Policy update: Purdue adjusts key financial thresholds for subcontracts, equipment

Purdue University is implementing revisions to two key financial policies, effective July 1, in response to recent federal Uniform Guidance updates and the university’s submission to extend its facilities and administrative rates. These changes aim to optimize the management of sponsored projects and equipment acquisitions.

Subcontract threshold adjustment

The university will increase the indirect cost recovery threshold for subcontracts on sponsored projects from $25,000 to $50,000. Consequently, indirect costs will be applied to the first $50,000 of each subcontract. This update will apply to all new sponsored project proposals with start dates on or after July 1. Faculty should be aware of this change when preparing proposals and negotiating subcontracts.

Equipment capitalization threshold update

Purdue is also revising its threshold for capital equipment, increasing it from $5,000 to $10,000. As a result, purchases below $10,000 will be categorized as supplies. This change will impact both existing and new sponsored projects, as indirect costs will be applied to equipment purchases less than $10,000 after July 1. In some cases, approved budgets may need to be revised to accommodate this change.

Impact on existing equipment

It is essential to note that any remaining netbook value as of July 1 for equipment originally costing less than $10,000 will be written off and reflected in the university’s annual financial report. No departmental action is required, and there will be no impact on the financial management reports and grant management reporting used by departments. Only recharge centers; self-supporting auxiliaries such as athletics, housing and food services; and other funding sources utilizing equipment depreciation through the finance ledger will be affected by these entries.

For further information on sponsored programs, please refer to the Facilities and Administrative Cost Rate document. If you have questions or concerns about these policy updates, please reach out to costing@purdue.edu.