Budget Preparation and Development

Budget Preparation and Development
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Preparation and Development Basic Budget Construction Module 4 Budget Preparation and Development

NURAMP Module 4: Budget Preparation
4/16/2017 Sponsored Programs Office Contact Information OSP Director Jeanne Wicks Associate Director Suzan Lund Assistant Directors Deb Arent Mike Behne

4/16/2017 Sponsored Programs Office Contact Information Grant Coordinators Nancy Becker Shelly Cutsor Julie Poykko-Post

4/16/2017 Sponsored Programs Office Contact Information 312 N 14th Street Alexander Bldg West Lincoln, NE Ph Fax Official Applicant/Recipient Entity: The Board of Regents of the University of Nebraska for the University of Nebraska-Lincoln use same address as above

Purpose and Elements of a Good Budget
NURAMP Module 4: Budget Preparation 4/16/2017 Purpose and Elements of a Good Budget Purpose Present and justify financial needs to fulfill the scope of the project Provide a roadmap for successful progress of work Reflect project goals financially Qualities: Clear Realistic Conforms to regulations and policies federal agency institutional program specific

Common Reviewer Issues to Avoid
NURAMP Module 4: Budget Preparation 4/16/2017 Common Reviewer Issues to Avoid Budget too small for project size Budget inflated for project size Justification does not support budget Budget and justification do not reflect project aims

How to Develop a Good Budget
NURAMP Module 4: Budget Preparation 4/16/2017 How to Develop a Good Budget Read and follow all sponsor instructions Work with PI or designee to understand project needs If available, read current draft of proposal Note possible expenses and other questions to address with PI who is mentioned in the text – key personnel? equipment mentioned? humans or animals involved? subawards involved?

Budget Considerations
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Considerations Costs to a project must meet the criteria in OMB Circular A-21 (if a federal project) Primary Principles – all costs must Be reasonable Be allocable Be allowable The cost is unallowable if these aren’t all met! Costs must also be treated consistently across the institution

NURAMP Module 4: Budget Preparation 4/16/2017 Budget Considerations Be reasonable – the cost must reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision was made to incur the cost be necessary – support the project benefit the grant directly – be a direct cost be accountable – explainable follow federal and state laws and all applicable regulations Document the prevailing circumstances!

NURAMP Module 4: Budget Preparation 4/16/2017 Budget Considerations Be allocable – the cost must be incurred solely to advance the work under the sponsored agreement benefit both the sponsored agreement and other work of the institution in proportions that can be approximated using reasonable methods be necessary to the overall operation of the institution and deemed to be assignable in part to sponsored projects

NURAMP Module 4: Budget Preparation 4/16/2017 Budget Considerations Be allowable – the cost must Be allowed per the sponsor rules, regulations and guidelines Also be allowed by institution, state and federal rules, regulations and guidelines

NURAMP Module 4: Budget Preparation 4/16/2017 Budget Considerations Be treated consistently The cost type must be treated the same regardless of source of support The cost can’t be treated as both an indirect and a direct cost unless granting agency specifically authorizes

Facilities & Administrative (F&A) Costs
NURAMP Module 4: Budget Preparation 4/16/2017 Facilities & Administrative (F&A) Costs Also known as overhead or indirect costs Costs incurred for common or joint objectives that cannot be readily and specifically identified with a single sponsored project Real costs to the university to maintain resources and infrastructure to do research Heating and air conditioning Building maintenance Administrative salaries Snow removal UNL has a federally negotiated rate agreement through our cognizant agency - DHHS

Facilities & Administrative (F&A) Costs
NURAMP Module 4: Budget Preparation 4/16/2017 Facilities & Administrative (F&A) Costs UNL’s F&A rate is applied to Modified Total Direct Costs (MTDC) MTDC includes all direct costs except equipment (over $5000) capital expenditures charges for patient care tuition remission rental costs scholarships and fellowships the portion of each subaward in excess of $25,000 F&A costs are incurred on actual expenditures

4/16/2017 F&A Policy Request full negotiated rates on all proposals. If sponsor has a published standard limited rate or does not allow F&A costs, UNL will accept (usually foundations). Waivers of F&A costs are generally not allowed. Requests for F&A reductions/waivers must be thoroughly justified and signed by the appropriate department chair and dean then submitted to OSP for review and consideration well before the proposal deadline. Requests should not be directed to the Vice Chancellor for Research. Nebraska State agencies State agencies should be including at least 10% If they are submitting to a federal sponsor with UNL as subcontractor, they should include our full allowable federal rate in the proposal.

