Indirect Cost Recovery (ICR) Funds
As outlined within the Banner Fund Codes webpage, the fund code is an important segment of the Banner accounting string which helps properly classify the University of Illinois’ financial resources for financial reporting purposes.
Classifying these financial resources into separate fund types also helps monitor compliance with applicable guidelines and restrictions to ensure proper stewardship of these funds.
Indirect cost recovery (ICR) funds are a common type of fund used across the University of Illinois System. See the following sections for answers to commonly asked questions regarding ICR funds, as well as tips for properly managing your ICR C-FOPs.
What Are ICR Funds?
Indirect cost recovery funds (which reside in fund type 2C and which are commonly referred to as “ICR funds”) are funds which account for recoveries of Facilities and Administrative (F&A) overhead charged to grant funds. These F&A assessments help cover the system’s overhead costs associated with the grant activities.
In addition, ICR funds also account for recoveries of tuition remission. Tuition remission is defined as a partial or full recovery of tuition waivers that graduate students receive as a condition of their university employment when the waiver was granted within a college or department that differs from the college or department in which the graduate student was employed. This ensures the grant which is benefiting from the graduate student’s employment pays for their fair share of the associated tuition waiver.
For example, if a graduate student is enrolled in College ABC and receives a tuition waiver as a condition of their employment with Department XYZ (e.g., as a research assistant), then a tuition remission assessment will be charged to Department XYZ. The funding generated from that tuition remission assessment will then be reallocated back to College ABC to ensure they are able to recover the tuition revenue which they lost from the tuition waiver that was generated as a condition of the graduate student’s employment with Department XYZ. These tuition remission allocations are commonly allocated back via ICR budget.
How Are ICR Funds Identified in Banner?
ICR funds can be identified by examining the fund code segment of the Banner C-FOP. The ICR fund code (which has a 2C fund type, as mentioned earlier) is 200250.
This fund code is shared by all units across the entire University of Illinois System. Thus, each unit must use their applicable organization code and department-specific program code along with this ICR fund code in order to distinguish their allocation of this ICR funding.
How Are ICR Funds Budgeted to Units?
The applicable budget offices are responsible for allocating ICR budget across the University of Illinois System. They will assign an expense budget to your unit’s specific organization and program code combination, using the primary ICR fund code (200250) which is used across the University of Illinois System. See below for a high-level summary of how this process works:
- The amount assessed to each grant fund for these indirect costs is based on a percentage of eligible direct expenses that are charged to the grant fund.
- When the grant fund is assessed, this indirect cost assessment will be charged to a 1981nn expense account code on the grant fund. The offsetting side of this entry will be a credit to a 3088nn revenue account code within the centrally held ICR fund.
- This ICR revenue is then allocated to the applicable units as expense budget by the applicable budget office.
If you have any questions on this process, contact your applicable budget office.
What Will My ICR C-FOP Look Like?
The ICR fund code (200250) is used across the entire University of Illinois System. In order to segregate your unit’s portion of the overall ICR fund budget allocations, you will need to use this shared ICR fund along with your unit’s applicable chart, organization, and program code.
For example, if a UIC unit (which has an assigned organization code of 123000) wants to assign ICR budget to one of their professor’s research program codes (e.g., 123004), then that ICR C-FOP would be 2-200250-123000-123004.
Units will typically need to request a new program code (not a new fund code, as everyone shares the same fund code) when requesting a new C-FOP string to use for their ICR activities.
How Do I Find the Budget Balance Available (BBA) For My ICR C-FOP?
- In order to find the available budget balance for an ICR C-FOP string, go to Banner page FGIBDST and enter the applicable C-FOP string.
- Then, uncheck the Include Revenue Accounts box within this page, and hit the Go button.
- Your available budget balance will then appear in the lower right-hand corner of the page, on the Net Total row of the Available Balance column.
For further details, refer to the Finding Your C-FOP Balance webpage.
What Types of Transactions Are Allowed on ICR Funds?
The primary purpose of ICR funds is to provide unrestricted support for a unit's core research and administrative operations. In other words, ICR funds help pay for those indirect costs incurred by the University of Illinois System which were assessed to the grant funds.
In addition, given the unrestricted nature of ICR funds, they may also be used for other costs , such as professional development, student financial aid, research, and student services. However, since ICR funding is generated from indirect cost recoveries from grant funds, it should not be used for instructional activities.
Am I Allowed to Deposit Cash or Checks to My ICR C-FOP?
Typically, the only times where it is allowable to make a deposit (such as cash or a check) into an ICR fund are the following:
- Your unit received a vendor refund or rebate from a past purchase which was posted to your ICR C-FOP string.
- Your unit received reimbursement from an employee who erroneously charged the ICR fund for a personal expense (such as a movie rental in a hotel during a business trip that was charged to the state fund).
How Do I Transfer ICR Budget from One C-FOP to Another?
If you ever need to transfer budget from one ICR C-FOP to another (e.g., to move the expense budget to a different organization or program code), always be sure to work with your applicable campus budget office for guidance. See Section 3.1, Adjust a Budget for further details.
- There are also limitations on where you can transfer your ICR budget to. For example, it is unallowable to transfer ICR budget to a self-supporting or gift fund.
- However, you may be able to transfer ICR budget to state C-FOPs or other types of institutional fund C-FOPs (such as administrative allowance) – but this type of request would need to be reviewed, approved, and processed by the applicable budget office.
What Rule Code Should I Use When Posting Journal Vouchers Involving ICR Funds?
When processing journal vouchers (JVs) on ICR funds, you are required to use either a 100 or 125 rule code (also referred to as a Journal Type within Banner) on the JV sequence which contains the ICR fund. See below for a breakdown:
- If your JV includes only one debit and one credit, then you would use the 100 rule code on the JV sequence which contains the ICR fund.
- If your JV includes one debit and multiple credits (or vice versa), then you would use the 100 rule code on the JV sequences which contain the ICR fund.
- However, if you are completing a JV which has multiple debits and multiple credits, then you would be required to use the 125 rule code on any of the sequences containing the ICR fund.
Why Is It Important to Use Accurate Expense Account Codes on the ICR Fund?
To ensure compliance with financial reporting requirements, as well as to prevent state compliance audit findings, it is very important to use accurate expense account codes when posting expenses to ICR funds. The expense account code should accurately reflect the goods, services, or personnel expenses which are being paid for.
Do Unspent Funds Within an ICR C-FOP Carry Forward to the Following Fiscal Year?
Yes. Any unspent funds within your Banner ICR fund simply carry forward to the following fiscal year. This unspent balance from the prior fiscal year can be found within the 109910 budget carryforward account code within Banner page FGIBDST.
For example, if a professor received a $10,000 expense budget in an ICR C-FOP string for research purposes, and if that professor only spent $7,500 within the first fiscal year, then the remaining $2,500 of unspent funds would carry forward to the 109910 budget account code in that same ICR C-FOP the following fiscal year.