaurant association member; Perennial plant care series adapted for nursery industry employees; 4-H projects adapted for teacher workshop about hands-on science; Food & Nutrition program; Pathways to Money for Department of Jobs and Family Services; Keep Food Safe.

Private or Exclusive Good Programs- Customized program developed for a specific individual, group, or business that realizes primary economic benefits. This might also include on-going one-to-one advising for a specific individual, group, or business that realizes primary economic benefit.

Examples: Food Safety certification program for restaurant workers; Strategic Planning Retreat conducted for a local non-profit agency; "Be Well, Eat Well" for a company's employees; Investing; Commercial pesticide applicator training for a company's employees.

PROGRAM CATEGORIES & LEVELS OF COST RECOVERY

PROGRAM CATEGORY

RECOVERABLE COSTS

Direct Project

Project Personnel

Project Development

Admin/Indirect

Public Good

Y

 

 

 

Targeted Public Good

Y

Y

 

Y

Private or Exclusive Good

Y

Y

Y

Y

E. Uses of recovered funds

Discussions and agreement about how costs that will be recovered and returned to the Extension unit will be used should occur as the project is being developed. The needs of the Extension unit and the Extension employee responsible for generating the funds need to be balanced.

These funds may be used to:

  • Hire backup support for the staff member who generated the recovered funds;
  • Hire temporary personnel to develop and /or teach programs;
  • Provide additional travel and professional development funds for the staff member who generated the recovered funds.
  • Purchase new equipment or resources for the unit;
  • Supplement the unit's operating budget, or
  • Other uses as agreed upon by the unit staff and/or employee who generated the recovered funds.

F. Definitions

Cost Recovery: This is a term used by Extension to describe any costs that are recovered from non-appropriated sources. This would be any dollar, donations or savings that doesn’t come from County State or Federal Funds. There will be more about specific types of cost recovery in later chapters.

Facilities and Administrative Rate (F&A): This is the rate built in to grants or contracts to cover overhead or indirect cost expenses. This may be referred to as administrative costs, indirect costs, or overhead in a proposal budget.

State Program Fees: These are fees set up by self-sustaining units for use in recovering costs for those units.

Cost Savings: This is the recovery of money that would have been spent on a program. This could be shopping for discounts, asking for donations of supplies, getting free meeting space, etc.

Release Time Appointment: This is the money that is saved and returned to local units because someone’s time is paid by a sponsored project. This can be used for operating and personnel expenses and expenses do not have to be project related.

Direct Appointment: This is when an employee is paid directly from the project funds. An employee’s wages (or part of their wages) may be drawn from the project rather than existing funds. This results in the unit saving the existing dollars for other uses. This is also used to increase an employee’s FTE to work on the project. In this case, the unit does not save existing dollars and the employee’s FTE is reduced when the project ends. 

G.

Funds administered by:

Sponsor Paid Appointments

 

Administrative Fees

Office of Sponsored Programs

 

Educators and Specialists:

Release Time

60% of wages and benefits returned.

40% returned to Admin.

Support and Program Staff:

Direct Appointments

100% of wages and benefits saved.

 

 

25% of collected overhead returned to Unit

 

75% of collected overhead returned to Admin

 

Extension

(Business Office)

OSU Foundation

 (Development Office)

None

H. Distribution and Use of Administrative Fees

Release time and administrative fees returned to the unit:

  • Recommended uses:
    • 80% could go to the individual generating those funds, and 20% stays with the unit. The individual and unit leader are free to decide on a different split depending on the circumstances and unit goals and priorities.
    • Can be used to support the project expenses related to the general administration and support services that cannot easily be determined for each project.
    • May include accountant, payroll, human resources, communications, computer support, value of space and utilities, and equipment depreciation.
    • May be used to support the temporary replacement of employees other duties while working on a sponsored project.
    • May be used to support ongoing goals of the unit.

I. Cost Recovery Funds Generated From Internally Funded Grants

  • Any cost recovery funds generated from a program funded by internal grants (e.g. innovative grants) are to be used to support ongoing grant-funded programs.

Section I effective November 1, 2013 - per OSUE Administrative Cabinet decision (October 10, 2013)