1. Brown Bag Series on Research Faculty Budgeting Demystified Gretchen Davis Richey, Office of Sponsored Programs December 16, 2011 Gerberding 142 University of Washington

2. Brown Bag Series on Research Faculty Outline Budget Categories, Formats, Object Codes Identifying your costs Finding hidden costs Estimating your costs successfully Writing good budget justifications Calculating F&A accurately Hints and best practices

3. Brown Bag Series on Research Faculty Facts A well-developed budget will increase your chances of getting funding Salaries usually make up the majority of the budget so accuracy is important Always refer to GIMs for the latest rates: Benefits, F&A Don’t cost share unless it is required Always follow sponsor requirements

4. Brown Bag Series on Research Faculty Components Direct Costs Facilities & Administration Costs Budget Justification

5. Brown Bag Series on Research Faculty The Goal Budget tightly matches the scope of work – Use the same terms and amounts Clear and concise, in non-technical terms Further clarifies how the project will be accomplished – X of subjects will be screened to get Y of subjects who will complete the study protocol

6. Brown Bag Series on Research Faculty Where to Start The first step of building a budget is a clear understanding of your scope of work and location of the project. The second step is understanding the allowable costs for the Program Announcement.

7. Brown Bag Series on Research Faculty Budget Categories Step Three: Choose a set of budget categories to develop your budget (direct costs) – UW Object Codes – Sponsor Budget Categories Modular Budgets for NIH – Some funding vehicles allow non-itemized budgets for projects <$250,000 per year. – Module = $25,000

8. Brown Bag Series on Research Faculty 8 UW Financial Categories

9. Brown Bag Series on Research Faculty Identify Budget Line Items Step Four: Use the budget categories to identify direct cost line items for your project F&A will be discussed later

10. Brown Bag Series on Research Faculty Salary Department administrator or fiscal specialist can look this up in OPUS/HEPPS (payroll system). The SAGE Budget Tool will pull this data automatically. Institutional Base Salary (IBS) – UW portion is listed in OPUS/HEPPS – Additional Clinical Salary is paid to persons with clinical appointments; the source is UWP or CUMG 10

11. Brown Bag Series on Research Faculty What is Institutional Base Salary? 11 See GIM 35 Non-clinical – A = State Salary – B = Grant Funded (other) Clinical – X = University Salary – Y = Clinical Salary Additionally… – ADS = Administrative Support – ENS = Endowed Supplements

12. Brown Bag Series on Research Faculty Salary Remember to include increases for promotions, merit increases (follow sponsor instructions & justify) Effort may fluctuate between project periods Calculating person months (see OSP website calculator) Sponsor Salary Cap – How should this be presented on the budget? – Any amount over the “cap” is cost sharing but does not have to be documented on the eGC1 Allowable administrative salaries 12

13. Brown Bag Series on Research Faculty Benefits Benefit rate is determined by employee type. See GIM 3 for a list of current rates The SAGE Budget Tool will pull this data automatically 13

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15. Brown Bag Series on Research Faculty Equipment & Supplies Supplies Equipment – >$2,000 and useful life is greater than one year – Certain projects may qualify for the Machinery & Equipment Tax Exemption See the EIO websiteEIO website 15

16. Brown Bag Series on Research Faculty Travel 16 Travel office - http://f2.washington.edu/fm/travel/ http://f2.washington.edu/fm/travel/ – Fly America Act – Per Diem Rates – Adv approval required for any exceptions International travel has special considerations

17. Brown Bag Series on Research Faculty Other items to consider Rent International projects Patient care costs Animal care costs 17

18. Brown Bag Series on Research Faculty Usually Disallowed Admin/Clerical salaries* Office supplies* Food and alcohol Any category not allowed by the sponsor *These costs are covered by F&A

19. Brown Bag Series on Research Faculty Off Campus Projects are an “Unlike Circumstance” Costs that are usually unallowable can be allowable, but must be justified Based on OMB A21 Includes: – Telephone – Office supplies – Rent

20. Brown Bag Series on Research Faculty Peel the Onion Once you have the basic line items identified, identify the hidden costs Shipping samples Human or Animal Subjects expenses Screening costs Rent