4/16/2017 Direct vs. F&A Costs Appropriate federal regulatory document Educational Institutions: OMB Circular A-21 Nonprofit Institutions: OMB Circular A-122 State, Local and Indian Tribal Governments: OMB Circular A-87 Hospitals: Appendix E of 45 CFR part 74 Commercial Organizations: FAR 48 CFR part 31 Normal treatment of expenses “Unlike circumstances” Unlike Circumstances Examples: direct charging of utility costs for the supercomputer facility Study surveys with special copying, paper and writing instrument costs (normally general supplies) Establishing an 800 phone line for study-specific requirements Good litmus test question: Would you have this expense if you didn’t have this grant? If no, then most likely a direct cost.

4/16/2017 Direct vs. F&A Costs Direct Cost Examples Portion of Principal Investigator, other investigators or key personnel salaries related to scope of work Lab supplies needed specifically for project Lab equipment specially needed for project Survey instruments Project-related travel expenses to attend scientific meetings and present results

4/16/2017 Direct vs. F&A Costs F&A Cost Examples Furniture Utilities Computers Administrative support salaries Memberships and dues General office supplies Building and renovations upgrades Memberships and dues allowed if project specific requirement, but generally not direct cost

Budget and Budget Justification
NURAMP Module 4: Budget Preparation 4/16/2017 Budget and Budget Justification Follow sponsor format/guidelines If no budget format provided, use standard format personnel fringe benefits equipment travel materials and supplies other subawards, if applicable F&A (aka indirects, indirect costs or overhead) cost share, when required Budget narrative critical to understanding budget –briefly describe each category/line of costs shown in budget Budget narrative should follow organization of budget.

4/16/2017 Key Personnel All individuals responsible for the design and conduct of the study Usually includes PI, co-investigators and essential collaborators Key personnel must be reported on in progress and final reports Changes to key personnel may require sponsor approval Be judicious in determining who is “key” to the project

Budget Items – Personnel
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Personnel Who is going to be working on the project? PI and other senior personnel Other local personnel lab techs, graduate students, undergrad students usually not considered Key Personnel Amount of effort for each – usually in person months Collaborators sometimes paid as local personnel or through subawards sometimes committing expertise without compensation

Budget Items – Personnel Costs
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Personnel Costs Reasonable salaries to cover the effort of any employee of UNL who will be working on this project – salary costs should relate to amount of effort Administrative and clerical salaries are normally not treated as direct costs OMB Circular A-21 Exhibit C provides examples of a "major project" where direct charging of administrative or clerical staff salaries may be appropriate – support that is significantly greater than the routine level of the services provided by academic departments

Budget Items – Fringe Benefits
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Fringe Benefits Rates are based on an average and should be consistently applied A higher or lower rate may be estimated on a case-by-case basis, if justified in the proposal Actual individual employee benefits will be charged on project Never indicate to sponsor that benefits are a fixed rate

Fringe Benefit Rates (9/23/08)
NURAMP Module 4: Budget Preparation 4/16/2017 Fringe Benefit Rates (9/23/08) Faculty, Managerial/Professional Employees, Post-Docs - 28% of salary Full-time hourly employees - 42% of salary Graduate assistants - 32% of salary for tuition remission Plus health insurance at the following estimated rates: 7/1/08 – 6/30/09 $925 7/1/09 – 6/30/10 $970 7/1/10 – 6/30/11 $1,020 7/1/11 – 6/30/12 $1,070 7/1/12 – 6/30/13 $1,125 (Increase by 5% per year thereafter) Undergraduates (full-time students): None Temporary Employees (including part-time students) % (FICA, Medicare, Workers Compensation, & Unemployment insurance)

Budget Items – Equipment
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Equipment Defined as a single item costing $5,000 or more and having a life of a year or more Multiple items may be purchased to build a single piece of equipment – these items would be considered equipment even though they may not meet the definition individually Justification should include a vendor quote whenever possible Sole source vendor requirement Custom manufacturing requirement

