1. OFFICE OF SPONSORED PROJECTS
BUDGETING BASICS
OFFICE OF SPONSORED PROJECTS

2. Course Objectives To learn and understand
University and sponsor regulations pertaining to budgets
Key terms and calculations that govern the budget
Categories of major cost$
How to prepare and incorporate a budget from a subcontractor
Key questions to ask the PI to build a budget

3. What is a Budget? Financial Expression of the proposed scope of work
All expenses required to achieve project aims and objectives
A guiding document for conducting work when awarded
Most sponsors provide detailed instructions for budget preparation; many provide budget forms or require a specific format.

4. Budget Translates resource needs to dollars
Conforms to agency guidelines
Realistic estimates
Supports the program
Explains itself
Plans ahead

5. Key Points Sponsors want to know details of how the funds will be used
Second most scrutinized portion of the proposal
A good budget can increase the chances for funding
Develop Credibility
Outlines/Clarifies the text
The PI and University are responsible for the accuracy of the cost data provided to the sponsor
The proposal budget becomes the award budget

6. OMB Circular A-21/ 2 CFR 200 – Sub Part E
Cost Principles for Educational Institutions
Allowable
Allocable
Reasonable
Consistently Treated
Provides rules, not just that a specific cost is allowable or unallowable. It may depend on the circumstances.
Defines allowable costs and cost principles:
– Federal contract, grant, or cooperative agreement
Specifically identifies the direct and indirect costs
Determining the appropriate costs to potential awards
Identifies those costs that cannot be charged

7. Two Primary Budget Categories
Budgets consist of two primary categories:
Direct Costs
Indirect Costs

8. Budget Categories - Direct Costs
Costs that can be charged directly to a project
Salaries
Fringe benefits
Tuition and associated fees
Consultants
Equipment
Supplies and Materials
Travel
Subawards
Other Expenses

9. Budget Categories - Indirect Costs
Indirect Costs, also known as Facilities and Administrative Costs (F&A)
Costs incurred for common or joint objectives and cannot be specifically identified with a particular sponsored project
F&A rate percentage applied to a direct cost base amount

10. Cost Categories - Personnel
Provide the annual salary rate and the percentage of time to be devoted to the project
Name, role on the project - not the job title, describe duties
Often comprise the largest amount of requested costs in a budget

11. Cost Categories - Personnel
Typical personnel categories
Faculty
Post Docs
Grad Students
Technical Staff
Undergraduates

12. Cost Categories - Personnel
Salary
Brown tracks effort internally on a calendar year, percent of effort basis
All Principal Investigators (PI) and Co PI s must show effort
Expressed as “Percent of Effort” or “Person Months”
The “appointment type” - 9, 10, 12 months
Exercise: Person months conversion chart
HANDOUT PERSON MONTHS CONVERSION CHART

13. Cost Categories – Fringe Benefits
Non-salary employee compensation
Includes social security (FICA), retirement, social security taxes, tuition, education assistance, dental plan, worker’s compensation, health insurance, long-term disability, group life insurance, unemployment insurance
Brown’s federally negotiated fringe benefit rates
7/1/2016 to 6/30/2017: % (full time)
7/1/2016 to 6/30/2017: % (part-time)

14. Cost Categories – Fringe Benefits
Graduate Student Research Assistant - Fringe Benefits
No fringe benefits charged during the academic year
Part-time rate is applied during the summer period

15. Cost Categories - Equipment
Equipment (Property)
Useful life of 1+ year
cost of $5,000 or more
Allowable items ordinarily will be limited to research equipment and apparatus not already available for the conduct of the work. General-purpose equipment, such as a personal computer and office furnishings, are not eligible for support unless primarily or exclusively used in the actual conduct of scientific research.

