OFFICE OF SPONSORED PROJECTS BUDGETING BASICS OFFICE OF SPONSORED PROJECTS

Course Objectives To learn and understand University and sponsor regulations pertaining to budgets Key terms and calculations that govern the budget Categories of major cost$ How to prepare and incorporate a budget from a subcontractor Key questions to ask the PI to build a budget

What is a Budget? Financial Expression of the proposed scope of work All expenses required to achieve project aims and objectives A guiding document for conducting work when awarded Most sponsors provide detailed instructions for budget preparation; many provide budget forms or require a specific format.

Budget Translates resource needs to dollars Conforms to agency guidelines Realistic estimates Supports the program Explains itself Plans ahead

Key Points Sponsors want to know details of how the funds will be used Second most scrutinized portion of the proposal A good budget can increase the chances for funding Develop Credibility Outlines/Clarifies the text The PI and University are responsible for the accuracy of the cost data provided to the sponsor The proposal budget becomes the award budget

OMB Circular A-21/ 2 CFR 200 – Sub Part E Cost Principles for Educational Institutions Allowable Allocable Reasonable Consistently Treated Provides rules, not just that a specific cost is allowable or unallowable. It may depend on the circumstances. Defines allowable costs and cost principles: – Federal contract, grant, or cooperative agreement Specifically identifies the direct and indirect costs Determining the appropriate costs to potential awards Identifies those costs that cannot be charged

Two Primary Budget Categories Budgets consist of two primary categories: Direct Costs Indirect Costs

Budget Categories - Direct Costs Costs that can be charged directly to a project Salaries Fringe benefits Tuition and associated fees Consultants Equipment Supplies and Materials Travel Subawards Other Expenses

Budget Categories - Indirect Costs Indirect Costs, also known as Facilities and Administrative Costs (F&A) Costs incurred for common or joint objectives and cannot be specifically identified with a particular sponsored project F&A rate percentage applied to a direct cost base amount

Cost Categories - Personnel Provide the annual salary rate and the percentage of time to be devoted to the project Name, role on the project - not the job title, describe duties Often comprise the largest amount of requested costs in a budget

Cost Categories - Personnel Typical personnel categories Faculty Post Docs Grad Students Technical Staff Undergraduates

Cost Categories - Personnel Salary Brown tracks effort internally on a calendar year, percent of effort basis All Principal Investigators (PI) and Co PI s must show effort Expressed as “Percent of Effort” or “Person Months” The “appointment type” - 9, 10, 12 months Exercise: Person months conversion chart HANDOUT PERSON MONTHS CONVERSION CHART

Cost Categories – Fringe Benefits Non-salary employee compensation Includes social security (FICA), retirement, social security taxes, tuition, education assistance, dental plan, worker’s compensation, health insurance, long-term disability, group life insurance, unemployment insurance Brown’s federally negotiated fringe benefit rates 7/1/2016 to 6/30/2017: 30.50% (full time) 7/1/2016 to 6/30/2017: 7.5% (part-time)

Cost Categories – Fringe Benefits Graduate Student Research Assistant - Fringe Benefits No fringe benefits charged during the academic year Part-time rate is applied during the summer period

Cost Categories - Equipment Equipment (Property) Useful life of 1+ year cost of $5,000 or more Allowable items ordinarily will be limited to research equipment and apparatus not already available for the conduct of the work. General-purpose equipment, such as a personal computer and office furnishings, are not eligible for support unless primarily or exclusively used in the actual conduct of scientific research.