Budget Items – Equipment
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Equipment General purpose equipment is usually not allowable on federal grants Scientific equipment is generally allowable with sponsor approval NIH modular grants do not always require sponsor approval for scientific equipment unless changes number of modules requested For audit purposes, departmental records should clearly indicate the need for the item in relationship to the grant

4/16/2017 Budget Items – Travel Indicate if domestic or foreign foreign travel may not be allowed or require special approval, even if accepted in proposal budget foreign travel is subject to FLY AMERICA act When budgeting for travel, consider the effect of inflation on multi-year awards. (What will the price of gas be in 2012?) When traveling with students, be sure to include cost of required insurance

4/16/2017 Budget Items – Travel In budget justification indicate number of trips number of people traveling location and type of meeting purpose of travel Note: Check program announcement for required investigator meetings to be sure you include them in budget.

Budget Items – Participant/Trainee Support
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Participant/Trainee Support Some agencies include a category for participant support costs on their budget forms. Only for conference proposals or training proposals such as National Science Foundation Research Experiences for Undergraduates (NSF/REU) proposals Not used for general travel to conferences or to bring collaborators together to meet and discuss the project

Budget Items – Participant/Trainee Support
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Participant/Trainee Support Funds proposed in this category and approved by the agency cannot be rebudgeted for use in other categories without the prior approval of the agency. These funds generally incur F&A Note: NSF does not allow participant support costs to be included in the calculation of F&A costs. This is an NSF rule, however, not a general rule for all participant support costs. Check sponsor guidelines before excluding participant support from the Modified Total Direct Cost and provide OSP with a copy of the rule.

Budget Items – Materials & Supplies
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Materials & Supplies Specific items needed to perform the project General use items – pens, pencils, paper, general lab supplies – are generally not allowable Some auditors take the stance that if you budgeted for 6 widgets at $1200, you are limited to 6 widgets – even if you have the budget to purchase 7. Appropriate justification can help.

Budget Items – Human & Animal Costs
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Human & Animal Costs Human Subjects Participation Patient care expenses Travel, food, other reimbursements Participant incentives Number of participants Timeline of activities Animal Use Type of animal Sole source vendor Housing expenses Special needs

Budget Items – Consultants
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Consultants A consulting agreement typically defines a scope of work and terms under which a private individual performs activities Under a consulting agreement, an individual (typically) provides professional or highly technical advice or assistance to the university Provide hourly or daily rate and number of hours or days estimated

Budget Items – Consultants
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Consultants University controls the results but not the manner in which the service is performed Consulting agreements are not considered subawards Consulting agreements are handled at the department level UNL employees cannot serve as paid consultants on a UNL grant

Budget Items – Other Expenses
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Other Expenses Services Specialized equipment maintenance Publication costs Fee for service vendors Animal maintenance If allowed. . . printing and duplication computer services rent and utilities communication costs alterations or renovations

Subrecipients vs. Vendors
NURAMP Module 4: Budget Preparation 4/16/2017 Subrecipients vs. Vendors Subrecipient is responsible for Carrying out a portion of the grant program as defined in the subaward Having its performance measured against the grant program objectives Programmatic decision making Adhering to applicable federal program compliance requirements

Subrecipients vs. Vendors
NURAMP Module 4: Budget Preparation 4/16/2017 Subrecipients vs. Vendors Vendor Provides goods and services within normal business operations Provides similar goods and services to many different purchasers Operates in a competitive environment Provides goods and services that are ancillary to the operation of the grant or contract Is not subject to compliance requirements of a federal grant or contract

4/16/2017 Subawards Deliver these items to OSP prior to submission Letter of intent/commitment signed by subrecipient’s institutional official (original, fax or scanned copy). We also will accept a signed cover page (SF424). Subrecipient’s detailed budget and budget justification (prepared using prime sponsor forms/format). Subrecipient budget/budget justification becomes a sub-part of your budget and justification Subrecipient’s statement of work for their work only Note: Read agency guidelines to determine how sub’s F&A costs are to be calculated in your budgets.

