1. Grant Budgeting Basics
Donna Marano
Director of Finance & Administration
Civil & Environmental Engineering
Denise Murrin Macey
Business Manager
Engineering and Public Policy
October 31, ©Sharon McCarl

2. Session Focus Theory-What is a good budget?
Practical-What are the pieces and how do I put it together?
Routing and Approvals

3. What is a good proposal?
A good idea, well expressed, with a clear indication of methods for pursuing the idea, evaluating the findings, and making them known to all who need to know - NSF

4. What is a quality proposal?
Manageable focus
Plan of work
Plan of resources needed

5. Point to Remember
Throughout It All, Remember, Proposals Are Approved Based on the Science, Then Whether the Budget Is Justified. A Good Budget Requires Justification but It Is Not the Primary Factor in Evaluation.

6. Budgeting Defined
“The Budget Plan is the Financial Expression of the Project or Program as Approved During the Award Process” (OMB Circular A-110, Subpart C, Section _.25).
Business Side-What do I need to accomplish the goals of this project?

7. Budgeting Principles
ALL costs (direct and F&A) that can be identified with a particular sponsored project should be identified and budgeted (somewhere) AT THE PROPOSAL STAGE
ALL costs (direct and F&A) of a particular sponsored project should be borne by the sponsor (to the maximum extent possible)

8. Costing Defined
The Process Used to Determine the Amount Required to Acquire the Goods and Services Necessary to Achieve Project Objectives

9. Pricing Defined
The Process Used to Determine the Amount Requested from the Sponsor to Acquire the Goods and Services Necessary to Achieve Project Objectives

10. Guiding Regulations
Office of Management and Budget (OMB) Circular A-21
Cost Accounting Standards Board
22 Standards for Industry
4 Apply to Educational Institutions
OMB Circular A110
Institutional Policies

11. Characteristics of Costs
Reasonable
Allocable
Allowable
Treated Consistently

12. Reasonableness Test - Is the expense reasonable? Logical?
Reasonable person test
Is it normal for this type and level of expense to be charged on projects of a similar nature?
Market Value-Appropriate Bids

13. Allocable
Was the cost incurred solely for the advancement of the project?
Can the expense be clearly identified with the project?
Assigning inappropriate expenses is FRAUD!

14. Allowable Reasonable and necessary A-21 section J
In conformance with limitations/exclusions (example foreign travel, equipment)

15. Treated Consistently Cost Accounting Standards
Must be able to defend cost estimates

16. Cost Accounting Standards
501-Estimating, Accumulating and Reporting costs
502-Consistency in Allocating Costs Incurred for the Same Purpose
505-Accounting for Unallowable Costs
506-Consistent use of Cost Accounting Period

17. OMB Circular A-110 Financial Management Standards Cost Sharing
Rules for Accounting, Asset Management
Cost Sharing

18. Cost Sharing
“…that portion of project or program costs not borne by the Federal Government.” (OMB Circular A-110, Subpart A, Section _.2(i))
Know your department or college’s policy & procedures
NSF Statement 10/19/04 (NSB )

19. Questions???

20. Consider the Source of Funding
Sponsor Awarded Funding
State or Federal Government
Industry
Foundations
Institutionally Provided Funding
Start-up Fund
Seed Fund
Faculty Development
Cost Sharing

21. Assess Budget Needs Budget matches narrative Amounts
Reasonable for scope of work
Well justified
In-line with program
Allowable
Includes adjustments for future years

22. Types of Costs Direct Costs Facility and Administrative Costs
“…costs that can be identified specifically with a particular sponsored project…” (OMB Circular A-21, Sec.D.1)
Facility and Administrative Costs
“…costs incurred for common or joint objectives and [that] therefore cannot be identified readily and specifically with a sponsored project…” OMB Circular A-21, Sec.E.1

23. Types of Direct Costs Personnel Fringe Benefits Equipment Supplies
Travel
Subcontracts/Consultants
Other

24. Personnel Individuals who are employees or students of Carnegie Mellon
Vacant Positions (to be named)
Generally no administrative positions
Funding in proportion to project effort using base salary
Include fringe benefits (full or part-time)
Include salary increments
Remember salary caps

25. Fringe Benefits Pooled or composite rate
Rates proposed by Carnegie Mellon and approved by the Office of Naval Research
Full-time  37.5 hours %
Full-time  37.5 hours Federal %
Issue: dependent tuition 3.60%

