1. Developing your proposal budget …
OSP awareness
November 15, 2017

2. Cost Principles (Standards)
Premise:
Project costs = Allowable direct costs (DC) + allowable indirect costs (IDC or F&A)
These provide the general framework from which budgets are built
Guiding Principles – Costs must be:
Reasonable,
Allowable,
Allocable, and
Consistently treated

3. What’s Reasonable?
The Prudent Person Test– would others have made similar decision given facts and circumstances at the time?
necessary to fulfill project objectives;
followed good business practices and applicable laws and regulations, and sponsored agreement terms and conditions;
followed institutional policies
If your purchase were posted on a newspaper headline how would folks react?

4. What’s Allowable?
Must be necessary and reasonable for the performance of the work;
Allocable to sponsored agreements;
Consistently treated; and
Conform sponsored agreement.
Sponsored agreement takes precedence over all principles.

5. What’s Allocable?
Item can be assigned (allocated) to an individual award/project, or function:
In proportion to benefit received
Direct costs – exclusive benefit to project or can be reasonably assigned to multiple projects
Indirect costs – benefit many projects or activities, can’t be reasonably assigned

6. What’s Consistency?
All costs incurred for the same purpose in like circumstances are treated the same
Once it’s in the F&A pool, that’s where it stays, UNLESS cost is not for same purpose…
Once a cost is allocated to one award, ordinarily can’t shift to another award (i.e. cost transfers)
If charge to one award, can’t shift to another just because there’s $ left ‘on the table’.

7. Federal government’s concern
Bear its fair share of sponsored project costs, (but not more than its fair share!)
Why is this important?
Protect public’s interests (taxpayer $$)
Protect public’s trust

8. What does a budget represent?
Financial expression of your statement of work
2 Major Categories:
Personnel costs
Other than personnel costs
Best estimate of financial resources needed to perform the work proposed
Accurate and reasonable
Costs should pull from actual sources (to the extent available)
Scope of the project and the project budget should be consistent with the costs available under the program

9. Who is responsible for budget preparation?
It varies - department budget managers, center staff, school/college grants development staff, or OSP research administrators
Some departments do not have budget support; OSP fills in that role
Some PIs prefer to be DIY, and that’s OK.
Have a question about any matters? OSP is here to help!

10. Read sponsor guidance for budget preparation
What to look for:
Check for unallowable costs
Some costs may be required (e.g.- PI meetings)
Some cost items may have limitations or thresholds (e.g.- F&A)
Budget category terminology may differ among sponsors
Placement of cost items on sponsors forms may differ

11. Personnel Costs (a direct cost)
SU employees/appointments whose effort will allow project objectives to be accomplished
Key or senior personnel
Folks responsible for project – ordinarily faculty
Others
Technicians
Project managers
Postdocs, grad students, undergraduates
don’t forget to account for graduate tuition!
Admin/clerical (in rare circumstances)

12. Personnel Costs Salaries and wages Fringe benefits How much?
Proportion time allocated to grant
Represented in person months or % effort
Fringe benefits
Federally negotiated rates
compliance-information/
Annually updated
Five employee classifications
1) Reg staff/AY faculty; 2) summer faculty; 3) Grad Res Asst; 4) Part time Hourly/ Extra Service / Overload; and 5) Adjunct

13. Administrative / Clerical support costs, allowable?
May be allowable when all of the following requirements are met:
The necessity of admin support explicitly included in the budget
Individuals work is directly linked with and integral to the project
The work performed is not for standard admin duties routinely performed by SU personnel
Cost cannot also be recovered as F&A
OSP will review admin/clerical in budgets on a case-by- case basis for appropriate application
- took effect for new federal awards or award increments that occur on or after 12/26/14

14. Other than Personnel Costs
Everything else…
Travel
Equipment (>$5,000)
Materials & Supplies (includes computers)
Non-SU people
Subawards, consultants
Participants
Tuition
Estimate should reflect the actual needs of the student, if known
Publications
Purchased Services
Conference Hosting Costs
Computer Services

15. What about computers?
Computing devices are considered materials and supplies
Computing devices are allowable when:
Predominantly used in support of the sponsored project.
If not predominantly used to support the project, reasonable proportion of cost relative to how much it is used on the sponsored project is allowable.
Definition of Predominant use is 75% or greater usage on the project.
Computers dedicated solely to lab or field use are allowable
In all cases, computers should be clearly justified in the budget narrative, including whether the entire cost is budgeted (e.g.- predominant use), or a reasonable proportion.
Except in extenuating circumstances, computers are not allowed for purchase at the end of an award.

