1. 1 SPS Primer Sponsored Project Budgeting Jeffrey Silber Sponsored Program Services

2. 2 SPS Primer Why Budget? Budgets are needed: –To ensure that the funds being requested are sufficient to perform the work proposed –Sponsors typically request detailed information in support of budget request Some sponsors or solicitations may not pay for certain expenses –Budgets help substantiate use of awarded funds –To demonstrate that projects are proposed as “break even,” consistent with the institution’s mission and corporate and tax status PI and Unit are responsible for correct and sufficient budgets, regardless of other reviews.

3. 3 SPS Primer Sources for Budget Information Proposal solicitation and referenced sponsor materials SPS Guide to Budgeting and Costing http://www.osp.cornell.edu/ProposalPrep/Costing-guide.html http://www.osp.cornell.edu/ProposalPrep/Costing-guide.html SPS web pages for links to rates: –Facilities and Administrative Costs –Employee Benefits –Graduate Tuition –Student Health Insurance –Escalation rates College and/or departmental information

4. 4 SPS Primer Budget Tools SPS Budget Template (Excel) Salary data from PEDL or CPBS Prior or similar project data (if available) from ADW

5. 5 SPS Primer Preparing Budgets Budgets should be prepared for all proposals Budgets need to conform to the sponsor requirements, but still retain the ability to map to the institution’s financial systems At a minimum, even when the sponsor does not require a detailed budget (e.g. fixed price agreement), a high level budget should be prepared for SPS review Budgets can be prepared fairly early in the proposal development process, allowing for preliminary review and iteration with principal investigator

6. 6 SPS Primer Budget Characteristics Allowable costs –With only rare exceptions, budgets must conform to OMB Circular A-21 rules on reasonableness, allocability, consistency, and allowability Budgets should represent intention for expenditure of funds. –Cannot deliberately propose in one category with the intention of spending in another Direct and indirect costs must be treated separately –Modified total direct costs (MTDC) –Facilities and administrative costs (F&A, IDC) Salaries must reflect “level of effort” not hourly rates

7. 7 SPS Primer Cost Sharing (Cornell Policy 1.1) Cost Sharing –Mandatory –Voluntary Committed Uncommitted –Examine the need for any form of cost sharing. The determination of the need for cost sharing is to be made by the PI, department, and college, with an understanding of the institutional cost, agency rules, and solicitation requirements. –Identify sources for mandatory and voluntary committed cost sharing Caution: Any unreimbursed costs quantified in a proposal narrative, budget, or budget justification constitute either mandatory or voluntary committed cost sharing. –Document cost sharing types, amounts and sources on Form 10.

8. 8 SPS Primer Program Income (Cornell Policy 3.8) Program income is revenue generated by the activity of the sponsored project, during the project period –Conference registration fees –Materials or products fabricated by projected-supported facilities –Sale or rental of project equipment –Generally not royalties or licenses Must be treated in a specific fashion, based on sponsor and award type May be required to be spent before project funds

9. 9 SPS Primer Budget categories: Salaries and Wages Faculty salaries may be academic year (9 month), summer (no more than 3 months, each month equaling 1/9 of AY), or, with some contract college faculty, calendar year (12 months) GRA appointments are typically for academic year and/or summer Other appointments are typically 12 months Salaries and wages should be projected to reflect rate during project period, and escalated for subsequent periods NIH limits salaries to an annualized rate of $183,500 (CY2006). This translates to a nine month salary of $137,625. This may result in the need for identifying non-grant funds for a portion of the salary.

10. 10 SPS Primer Budget categories: Salaries and Wages GRA –Tuition (typically one-half the full rate) –Stipend (minimum amount is published by Graduate School) –Health Insurance Note that Tuition and Health Insurance are excluded from MTDC –Generally shown as a single line, rather than breaking out components. –NIH also limits GRA compensation to a reasonable amount, and may not fund more than their Level 0 postdoc rate ($36,996 for FFY 2006) Sabbatic salary –May be included, but must be explicitly stated and represent salary for work on the project during that period

11. 11 SPS Primer Budget categories: Employee Benefits Benefits have different treatment in Endowed and Contract College divisions –Proposals crossing divisions must use both rates The correct rates must be used for the project period –Use multiple rates, and prorate if necessary Benefit charges cannot be waived, except as defined in policy Benefit charges are not applied to student (undergraduate or GRA) payments All employees (permanent, temporary, full-time, part-time, student, etc.) receive at least some employee benefits Rates are reviewed and approved by Federal Government

12. 12 SPS Primer Budget categories: Employee Benefits Endowed Colleges –Three rates (Full, Minimum, Zero) –Most benefits-eligible employees are charged full rate on their salaries. Includes faculty summer salary and benefits-eligible temporary employees. –Non-benefits eligible staff (part-time, temporary) are assessed at the minimum rate. –Student staff, faculty sabbatic salaries, and some special payments receive the zero rate. –Rates are typically negotiated for a multi-year period

13. 13 SPS Primer Budget categories: Employee Benefits Contract Colleges –Two rates (Full, Zero) –Most employees charged at the full rate –Student staff and faculty sabbatics are charged at the zero rate –Awards from New York State agencies, of monies from the state’s general fund, are not assessed benefits –The rate is set annually The majority of the rate is set by the State A small piece is added for the Cornell-provided benefits The entire rate is approved, usually around May, by the Federal Government (HHS)