26. Fringe Benefits Part-time  17.5 and < 37.5 18.5%
Part-time Mandatory < %
Mandatory (FICA, unemployment, worker’s comp)
Non-CMU students
Additional Compensation %

27. Equipment Cost  $1,000 & Useful Life  2 Years
Exclusive use by project
Computers
General purpose
equipment

28. Equipment Itemize and Justify
Competitive Pricing ( 3 bids > $2,500)
Price Reasonableness
Identify Sole Source Suppliers at the Proposal Stage

29. Supplies Must be specific to project (check A-21)
Avoid general purpose items
Itemize and justify
Examples
Chemicals, glassware, non-capital equipment
Animal purchases, enzymes

30. Travel Itemize and justify Who, what, when, where, why and how
Include business purpose and destination
Separate domestic and foreign travel
Do not include patient care or consultant travel

31. Other Animal housing Publication and page charges
Subject incentive and travel reimbursement
Rentals & maintenance contracts
Equipment Usage (# hours and rate)
Long distance

32. Subcontracts Itemized budget Statement of work
Commitment to perform (w/signature)
Justify need and selection criteria
Include direct and F&A in your budget

33. Consultants Employee vs. Consultant (substantial fines)
Justify contribution to project and budget
Include name and affiliation
Include all costs including travel & per diem
Include biographical sketches

34. Flags Animal Research Radioactive/DNA Human Subjects Effort > 100%
Employees ???
Subcontract > 50%
Unallowable (get it in writing)
Space or Cost Sharing

35. Facilities and Administrative Costs (a.k.a. Indirect Costs)
“…costs incurred for common or joint objectives and [that] therefore cannot be identified readily and specifically with a sponsored project…” OMB Circular A-21, Sec.E.1
Two Components
Facilities
Administration

36. Facilities and Administrative Costs
Federal rates set by our cognizant agency ONR in negotiation with Carnegie Mellon
Applies to subcontracts with federal prime
Modified Total Direct Cost Base
Industrial Rate 56 %
Federal Rate 45% (DOD Contracts 49%)
Federal Rate Off-Campus 28.8%

37. Facilities Depreciation and Use Allowance
Interest on Debt (specific buildings)
Equipment & Capital Improvements
Operation & Maintenance Expenses
Library Expenses

38. Administration GA - General Administration
Executive & Administrative, Central functions
DA - Department Administration
Administrative and Clerical Staff, office supplies, telephones, travel
Sponsored Project Administration
Student Administration & Services

39. Calculation Modified Total Direct Cost Base Carnegie Mellon example
Total Direct Costs Less:
Equipment
1/2 graduate student costs
Portion of sub-awards in excess of $25,000
On-site vs. Off-site rate
Check Sponsor Terms

40. Summary Preplanning Know regulations and sponsor requirements
Know special requirements
Animals, Human Subjects, Subcontracts, Cost Sharing
Check Math

41. Questions???

42. Getting Started Sponsor Project Dates
Federal, Non-federal (what rates and rules apply)
Special Rules or Instructions (caps, F&A)
Project Dates
Subcontracts or Multi-departmental Budgets
Special Approvals (animals, human subjects)

43. Personnel Who will work on this project?
What will this person contribute?
Where will this person work?
What is this person’s status? Employee, graduate student, consultant???
Type of Appointment
How much effort is required?
Are there security issues?

44. Equipment What do you need?
What is the importance of this item to the research?
Does it qualify as capital equipment?
Is it general purpose equipment?
Is it available elsewhere? Borrow or share
Cost analysis Lease vs. Purchase

45. Travel How does this trip enhance the goals of the proposed research?
Who will travel?
Where?
Why?

46. Supplies and Other Expenses
What do you need?
What is the best way to estimate the cost?
Do the numbers-avoid excessive guessing
Check recharge rates, facility charges, historical expenses
Match budget detail to accounting system
Controlled Substances?
Cost of an Audit

47. Proposal Routing Contact Business Manager
SPEX Sponsored Projects Exchange
Generates Proposal Routing and Sign-off Sheet
Carnegie Mellon Proposal Number

48. Disclosure and Signatures
Investigator(s) Disclosure and Assurances
Must read and check appropriate box
Conflicts must be resolved –Susan Burkett
All proposals require approval prior to submission
Signatures PI
Department Head
Dean
Pre-award Office
Associate Provost-Institutional Official

49. Routing Time Allow Adequate time for review
Carnegie Mellon reserves the right to withdraw any proposal AND
You need time to copy and collate before the express mail pick-up
Electronic Submissions