Angie Templeton & Nicole Cobb Grants & Contracts Administrators Sponsored Programs Administration

OMB Circular A-21 General Principles Direct vs Indirect Costs Allowability of Costs Mechanics of Building a Budget Sample Problems

Provides allowability principles for the reimbursement of costs associated with federally sponsored projects Provides guidance for determining direct and indirect costs *Note: Circular A-21 will be included in the OMB Uniform Guidance that will take effect on December 26, 2014, so the references at A-21 in this presentation will likely be different when that begins.

DIRECT OMB A-21 D.1. Can be identified specifically with a particular project Can be directly assigned to projects relatively easily with a high degree of accuracy INDIRECT OMB A-21 E.1. aka “F&A” or “Overhead” Incurred for common or joint objectives Cannot be identified readily and specifically with a particular project

Salaries Fringe Travel Commodities/Supplies Contractuals/Services/Subcontracts Equipment

Facilities Depreciation and Use Allowances Interest of Debt associated with certain buildings Equipment and Capital Improvements Operation and Maintenance Expenses Library Expenses Administrative General Administration and Expenses Departmental Administration President’s Office General Counsel Provost Budget & Planning Procurement Compliance Sponsored Programs Administration

OMB A-21, C.2. (a.b.c.d.) Reasonable Allocable Consistent Allowable

REASONABLE “Prudent Person Test” Determining Reasonableness: Necessary to the project Complies with Federal and State Laws and Regulations Did the individuals make good judgements? Were the actions taken consistent with institutional policies and procedures?

ALLOCABLE Expenses are incurred solely for the project OR Expenses benefit both the project and other work in a proportion that can be approximated Split purchases are allowed, and are often the most appropriate way to allocate expenses to projects

CONSISTENT Cost Accounting Standard (CAS) 502 requires consistent allocation of costs Incurred for the same purpose, in like circumstances, and are either only direct costs or only indirect costs REMEMBER: Cannot charge the same cost both directly and indirectly when it is incurred for the same purpose and circumstance

ALLOWABLE Must follow requirements from: OMB Circulars (soon to be Uniform Guidance) Sponsor Guidelines Award Document Institutional Policies Applies to both direct and indirect costs Certain costs may only be allowable as indirect Example: Sponsored Programs expenses are not allowable as a direct costs, but are allowable as indirect

Costs must be treated consistently as either direct costs or indirect costs, when in like circumstances “Like costs in like manner” Disclosure Statement (DS-2) also provides guidance: Example: Travel costs incurred while performing the function of general university activity such as travel by executive officers meeting with the State Board of Trustees to discuss general university business would be classified as indirect costs. Travel by a university employee related to carrying out the functions of a specific contract or grant would be classified as a direct charge to that contract or grant.

Can I charge a computer to my project? IT DEPENDS! Yes, if being used in a programmatic way Computer needed to be connected to a scientific piece of equipment for data collection Computer needed to run simulations, analyze data, etc No, if being used in a general way Check , browse internet, word processing, etc

Can I charge office supplies to my project? Typically no, due to lack of allocability OMB A-21 F.6.b.(3).- normally treated as Indirect Costs Allowable in unlike circumstances Used in programmatic way (conference materials, pamphlets, etc)

Can I charge my administrative assistant to my project? Typically no, due to lack of allocability OMB A-21 F.6.b.(2).- salaries of administrative and clerical staff normally treated as Indirect Costs Appropriate on a “Major Project” OMB A-21 Exhibit C

Anything necessary for the completion of the project that is not paid for by the sponsor Source of funds is irrelevant: MSU- E&G (Educational and General) Funds MSU- Designated Funds Third Party Contribution Other

Committed Must be tracked Required by sponsor Not required, but committed in proposal Not required, but implied through regulation Uncommitted Doesn’t need to be tracked Typically after the fact “volunteering” of MSU resources

As a PI, do I have to charge my time to the project? No- BUT your time will be considered cost share, and some portion of it must be committed and tracked Doing so will require division approval on the IAS in the Cost Share portion OMB Memo All projects must have some committed effort, and therefore must be tracked Note: we do not encourage cost sharing if it is not required by the sponsor

