1. Grant Budgets and Budget Justifications
November 2018

2. Rules and Regulation
Governing Policies

3. Financial Accountability
Preserve public / government trust in university
Avoid mismanagement of federal funds
Financial stewardship of a sponsor’s resources
Risk of non-financial compliance

4. Risks of Non-compliance
Fines and penalties – false claims act ($5,000 - $10,000 per false claim)
Reduced research funding
Enhances sponsor monitoring
Designation as “exceptional” or “high risk” institution
Compromise reputation
Loss of public trust

5. Compliance Items Time and effort certification Cost transfers
Direct charging clerical and administrative salaries
Cost Sharing and Matching
Timeliness of Report Submission

6. Uniform Guidance
Federal Government’s guidance on Administrative Requirements, Cost Principles, and Audit Requirement for Federal Awards
“Super Circular” combines:
A-21 Circular: determines costs applicable to grants, contracts, and other agreements with educational institutions
A-110 Circular: sets forth standard for obtaining consistency and uniformity among Federal agencies in the administration of grant agreements with institutions of higher education.
A-133 Circular: sets forth obtaining consistency and uniformity among Federal agencies for the audit of States, local government, and non-profit organizations expending Federal awards.

7. What happens if we don’t? Recent Institutional Settlements
2016 $9.5M Columbia – Inaccurate use of Indirect Cost Rate
2015 $19.8M U Florida –Improper use of grant funds( )
2009 $7.6M Yale – Effort Reporting
2006 $2.5M U Connecticut – Service Center Billing Rates
2005 $4.4M Cornell – Grant Money Paid to Non-Research Staff
2005 $6.5M Mayo Clinic – Improper Cost Transfers
2005 $11.5M Florida International – Improper Cost Transfers
2004 $2.4M Harvard – Grants Billed for Unrelated Salaries
2004 $2.6M Johns Hopkins – Faculty Effort Reporting
2003 $5.5M Northwestern – Faculty Effort Reporting

8. Grant Cost Must Be
Allowable
Allocable
Reasonable

9. Allowable Costs General Test of Allowability – Costs Must Be:
Treated consistently through generally accepted accounting principles
Reasonable
Allocable
Conform to limitations of Uniform Guidance and agreement with terms and conditions

10. Allocable Costs
A cost is allocable to a particular objective according to the relative benefits accrued to the objective.
Any cost allocable to a particular award or other cost objective may not be shifted to other federal awards simply to overcome funding deficiencies nor to avoid restrictions imposed by law or by the terms of the award.

11. Reasonable Cost
A cost is considered reasonable if the goods or services acquired, and the amount involved, reflect action that a prudent person would take under the circumstances.

12. Factors to Consider
Is the cost necessary for the performance of the project?
Was the cost budgeted in the proposal budget?
What laws and regulations should be considered – what are the terms and conditions of the award?
Did all individuals act with prudence and satisfy their responsibilities to both the institution and the federal government?

13. Examples of Unallowable Costs
Alcoholic beverages not part of an approved protocol
Bad debts/directly associated legal costs
First class air travel (usually)
Product advertising
Promotional items and social club memberships

14. Budget Principles
Most funding agencies require that a proposed budget be based on a “good faith estimate” of the anticipated costs. A person may not knowingly include false, inaccurate or misleading cost information.
What you put into the budget and justification turns into your commitment to the sponsor.

15. Essential Elements
Constructing a budget

16. Direct Costs Expenditures needed to carry out the project
Usually include:
Salaries and benefits
Travel expenses
Supplies
Contractual Services
Equipment
Tuition

17. Salaries and Wages Principal investigator or project director
Coordinator, manager
Research assistant
Postdoctoral fellow
Graduate assistant
Technician
Undergraduate student

18. Travel expenses – ground transportation, airfare, lodging, meals – conferences, meetings, fieldwork
Supplies – laboratory, photographic, animal care, educational/instructional
Contractual – outside lab analysis fees, rental fees, shipping, training, testing, honoraria (non-NMU employees)

19. Subawards – portions of a budget for cost of project activities carried out by others at another institution or agency
Equipment – typically items over $5,000 (laboratory, office, medical, audio-visual)

20. F&A/Indirect Costs/Overhead
Indirect costs are University operating expenditures incurred for common objectives which are not allocated to a specific project.
Examples: Facilities (labs, offices, etc.), administrative services (purchasing, personnel, accounting, pre-award services, post-award project management, maintenance, utilities, dept. office expenses.
NMU’s rate: 34.5% of salaries, wages, fringe

21. Types of Cost Share Mandatory – required condition of award
Voluntary Committed – offered, excess of mandatory, not a condition to be considered for the award

22. Possible Sources of Cost Share
Employee time, including fringe benefits
Graduate assistants, undergraduate students
Equipment
Volunteer time or other contributed items
Unrecovered F&A
Subrecipient cost-sharing
Directly related supplies and services
Travel

23. Adding it all up
Sample budget

24. Project Expenses
Principal Investigator – Prof. Plum – 20% time ($50,000 annual salary)
1 Graduate Research Assistant
Travel 3 trips at $2,000 each
Supplies: $8,800
Flowers for grant administer: $50
Tuition
Subaward: $30,000

25. Provide a rationale
Justification

26. Budget Justification
Identifies your costs and explains the need for them.
Answers any questions a reviewer may have about how you calculated your costs
Indicates the base salaries and any yearly increases
Should reflect the objectives of the project.

27. Tips
Be sure everything in your budget is referenced in the proposal and everything in your proposal that would incur cost is explained in the justification.
Follow the same order as the budget
The more “unusual” the request, the more justification needed (personal computers)

28. Salaries and Wages
Provide enough detail to make it clear why each person is necessary to the project and what the contribution will be:
PI: P. Plum, PhD is Assistant Professor of __ in the __ department, with extensive experience in __. Dr. Plum will be responsible for __.
Research Assistant: TBN, MS, will work with __ on __. In year one, this RA will __.

29. Description of Duties
Weak: C. Mustard will analyze all data associated with the project.
Strong: C. Mustard will be responsible for statistical analysis of data collected in experiments 1-3 which are directly tied to specific aims 3 and 4. He will also be responsible for day-to-day project planning, coordination with experts at partnering institutions, writing all progress reports, and supervising the RA.

30. Travel Provide information about: Purpose Duration
Points of departure and destination
Number of travelers
Cost per traveler
Registration fees, ground transport, etc.

31. Materials and Supplies
Provide a list of the general types of expendable materials and supplies required
You do not have to have an exhaustive list or show catalog numbers or other documentation
Provide sufficient detail to show:
You have anticipated the materials needed
There is adequate justification for the amount requested.

32. Consultants
Be sure that the daily rates is not in excess of the maximum allowed by the funding agency, provide justification of the rate
If travel and subsistence costs are not factored into the daily rate, these should be justified separately

33. Subawards
Justification for a subaward budget should come from the subaward partner(s)
Include one or two sentences describing why the work cannot be done at NMU and why you chose the partner(s) you did

34. Tips Don’t give them something to cut
Don’t try to give the agency a bargain
Too many 000’s look like you guessed on costs
It’s not how much money you want, its how much the project costs
Double-check what expenses the sponsor will not allow
A budget is just plan, it can be renegotiated

35. Questions?
Kristin Beck