1. Intro to Budgeting

2. Today’s Agenda  Where do we start?  Basic framework for budgeting in sponsored research  OMB 2 CFR 200: Uniform Guidance  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 2 CFR 200.404  Allocable –  OMB 2 CFR 200.405  Consistent –  OMB 2 CFR 200.403(c-d)  Allowable –  OMB 2 CFR 200.403

7. Direct vs. Indirect Costs  Direct Costs  Can be identified specifically with a particular sponsored project (OMB 2 CFR 200.413).  Indirect Costs  Facilities & Administrative Costs [F&A], Overhead (OMB 2 CFR 200.414)  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. Direct Costs – Salaries – Fringe benefits / Employee Related Expenses (ERE) – Travel – Supplies – Contractual/Services/Subcontracts – Equipment

17. 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

18.  Personnel – Summer Salaries  Two ways to calculate  Summer hourly rate = 0.00072 * Academic Salary  Multiply by number of summer hours worked (464 summer hours assumed = 154.67 hrs per month)  Summer salary = 1/3 * Academic Salary Budget Basics - Categories

19.  Personnel costs are the biggest portion of most budgets  Most likely to be restricted:  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  Salary cap?  Other sponsor restrictions  Tuition Remission - Smith Lever act

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  Participant Support  In the past, mostly used for NSF projects. OMB 2 CFR 200.75 extends Participant Support to all federal sponsors  Direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects.  Typically not charged indirect costs.  Different from subject pay.  If you’re not sure if something qualifies as participant support, ask early. Participant support is a restricted category that usually does not allow rebudgeting.

22. 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

23. Budget Basics - Categories Tuition Remission As of July 1, 2015 UA has moved to a direct charging method for tuition. It should be budgeted in Other Direct Costs with a flat rate dependent upon grad effort. For a full time GRA working for two semesters, charge $11,040. For one semester, charge $5,520. Tuition only charged during academic period. A grad only on supplemental compensation is not charged tuition. Budget justification example: Tuition for the graduates students is included as a mandatory benefit and is charged in proportion to the amount of effort the graduate student will work on the project.

24. 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

25. 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

26. 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

27. Indirect Costs (F&A) Stipulations Generally reduced indirect cost rates are calculated at a Total Direct Costs (TDC) base rather than our negotiated DHHS Modified Total Direct Cost Base (MTDC) Look our for odd language that imply “total cost” rather than TDC: USDA NIFA limits indirect costs to 30% of TOTAL FEDERAL FUNDS. This is equivalent to 42.857% of TDC

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?