1. Intro to Budgeting Lori Schultz, Sponsored Projects Services Sept 2014

2. Today’s Agenda  Where do we start?  Basic framework for budgeting in sponsored research  OMB Circular A-21 General Costing Principles  The rules  Mechanics of building a budget  Categories of costs  Common Issues  Preparing the budget

3. Where do we start?  Program/Sponsor restrictions  Total dollar limits  Unallowed items of cost  Required items of cost  Cost sharing  F&A  Who else is involved? Other units/PIs?  Deadline  Sponsor Format  Relative difficulty (have we done this before?)

4. Mechanics of Building a Budget  What can I charge?  Budget & Justification should make sense when read along with the science  Rules for federal awards  The specific RFP may prohibit or require certain classes of expenses

5. OMB Circular A-21 (Federal Rules)  What is/was it?  OMB: Office of Management and Budget  Cost principles for federally sponsored projects  Guidance for determining direct vs. indirect costs  Replaced by OMB “Omni Circular” (2 CFR 200) on Dec. 26, 2013  No substantial change in cost principles

6. Cost Principles  Reasonable –  OMB A.21, C.2(a)  Allocable –  OMB A.21, C.2(b)  Consistent –  OMB A.21, C.2(c)  Allowable –  OMB A.21, C.2(d)

7. Direct vs. Indirect Costs  Direct Costs  Can be identified specifically with a particular sponsored project (OMB A-21 D.1.)  Indirect Costs  Facilities & Administrative Costs [F&A], Overhead (OMB A-21 E.1.)  Incurred for common or joint objectives - cannot be identified readily and specifically with a particular sponsored project  Administrative expenses (staff, supplies)  Utilities  Building renovations, maintenance  Depreciation, debt service, central administration

8. Direct vs. Indirect Costs  Costs must be treated consistently - either as a direct or an F&A cost  ‘Like costs treated in like manner’  Institution’s DS-2 often details which costs will be viewed as direct vs. indirect  UA Direct/Indirect Cost policy: http://rgw.arizona.edu/sites/researchgateway/files/direct_and_indi rect_costs_of_sponsored_agreements_1.pdf http://rgw.arizona.edu/sites/researchgateway/files/direct_and_indi rect_costs_of_sponsored_agreements_1.pdf

9.  Can I charge a computer/mobile device to my project?  Yes – if being used in a programmatic way  Connected to a scientific piece of equipment for data collection; Needed to run simulations, analyze data, etc.  No – if being used in a general way  Check email, browse internet, word processing, etc.  Updated guidance is more flexible  Not required to be dedicated to a single project  ALWAYS ensure it is well-described in the justification

10. Common direct cost questions  Can I charge office supplies to my project?  Typically no, due to lack of allocability  However, they are allowable when in unlike circumstances  Used in a programmatic way: conference materials, pamphlets, surveys, etc.

11. Common direct cost questions  Can I charge my administrative assistant to my project?  Typically no, due to lack of allocability  However is appropriate on a ‘major project’  Outside of general job duties  Coordinating large numbers of collaborators or participants  New guidance is more flexible here  “Major projects” language removed, but requirement for allocability still exists

12. Cost Sharing Matching funds / in-kind contributions Anything necessary for the completion of the project that is not paid for by the sponsor – College/dept/central funds to pay for salaries, portion of equipment, F&A restrictions, etc. Cash or in-kind Cash: cost of cost-shared effort In-Kind: reduced indirect cost rate 3 rd party contributions

13. Cost Sharing  The general rule: DO NOT include cost sharing unless it is required by the program.  When required, be sure it is clearly stated in budget & justifications  Two categories:  Committed – must be tracked  Required by sponsor (committed in proposal)  Not required, but committed in the proposal   Uncommitted – does not need to be tracked  ‘Volunteering’ of institution resources without mention of a specific dollar amount 

14. Cost Sharing & Allowability  Remember reasonable, allocable, consistent, allowable?  All of those apply!  In general cost-shared expenses are subject to the SAME rules as direct expenses on the award:  Allowable costs, allocable items  Consistent & reasonable treatment  Within project start/end dates  Not otherwise prohibited by sponsor or program

15. Cost Sharing & Allowability  Sponsor F&A limitations:  Is this cost share?  Yes, but:  Am I allowed to include it in my cost sharing total?  Maybe, maybe not  I have two related federal projects. Can I use my NSF funds as cost share for my USDA project?  NO.  Federal sources are almost never allowed as a cost share source.