16. Cost Categories - Equipment
Important questions to keep in mind…
Is the item necessary to this project? State purpose
Cost estimates – does the cost include tax, shipping, transit insurance and/or installation?
Source of cost per vendor quote or catalogue
Can it be supported in the current space without facility alterations?
Off the shelf or ‘fabricated’ (made at Brown)
Number of quotes required by sponsor
UNIFORM GUIDANCE WILL BE UPDATED IN PLEASE REVIEW ONCE CHANGED

17. Cost Categories - Supplies
Materials and Supplies
Consumable scientific and technical supplies necessary to carry out the sponsored agreement
Explain how it is essential to project
Acquisition cost of less than $5,000
May include:
Chemicals, glassware, specimen bottles, etc.
General office supplies (e.g. pens, paper, toner) ordinarily not allowed
UPDATE WHEN UNIFORM GUIDANCE IS FINALIZED

18. Cost Categories – Travel
Provide detailed estimate
Purpose of the travel
Number of trips, number of days per trip
Number of individuals traveling
Destination, dates and purpose
$95
Average per day including tax and tip. Note: This is not per diem
$20 breakfast $25 lunch $50 dinner
Lodging-depends on city/country-eg.Major cities max is $275, New York and foreign nations-max $400.

19. Cost Categories - Travel
Airfare, lodging, car rental, mileage if using personal automobile, meals, ground transportation
Foreign travel: Fly America Act
Use of U.S. air carriers required
Brown reimbursement rates
Refer to guidance in the Brown Travel Policy
$95
Average per day including tax and tip. Note: This is not per diem
$20 breakfast $25 lunch $50 dinner
Lodging-depends on city/country-eg.Major cities max is $275, New York and foreign nations-max $400.

20. Cost Categories - Subaward
Portion of research performed by another institution outside of Brown
Contributes substantively to the scholarly/scientific conduct of the project and will write portion of the continuation proposal and/ or technical reports
Has responsibility for programmatic decision making
Utilizes its own facilities, employees and/or resources 20

21. Cost Categories - Subaward
Subrecipient organization must submit
Letter of Intent signed by Authorized Official
Statement of Work
Budget
Budget Justification
Documentation as required by agency
Subaward must have a PI which is not the Brown PI

22. Cost Categories - Consultants
Professional Services Agreement
(non Brown Personnel)
Provides the services within normal business operations to many different purchasers
Goods or services provided that are ancillary to the operation of the research project
Is not subject to monitoring or reporting requirements of the prime award
Fee for services may not exceed consultant’s normal rate of pay or daily maximum established by sponsor

23. Cost Categories - Consultants
Professional Services Agreement
Include:
Consultant’s Name
Services to be provided
Rate of Pay (Daily or hourly)
Number of Days they will work
Any travel requested

24. Cost Categories – Publication Costs
Costs of documenting, preparing, publishing the findings and products of the work conducted under the project
Include
The name of the Journal (s)
Charge per page

25. Cost Categories – Other Direct Costs
Tuition
Health Fee
Vertebrate Animal Subjects care
Human subjects payments
Computing Services
Identify cost and the cost basis

26. Cost Categories – Indirect Costs
Modified Total Direct Costs (MTDC) base excludes:
Capital expenditures (Equipment)
Portion of subaward > $25,000
Rental/maintenance of off-site activities
Student tuition, student support costs
Participant costs
Example of student support costs-student aid, stipends, dependency allowances, scholarships, fellowships)

27. 27

29. Budget Justification A description of the expense or service
How it relates to and benefits the project
The anticipated cost
The time-period in which it will be utilized
Any other information that will aid the sponsor in evaluating and funding the proposed item of cost

30. Summary
Sponsor policies and guidelines dictate what direct costs are appropriate in a proposal budget
Federal cost principles and the Cost Accounting Standards should always be applied when preparing proposal budgets
Is this cost allowable?
Is this cost allocable?
Is this cost reasonable?
Is this consistent with costing practices of the University?