Cost Categories - Equipment Important questions to keep in mind… Is the item necessary to this project? State purpose Cost estimates – does the cost include tax, shipping, transit insurance and/or installation? Source of cost per vendor quote or catalogue Can it be supported in the current space without facility alterations? Off the shelf or ‘fabricated’ (made at Brown) Number of quotes required by sponsor UNIFORM GUIDANCE WILL BE UPDATED IN 2015. PLEASE REVIEW ONCE CHANGED

Cost Categories - Supplies Materials and Supplies Consumable scientific and technical supplies necessary to carry out the sponsored agreement Explain how it is essential to project Acquisition cost of less than $5,000 May include: Chemicals, glassware, specimen bottles, etc. General office supplies (e.g. pens, paper, toner) ordinarily not allowed UPDATE WHEN UNIFORM GUIDANCE IS FINALIZED

Cost Categories – Travel Provide detailed estimate Purpose of the travel Number of trips, number of days per trip Number of individuals traveling Destination, dates and purpose $95 Average per day including tax and tip. Note: This is not per diem $20 breakfast $25 lunch $50 dinner http://www.brown.edu/Administration/Controllers_Office/documents/TravelPolicyFinal4.19.11.pdf Lodging-depends on city/country-eg.Major cities max is $275, New York and foreign nations-max $400.

Cost Categories - Travel Airfare, lodging, car rental, mileage if using personal automobile, meals, ground transportation Foreign travel: Fly America Act Use of U.S. air carriers required Brown reimbursement rates Refer to guidance in the Brown Travel Policy $95 Average per day including tax and tip. Note: This is not per diem $20 breakfast $25 lunch $50 dinner http://www.brown.edu/Administration/Controllers_Office/documents/TravelPolicyFinal4.19.11.pdf Lodging-depends on city/country-eg.Major cities max is $275, New York and foreign nations-max $400.

Cost Categories - Subaward Portion of research performed by another institution outside of Brown Contributes substantively to the scholarly/scientific conduct of the project and will write portion of the continuation proposal and/ or technical reports Has responsibility for programmatic decision making Utilizes its own facilities, employees and/or resources 20

Cost Categories - Subaward Subrecipient organization must submit Letter of Intent signed by Authorized Official Statement of Work Budget Budget Justification Documentation as required by agency Subaward must have a PI which is not the Brown PI

Cost Categories - Consultants Professional Services Agreement (non Brown Personnel) Provides the services within normal business operations to many different purchasers Goods or services provided that are ancillary to the operation of the research project Is not subject to monitoring or reporting requirements of the prime award Fee for services may not exceed consultant’s normal rate of pay or daily maximum established by sponsor

Cost Categories - Consultants Professional Services Agreement Include: Consultant’s Name Services to be provided Rate of Pay (Daily or hourly) Number of Days they will work Any travel requested

Cost Categories – Publication Costs Costs of documenting, preparing, publishing the findings and products of the work conducted under the project Include The name of the Journal (s) Charge per page

Cost Categories – Other Direct Costs Tuition Health Fee Vertebrate Animal Subjects care Human subjects payments Computing Services Identify cost and the cost basis

Cost Categories – Indirect Costs Modified Total Direct Costs (MTDC) base excludes: Capital expenditures (Equipment) Portion of subaward > $25,000 Rental/maintenance of off-site activities Student tuition, student support costs Participant costs Example of student support costs-student aid, stipends, dependency allowances, scholarships, fellowships)

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Budget Justification A description of the expense or service How it relates to and benefits the project The anticipated cost The time-period in which it will be utilized Any other information that will aid the sponsor in evaluating and funding the proposed item of cost

Summary Sponsor policies and guidelines dictate what direct costs are appropriate in a proposal budget Federal cost principles and the Cost Accounting Standards should always be applied when preparing proposal budgets Is this cost allowable? Is this cost allocable? Is this cost reasonable? Is this consistent with costing practices of the University?