16. Getting started  Usually best to start with a common format, even when the sponsor has forms:  Review at multiple levels is easier  Changes are easier  Many sponsor formats don’t calculate except simple addition  We’ll illustrate with the CALS format

17. Direct Costs – Salaries – Fringe benefits / Employee Related Expenses (ERE) – Travel – Supplies – Contractual/Services/Subcontracts – Equipment

18. Budget Basics - Categories  Personnel  Name/(TBD) and effort devoted to project  % effort or person months (PM)  PM = % effort X appointment, so: 10% effort for AY = 10% X 9mos =.9 person months  Grad Students or Student workers : salary/stipend or hourly rate  Salaries/hourly wages  Current faculty/staff: Ask department  To-be-hired: http://www.hr.arizona.edu/compensation_and_payhttp://www.hr.arizona.edu/compensation_and_pay  ERE rates http://rgw.arizona.edu/administration/institutional- informationhttp://rgw.arizona.edu/administration/institutional- information

19. Budget Basics - Categories  Personnel costs are the biggest portion of most budgets  Most likely to be restricted:  NIH Salary cap: $181,500 IBS (translates to full FY salary)  http://grants.nih.gov/grants/policy/salcap_summary.htm http://grants.nih.gov/grants/policy/salcap_summary.htm  NIH graduate compensation limit  http://grants.nih.gov/grants/guide/notice-files/NOT-OD-02- 017.html http://grants.nih.gov/grants/guide/notice-files/NOT-OD-02- 017.html  NSF 2-months salary  http://www.nsf.gov/pubs/policydocs/pappguide/nsf14001/gpg_2.js p#IIC2g http://www.nsf.gov/pubs/policydocs/pappguide/nsf14001/gpg_2.js p#IIC2g  Other sponsor restrictions

20. Budget Basics – Categories  Travel  For budgeted project personnel  Project-related conferences, required grant meetings, subrecipient site visits, field work, etc.  Transportation, lodging, per diem, etc.  Costs based on:  Searching fares for providers (airline, etc)  Historical costs for conferences (fees / hotel)  Limits on lodging/per diem by location (http://policy.fso.arizona.edu/fsm/1400/1471)http://policy.fso.arizona.edu/fsm/1400/1471

21. Budget Basics – Categories Equipment – Defined by our rate agreement: http://rgw.arizona.edu/administration/institutional-information Tangible, non-expendable, useful life >1 year Acquisition cost of $5,000+/unit Depending on the program & cost of equipment Formal quotes Informal quotes Acquisition cost includes tax, shipping, & installation

22. Budget Basics - Categories Materials and Supplies – Items to be used for the project Ex: chemicals to be used for experimentation Ex: printer paper for a research survey Ex: computer to run a piece of lab equipment Contractual – Services to be performed by another entity for the project Ex: 3rd party vendor to perform DNA sequencing Ex: evaluator to assess effectiveness of education program – Subaward

23. Budget Basics - Categories  Collaborator from another institution?  Subaward (subcontract)  Distinguished from a vendor by the intellectual contribution to the project outcome  Provide SOW, budget, and budget justification prior to submission  A single line item on your budget  Subaward budget must comply with sponsor guidelines, subrecipient institution policies, and all federal regulations  F&A only charged on first $25,000 of each subaward

24. Indirect Costs (F&A) Applied to costs specified in federally negotiated rate agreement – Modified Total Direct Cost (MTDC) All costs excluding tuition, equipment, patient care, off-site rentals, scholarships, fellowships, and all subaward costs exceeding $25,000 We are a DHHS institution Sponsor stipulations & F&A Waivers http://rgw.arizona.edu/administration/build- budget/F-A-Costs http://rgw.arizona.edu/administration/build- budget/F-A-Costs

25. Working out a budget…

26. The Parameters  Sponsor: NIH  Total direct cost limit/yr: $250,000 (modular)  Cost sharing: Mandated by cap  On-Campus Research project for F&A  The PI is Dr. Lecter, in SWES. He makes $300,000 total IBS and is an academic employee. He plans to spend 15% effort in the summer.

27. And another one…  Sponsor: NSF  Total direct cost limit/yr: Not specified  Cost sharing: prohibited  On-Campus Research project for F&A  Subcontract to Whatsamatta U.  The PI is Dr. Lecter, in SWES. He makes $300,000 total IBS and is an academic employee. He plans to work the entire summer.

28. You WILL use algebra again…  A sponsor limits the project budget total to $150,000 and will pay full F&A rate of 53% MTDC.  The project budgets nothing that would be excluded for F&A purposes (tuition, equipment).  How much money is available in direct costs?  Total / 1+ F&A Rate = Direct Cost  $150,000/1.53 = $98,039  $98,039 *.53 = $51,961  $98,039 + $51,961 = $150,000

29. Questions?