31. Summary Budget Justifications are usually required by sponsors
Budget Justification should follow the same format as the budget items on the detailed budget form
Always retain documentation as to how costs were derived
Even if the sponsor doesn’t require a detailed budget or budget justification

32. Budget Preparation
Read sponsor instructions, guidelines, and/or requirements
Certain expenses may not be allowed
Certain expenses may be required (e.g. travel to meetings)
Certain expenses may have limits (e.g., salaries/equipment)

33. Budget Preparation Where do the numbers come from?
Actual sources (e.g. level of actual pay and benefits)
Pay scales for undetermined hires
Historical experience for categorical costs (e.g. supplies)
Quotes from vendors (e.g. Equipment)

34. Budget Preparation Time Period Brown Fiscal year: July 1 – June 30
Period of Performance:
Will affect Indirect Cost and benefit rates, salary increases, etc.
Apply the correct rate for the relevant time period
Refer to the FOA for the earliest start date and the maximum period of performanc

35. Budget Preparation Example: Budget Period = April 1 – March 31
3 months in one fiscal year
April, May, June
9 months in the next fiscal year.
July through the following March

36. Case Study
Prof. Josiah Carberry sent you an that he will be submitting a 3 year proposal to the NIH with his colleague at Harvard University, Professor Gimme Munny as a subcontractor at $20,000 for each year. The due date is 9/17/16 at 5PM. This is a new initiative for Prof. Carberry. The proposed start date is 7/1/17. Prof. Carberry states that he is planning on committing 5% effort during the academic year. The PI needs to purchase a particle analyzer in the first year which he has received a quote for of $50,000. He will need a graduate student research assistant on the project with a $15,000 academic year stipend. Travel $2,000, supplies $3,000 and include $500 for publication charges. Please put together a standard NIH proposal, Professor Carberry will forward the scope of work when it is ready. 36

37. Case Study What you will need to know:
Professor Carberry (9 mo appt) salary is $100,000
Graduate tuition is 50,224 & health fee is $804
Note: Brown only charges 25% of tuition to sponsored award, but charges all of the health fee
Fringe Benefits are 30.10% FY18-20
Harvard Subaward will include both direct & indirect
Indirect Cost rate for FY16-20 is 62.5% 37

38. UPDATE WITH NEW FY RATES

39. Coeus Budget: Cumulative
Once all of your Budget Items are added to the Period 1 Budget, Coeus has a function to generate the remaining budget periods.   The budget items are copied into each period and inflation is applied, if applicable, within each budget period.
Once your budget periods have been generated with using the Period 1 budget as the base, you can further modify a specific budget period.

40. Budget Review Sponsor suggestions: Look at previously funded projects
Provide strong connection between project design, methods and requested costs
Note significant changes across years
Put in dates, timeline
Make sure numbers match
Clearly explain and justify each item

41. Coeus Budget Tool
Coeus has a Budget tool that stores all approved Facilities and Administrative Rates, Employee Benefit Rates, & Inflation Rates to automate those calculations when you add your cost elements.
You can create an initial budget that includes the period of performance and the detailed personnel/ non-personnel cost elements.  Coeus then will automatically calculate inflation and salary increases as well as overhead.

42. Budget Preparation Checklist

43. Additional Resources NIH All About Grants – podcasts
Foundation Center (non federal budgets)
Proposal Writing Short Course
OSP Training
Post Award - Direct Charging Administrative Costs
Post Award - Allocations of Costs
Post Award - Supporting Documentation and Justification
Post Award - Traveling on Sponsored Funds
Pre-Award - Reading the Funding Opportunity Announcement (FOA)
Pre-Award - Cost Sharing on Sponsored Projects

44. Working Together Faculty Department Managers and Administrators
Office of Sponsored Projects
BioMed Research Administration

45. FINI

46. Extra Help with Math

47. Fun With Math!!!! Working with Percentages
5% = .05 but it does NOT = .05%
Factor of 100 difference!
.05% = .0005
.05% raise on $50,000
= $25.00

48. Fun With Math!!!! Working with Percentages
To increase a number by 5% multiply the number (the Base) by .05 and add them together:
100,000 X .05=5, ,000+5,000=105,000
-OR-
Simply multiply the Base number by 1.05
100,000 X 1.05 = 105,000

49. Fun With Math!!!! Working with Percentages
To find the Base number when you have the Total and the %,
Divide the Total by 1+.05
$105,000 / 1.05 = $100,000
Helpful if there is a total funding limit:
TC=$300,000 / 1.62 = $185,185 (MTDC)*
(*assumes no deductions from MTDC)