14. 14 SPS Primer Budget categories: Equipment (Policy 3.9) Definition of Equipment –Durability (2 or more years) –Value ($5,000 or more, >= $100,000 for software) Generally equipment is acquired in a single functional unit, but in some cases it may be fabricated, in which case parts, but usually not labor, may be included in the asset cost. Equipment is capitalized in the University’s books Where necessary, observe a lower, sponsor stated, threshold Equipment is excluded from MTDC Sometimes sponsor will provide equipment, or keep title

15. 15 SPS Primer Budget categories: Equipment Special Purpose Equipment –“means equipment which is used only for research, medical, scientific, or other technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments, and spectrometers.” (OMB A-21) General Purpose Equipment –“means equipment, which is not limited to research, medical, scientific or other technical activities. Examples include office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles.” General purpose equipment is normally charged indirectly and thus requires prior approval by sponsor if direct charged, and should be clearly stated in the budget.

16. 16 SPS Primer Budget categories: Travel (Policy 3.2) Some sponsors require foreign travel approval. Some require approval of all travel. Some do not permit any travel. Travel must relate to project. Sponsors generally want to see the detail (number of trips, where, etc.) Federal sponsors require use of domestic air carriers for most foreign travel. Any additional cost must be factored into budget. Sponsors expect that travel will be done in a least cost manner. Use of premium travel – although permitted in some cases by CU policy – should be justified in proposal. Per diem information may be found at www.payments.cornell.eduwww.payments.cornell.edu

17. 17 SPS Primer Budget categories: Other General Expenses Supplies –Office supplies are normally indirect –Lab or other project supplies may be included if allocable Services –Consulting Agreements Important to identify consulting details in proposal text or justification. Will assist in subsequent sole source justification. Publication Costs Communications –Most communications (local phone, postage, generally indirect) Lease and rental Repair and Maintenance –Generally only for R&M of project equipment

18. 18 SPS Primer Budget categories: Other General Expenses User Fees, Per Diems –Facility should be following “Recharge Operation and Service Facility” policy (3.10) Participant costs –Cornell excludes from MTDC –NSF prohibits rebudgeting out of this category without prior approval Subcontracts –Performance of a portion of the project scope (or “science”) by another party –Not routine technical services (see Services or Consultants) –Amount over $25,000 excluded from MTDC –Weill Medical College is not a subcontract –Important to identify subcontracting details in proposal text or justification. Otherwise sponsor approval may be required. May also assist in subsequent sole source justification.

19. 19 SPS Primer Budget categories: Facilities and Administrative Costs Use rate specific for the division/campus and the proper time period –Use multiple rates and prorate if necessary Off campus rate only applicable when personnel are located elsewhere for a continuous period greater than two months. Other activities (services, subcontracts, etc.) are considered on-campus. Rates should be proposed at the federally-approved rate, or the sponsor’s published maximum for this solicitation, which ever is less. Other rates must be approved by the appropriate Vice President or Dean prior to submission.

20. 20 SPS Primer F&A Cost Bases All direct costs live in a “base” either instruction, research, other sponsored activity (public service/extension) or other institutional activities Base used for F&A computation is Modified Total Direct Cost (MTDC). Equal to Direct Cost less equipment, tuition, portion of subcontracts greater than $25,000 Some programs may provide F&A on a Total Direct Cost (TDC) base. This is typically a lower rate, and there are no exclusions (even if cost is higher than if MTDC) Occasionally sponsor will require salary & wages or other special base

21. 21 SPS Primer F&A Math Tricks To “back in” to a number for direct costs use –TOTAL BUDGET/(1+F&A RATE) –(e.g. 100,000/(1.58)=63,291 F&A=36,709) If there are exclusions use –TOTAL BUDGET – EXCLUSIONS/ (1+F&A RATE) –Example: $100,000 total budget, $15,000 equipment –(100,000-15,000)/(1.58)=53,797 direct subject to MTDC –53,797 (direct in MTDC) + 15,000 (excluded) + 31,203 (F&A)

22. 22 SPS Primer Budget Justification Key element of documenting “thoughts” behind the budget development Should include rates (benefit, F&A, escalation), bases, exclusions, etc. Should include details on each category Identify any normally direct costs that will be charged directly Must “tie” to the budget Can be vital for resolving audit issues years after project completion

23. 23 SPS Primer High Level Budget Salaries –Break out GRA Tuition/Stipend/Health, Students, Temporary Staff Benefits Equipment Participant Costs Subcontracts Other Direct F&A This permits SPS to ensure that rates are correct and budget is reasonable.

24. 24 SPS Primer Budget Template http://www.osp.cornell.edu/ProposalPrep/BudgetTemplate/SponsoredBudgetTemplate.xls

25. 25 SPS Primer Sample Budget Formats NSF (Form 1030), available through FASTLANE NIH (PHS 398) SF 424 R&R, used by grants.gov, and in the future to be used by all federal agencies. NOTE: This will become the default budget for federal assistantship programs High level budget

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