To be allowable as a cost share expense, it must be allowable as a direct cost Must be incurred during project period Can only be used as cost share once Cannot be already charged to the feds (F&A costs)

The sponsor does not allow me to charge F&A on the project. Can I use this unrecovered F&A to meet my cost share requirement? Only if you have prior approval of the Federal awarding agency (see OMB A-110 C.23.(b).) If I have two related federal projects, can I use my NSF funds as cost share for my USDA project? No- unless authorized by federal statute to be used as cost share (very rare to happen)- OMB A-110 C.23.(a).(5). **Cannot cost share Federal funds with Federal funds.**

I bought a piece of equipment a few years ago that I plan to use on this project. Can I use that as cost share? 1- Was it purchased with Federal funds? 2- Are the feds already paying for this (as F&A)? Is it in the F&A pool? 3- Is it fully depreciated? If you answer “no” to all of these, then you could use the depreciation value as cost share.

Basic Principles All costs must follow the principles we’ve discussed: Reasonable, Allocable, Allowable, and Consistent Properly budgeted as Direct or Indirect Costs All costs should be viewed in relation to the project’s needs Specific RFP’s may prohibit or require certain classes of expenses- be sure to read carefully! Personnel PI, Project Team, Students Establish this section first to help determine expenses for other categories Calculations: % effort or person months Person Months recommended 9 mo. Vs 12 mo. employees Use current salaries- escalations allowed for future budget periods

Sometimes sponsors (particularly industries) will ask for an hourly rate. Hourly Rate for 12 month: Salary / 2,080 Hourly Rate for 9 month: Salary / 1,560 Because MSU uses level of effort percentage instead, hourly rates are not auditable. We can provide these rates if required, but we need to add a disclaimer. SPA can work with the PI on what verbiage to use.

Fringe Benefits Treated as a Direct Cost Effective August 31, 2014 Calculations Rates are applied to budgeted salaries Faculty/Staff (based on $40,000 average salary) Enrolled Students RetireesOther Intermittent Employees and Non-Enrolled Students 36.09%0.73%24.23%8.48%

Graduate Student Tuition Calculation is based on student’s budgeted effort Note: Effective Fall 2015 (FY16), all GRA’s will have the 100% rate charged in budgets. GTA’s and GSA’s will remain at 71%. (Kevin Edelblute)

Travel Project related conferences, meetings, data collection, etc For budgeted personnel Per Diem ate.edu/hcma/plhcma. php ate.edu/hcma/plhcma. php $41/day (min) $46/day (max) Mileage ate.edu/mileage/mileag e.pdf ate.edu/mileage/mileag e.pdf $.56/mile if State owned vehicle not available $.235/mile if State owned vehicle available Equipment Non-expendable Tangible Useful life of more than one year Acquisition cost of $5,000 or more per unit Note: just because it can be inventoried, does not necessarily make it equipment for budgeting purposes

Commodities/Materials and Supplies Items to be used for the project Examples: Molecular Biology Supplies (enzymes, tubes, etc) to be used for DNA sequencing Contractuals/Subcontracts Services to be performed by another entity to complete the project Example: Third-party vendor will perform DNA sequencing samples

Participant Costs Broad definition: Support provided when a sponsor funds a project or activity in connection with formal meetings, conferences, or training programs Specific definition: Costs paid to (or on behalf of) participants in such events Treatment of participant costs vary from sponsor to sponsor- check the RFP and sponsor requirements!

Facilities and Administrative Costs (F&A) Research 45.5% MTDC On Campus 26% MTDC Off Campus Instruction 50% MTDC On Campus 26% MTDC Off Campus Public Service/Other 27.2% MTDC On Campus 22.8% MTDC Off Campus (MTDC = Modified Total Direct Costs) *Current Federally- negotiated rates, effective: July 1, June 30, 2017

Exclusions: Tuition Equipment Patient Care Off-site Rentals Scholarships/Fellowships All Subaward Costs Exceeding $25,000 Sponsor may further restrict the F&A Rate The maximum that can be charged is our federally negotiated rate Total Direct Costs Exclusions Modified Total Direct Costs

Angie Templeton: Nicole Cobb: Sponsored Programs Administration 133 Etheredge Hall