21. Brown Bag Series on Research Faculty Estimating Costs Hints for success include: Accurately calculate salaries, including clinical (A/B) components, step increases for classified staff, expected promotions for faculty or staff Get up to date equipment cost quotes from vendors & attach in proposal

22. Brown Bag Series on Research Faculty Budget Justification - Good Justification matches the cost categories and sufficiently “itemizes” the costs Written in non-technical language, understandable by someone without scientific background

23. Brown Bag Series on Research Faculty Budget Justification - Bad Insufficient information from the reviewers perspective – “We have benefits included” Doesn’t match the budget request “False elegance” – use of language to veil a perceived weakness. Overly technical or condescending verbiage – “Program official said it’s okay” (provide proof) – Cut and pasted text from elsewhere in the proposal

24. Brown Bag Series on Research Faculty Reasonable vs Allowable vs Allocable Reasonable – A prudent person would find the costs acceptable Allowable – The sponsor instructions allow the costs (A21) – Under “like circumstances” costs are treated the same Allocable – Costs must benefit the project – You must be able to prove that the cost is directly related to the project 24

25. Brown Bag Series on Research Faculty Facilities & Administration Costs “F&A” are those costs that pay for expenses which cannot be identified to a particular project, program or activity 25

26. Brown Bag Series on Research Faculty Calculating F&A – read GIM 13 Read GIM 13 & Attachment A Base – Determine budget items excluded from the F&A calculation – TDC vs MTDC Location – On campus – Off campus – Other options 26

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29. Brown Bag Series on Research Faculty Base Type F&A costs are calculated on a base amount The base amount is the total of all line items of a budget that are subject to F&A costs (per sponsor instructions) There are several base types: – MTDC = Modified Total Direct Costs – TDC = Total Direct Costs – S&W = Salaries and Wages – TDC less T&E = Total Direct minus Tuition & Equipment 29

30. Brown Bag Series on Research Faculty Grocery Store Analogy In your cart – Meat, veggies, TP  Direct Costs At checkout – Tax calculated on the paper products only  F&A – Paper products = Base – Tax % = Rate – Total cost of groceries + Tax = Grand Total

31. Brown Bag Series on Research Faculty Importance of Sponsor Instructions Provides overall instructions for the application If sponsor approval is needed at the preparation phase Allowable costs Salary caps F&A rate & base Budget format (modular or full, NIH only) Overall policies 31

32. Brown Bag Series on Research Faculty Why are Instructions Important? Most questions can be answered in the sponsor instructions (read them before contacting OSP) All requirements in the instructions must be met Maximize opportunity to get funding (little mistakes may have big penalties) Some optional forms must be included if project includes this type of work (i.e., subcontracts) 32

33. Brown Bag Series on Research Faculty UW Tools for Budget Building SAGE Budget Budget preparation tool Pulls in salaries and benefit rates Calculates subtotals and F&A Able to attach to eGC1 Able to modify based on feedback Able to use for multiple projects Sign up for SAGE Learning http://www.washington.edu/research/main.php?page =learningAbout http://www.washington.edu/research/main.php?page =learningAbout 33

34. Brown Bag Series on Research Faculty Budget Documents Use SAGE Budget Tool or a spreadsheet to develop your budget Don’t create a pdf – it obscures the formulas Identify line items excluded from F&A Justify unlike circumstances Show draft budget to expert for feedback

35. Brown Bag Series on Research Faculty Hints Initially prepare the budget using either the UW object codes or the sponsor budget categories When the budget is finalized, translate the budget figures to other forms Do use past proposals as models Don’t simply copy a prior submission Precedent may not be a valid reason for current practice (rules change, people make mistakes) Always attach a detailed budget spreadsheet – No PDFs Please consider contacting your OSP administrator early in the preparation process if you have questions 35

36. Brown Bag Series on Research Faculty Budget Checklist PI must review and approve the final budget PI assures you that all budget items are allocable, reasonable and allowable Confirm the current benefit rates are being used Check that the budget $ matches on all budget and budget justification pages Application meets sponsor requirements Take and break and then review the final one last time 36

37. Brown Bag Series on Research Faculty Questions & Discussion

38. Brown Bag Series on Research Faculty Thank You