Summary Budget Justifications are usually required by sponsors Budget Justification should follow the same format as the budget items on the detailed budget form Always retain documentation as to how costs were derived Even if the sponsor doesn’t require a detailed budget or budget justification

Budget Preparation Read sponsor instructions, guidelines, and/or requirements Certain expenses may not be allowed Certain expenses may be required (e.g. travel to meetings) Certain expenses may have limits (e.g., salaries/equipment)

Budget Preparation Where do the numbers come from? Actual sources (e.g. level of actual pay and benefits) Pay scales for undetermined hires Historical experience for categorical costs (e.g. supplies) Quotes from vendors (e.g. Equipment)

Budget Preparation Time Period Brown Fiscal year: July 1 – June 30 Period of Performance: Will affect Indirect Cost and benefit rates, salary increases, etc. Apply the correct rate for the relevant time period Refer to the FOA for the earliest start date and the maximum period of performanc

Budget Preparation Example: Budget Period = April 1 – March 31 3 months in one fiscal year April, May, June 9 months in the next fiscal year. July through the following March

Case Study Prof. Josiah Carberry sent you an email that he will be submitting a 3 year proposal to the NIH with his colleague at Harvard University, Professor Gimme Munny as a subcontractor at $20,000 for each year. The due date is 9/17/16 at 5PM. This is a new initiative for Prof. Carberry. The proposed start date is 7/1/17. Prof. Carberry states that he is planning on committing 5% effort during the academic year. The PI needs to purchase a particle analyzer in the first year which he has received a quote for of $50,000. He will need a graduate student research assistant on the project with a $15,000 academic year stipend. Travel $2,000, supplies $3,000 and include $500 for publication charges. Please put together a standard NIH proposal, Professor Carberry will forward the scope of work when it is ready. 36

Case Study What you will need to know: Professor Carberry (9 mo appt) salary is $100,000 Graduate tuition is 50,224 & health fee is $804 Note: Brown only charges 25% of tuition to sponsored award, but charges all of the health fee Fringe Benefits are 30.10% FY18-20 Harvard Subaward will include both direct & indirect Indirect Cost rate for FY16-20 is 62.5% 37

UPDATE WITH NEW FY RATES

Coeus Budget: Cumulative Once all of your Budget Items are added to the Period 1 Budget, Coeus has a function to generate the remaining budget periods.   The budget items are copied into each period and inflation is applied, if applicable, within each budget period. Once your budget periods have been generated with using the Period 1 budget as the base, you can further modify a specific budget period.

Budget Review Sponsor suggestions: Look at previously funded projects Provide strong connection between project design, methods and requested costs Note significant changes across years Put in dates, timeline Make sure numbers match Clearly explain and justify each item

Coeus Budget Tool Coeus has a Budget tool that stores all approved Facilities and Administrative Rates, Employee Benefit Rates, & Inflation Rates to automate those calculations when you add your cost elements. You can create an initial budget that includes the period of performance and the detailed personnel/ non-personnel cost elements.  Coeus then will automatically calculate inflation and salary increases as well as overhead.

Budget Preparation Checklist

Additional Resources NIH All About Grants – podcasts http://grants.nih.gov/podcasts/All_About_Grants/  Foundation Center (non federal budgets) Proposal Writing Short Course Http://foundationcenter.org/getstarted/tutorials/shortcourse/budget.html OSP Training Post Award - Direct Charging Administrative Costs Post Award - Allocations of Costs Post Award - Supporting Documentation and Justification Post Award - Traveling on Sponsored Funds Pre-Award - Reading the Funding Opportunity Announcement (FOA) Pre-Award - Cost Sharing on Sponsored Projects

Working Together Faculty Department Managers and Administrators Office of Sponsored Projects BioMed Research Administration

FINI

Extra Help with Math

Fun With Math!!!! Working with Percentages 5% = .05 but it does NOT = .05% Factor of 100 difference! .05% = .0005 .05% raise on $50,000 = $25.00

Fun With Math!!!! Working with Percentages To increase a number by 5% multiply the number (the Base) by .05 and add them together: 100,000 X .05=5,000 100,000+5,000=105,000 -OR- Simply multiply the Base number by 1.05 100,000 X 1.05 = 105,000

Fun With Math!!!! Working with Percentages To find the Base number when you have the Total and the %, Divide the Total by 1+.05 $105,000 / 1.05 = $100,000 Helpful if there is a total funding limit: TC=$300,000 / 1.62 = $185,185 (MTDC)* (*assumes no deductions from MTDC)