16. What about that F&A Cost?
Also called “indirect costs”
Facilities & Administrative costs
Negotiated with federal government (FY16 – FY19)
Research – on campus (50%)
Instruction – on campus (34%)
Other – on campus (35%)
Off-campus Research, Instruction and Other (26%)
Percent of what?
Modified total direct costs (MTDC) (most commonly used F&A base)
Direct costs less tuition, equipment, subcontract > 25k, rent, participant support cost, scholarships & fellowships
Sometimes sponsors formulas will apply (e.g. – 15% of Salary + Fringe; 20% of Total Cost, etc…….)

17. Estimating direct costs
Check out osp.syr.edu
specifics/budget-development/budget-tools-and-requirements/budget- narrative/major-categories-of-expense/
Historical experience, vendor quotes, or actual published rates should be used
Budget figures are not pulled from thin air
Talk to those with more experience
What can you get done for the money?
What do sponsor’s expect when budgeting and expending money….
Cost principles (2 CFR Part 200, Section 4xx)

18. So, In Summary … to be Allowable as Direct Cost…
Must be essential to support project
Cost should be in proportion to benefit received
If sponsor pays the whole cost, they are the sole beneficiary
In the case of computing devices, they use must be predominantly for the project charged, or a reasonable allocation.
Must adhere to sponsor policy/ guidelines as well as University policies

19. Allowable in F&A (not DC)
Needed to support many projects
Not ordinarily reasonable to assign proportion of benefit, including but not limited to
Sect’y/clerical (cost of doing business)
Office supplies (cost of doing business)
Local phone calls (cost of doing business)
These are all administrative costs…
(the “A” in F&A (“F” = facilities)

20. And other areas like: Food….
That’s entertainment!! ( )
Unless conference or meeting ( )
PURPOSE – disseminate sponsor’s results (Remember: How does expenditure allow you to achieve project’s objectives?)
Characteristics of meeting:
Formally announced;
Agenda;
List of attendees;
Minutes,
Proceedings etc.
This is OK! …but Not This!

21. Core questions when developing budget AND spending $$..
How does purchase/expenditure (as Direct Cost) help accomplish the project’s goals and objectives?
If cost in generally in F&A, how is situation non-routine, unlike?
Is purchase/expenditure allowed in sponsor solicitation or agreement?
Is prior approval necessary?
If yes, and not obtained, not allowed. Prior really does mean prior.
Is this a Reasonable purchase?

22. Importance of a well crafted Budget Narrative
Start with OSP’s Budget Narrative Templates and adapt for your purposes
Give OSP enough time, and we can start your 1st draft
Clearly articulate, following the same order in detail budget:
the Personnel costs required, specific roles, and level of effort
your travel needs and itemization of required materials & supplies, equipment, & Other costs
items that would typically be unallowable, but have sufficient rationale to include; now is the time to justify the cost
Work with OSP on this language
DOCUMENT in budget justification when and how purchases advance project’s objectives.
TELL THE STORY!!

23. Typical issues we see Lack of Sufficient Detail Example:
Funding for one graduate student is requested for 2 years at $25,000/ year.
Issue:
What is the graduate student working on? How are they supporting the PI to meet the project goals and objectives?

24. Example of improved Personnel Description
Funding for one graduate student, 4.5 AY mo. (0.5 FTE) and 3 summer months (1 FTE), is requested for the three-year project. The graduate student will be involved with the collection of survey data and its review and analysis, analysis of the field test data, and development of the experimental model and non-parametric study.

25. Lack of Sufficient Detail for Travel
Example of Insufficient details:
The PI and her team request $8,000/ year for travel. The trips and travelers are to be determined.

26. Example of Improved Travel Justification
A total of $4,500 is requested for senior personnel or the graduate student to participate in the annual meeting of the Society for Hard Materials and disseminate research results. Estimated annual costs per single traveler are: $500 for round trip air-fare from <origin> to <destination>, registration fee of $250, and meals and lodging of $250/day for three days.

27. NSF will now allow 5 pages for budget justifications!
Effective for NSF proposals submitted on or after January 29, 2018, proposers and subawardees alike, will have up to 5 pages to justify their requested budgets.
PAPPG 18-1
This is a message that NSF is looking for more rationale and justification to tell the narrative story of the cost items requested in the budget.
Use the extra space provided to your advantage!

28. The OSP Budget Template
It doesn’t do everything, but comes pretty close!
OSP Budget Template
QUESTIONS?