1. Grant Budgeting Basics Donna Marano Director of Finance & Administration Civil & Environmental Engineering Denise Murrin Macey Business Manager Engineering and Public Policy October 31, 2005©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 http://www.whitehouse.gov/omb/circulars/a021/a021.html  Cost Accounting Standards Board http://www.whitehouse.gov/omb/procurement/casb.html 22 Standards for Industry 4 Apply to Educational Institutions  OMB Circular A110 http://www.whitehouse.gov/omb/circulars /a110/a110.html)  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 –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-04-157)

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 –“…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 29.50% –Full-time  37.5 hours Federal 25.90% Issue: dependent tuition 3.60%

26. Fringe Benefits –Part-time  17.5 and < 37.5 18.5% –Part-time Mandatory < 17.5 10% Mandatory (FICA, unemployment, worker’s comp) Non-CMU students –Additional Compensation 10%

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 –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