Budget Items – Cost Share
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Cost Share Project costs not borne by the sponsor Cannot be met through federal sources Two types – mandatory and voluntary Voluntary cost share becomes mandatory if the proposal is awarded When cost share is required, the difference between UNL’s full F&A rate and sponsor’s limited rate should be used to meet this requirement, if allowed by sponsor Mandatory Cost Sharing – Mandatory cost sharing is that commitment to participate in the cost of the project required either by Statute or by Administrative regulation. The requirement for such cost participation will be explicitly set forth in project announcements or guidelines issued by the sponsor, and will be a requirement for eligibility to participate in the project and will be specifically identified within the University’s proposal. Voluntary Cost Sharing – Voluntary cost sharing is the University’s participation in the cost of a project when there was no commitment within the University’s proposal to share in the cost of the project or when the University’s actual participation in the cost of the project exceeds the cost sharing commitment made as a part of the University’s proposal.

Budget Items – Cost Share
NURAMP Module 4: Budget Preparation 4/16/2017 Budget Items – Cost Share Cost sharing has to be tracked and reported Don’t quantify unless needed Examples of acceptable wording to avoid quantifying The PI will devote the necessary time to complete the project The department of X will provide the necessary equipment to accomplish the proposed research. Computer support for the project will be provided by the College of X. You cannot cost share an item more than once As a general rule, avoid it, if possible!

4/16/2017 Other Considerations Cost of living increases on multi-year awards Cost share requires institutional approval prior to proposal submission (NUgrant) ALL cost share, mandatory or voluntary, must be included on the internal routing form in NUgrant and approved PRIOR TO submission

4/16/2017 Budget Justification An explanation of the items included on budget form Most important part of the budget! Fully justify every person listed in the proposal Fully justify every budget category in order of budget form Make it easy for a reviewer to understand the proposed costs on the budget

4/16/2017 Budget Justification Justify any items that would normally be unallowable or treated as F&A cost or require sponsor approval Provide budget details in the justification rather than list in budget Cost Accounting Standards 501 requires that our accounting system accumulate level of detail that is proposed in the budget

4/16/2017 Budget Development Dr. Smith is writing a proposal for a three year project and has asked you to assist with the budget development. He provides you with the following information: Dr. Smith, PI, effort = 15%. Dr. Jones, Co-I, effort = 25% Graduate Student, effort = 100% Travel to DC to present finding to NSF as required; also travel to conference for both Dr. Smith & Dr. Jones Needs lab supplies, $13,000 per year Needs a new more powerful spectrometer, $7,500 Dr. Johnson at XYZ Corp. will be consultant in year 3, $3,500 Would like a new computer for his office

Steps for Developing a Budget
NURAMP Module 4: Budget Preparation 4/16/2017 Steps for Developing a Budget Ask Dr. Smith for RFP or solicitation to help determine which costs are allowable, allocable, and reasonable for this proposal Ask Dr. Smith what he would like the start date to be – make sure it falls within sponsor guidelines Determine if cost share is needed, and if F&A is allowable or restricted

Steps for Developing a Budget
NURAMP Module 4: Budget Preparation 4/16/2017 Steps for Developing a Budget Begin populating a budget spreadsheet with the information provided. In order to populate the spreadsheet you will need to: Find salary amounts Determine if personnel are appointed 9/12 or 12/12 Calculate salary request Calculate person months

4/16/2017 Salary & Person Months Dr. Smith’s annual salary is $105,592; he is 12/12, effort 15% Salary requested from sponsor = salary x effort $105,592 x 15% = $15, Person months = appointment x effort 12 months x 15% = 1.8 calendar months Dr. Jones’ annual salary is $73,900; she is 9/12, effort 25% Salary requested from sponsor $73,900 x 25% = $18,475 Person months 9 months x 25% = 2.25 academic months

Salary and Person Months
NURAMP Module 4: Budget Preparation 4/16/2017 Salary and Person Months Graduate students start at $18,000 $18,000 x 100% = $18,000 Person months for GRA (only when required) 12 x .49 = 5.88 calendar months

4/16/2017 Equipment Dr. Smith has been shopping around for a spectrometer and the best quality for the best value came in at the $7,500 price If the work can’t be done without this equipment, if it is allowable according to the RFP and if it can be specifically allocated, this expense can be included

4/16/2017 Travel RFP requires presentation of progress annually in DC. PI indicated 2 days total, 2 nights hotel and airfare $900 each, both PI & Co-I will attend Increase at 3% each year to account for estimated price increases Conference will be to present findings in third year 2 people 4 days, 4 nights, previous conferences ran about $2,500 for each person

4/16/2017 Supplies Dr. Smith gives you a list of supplies that are necessary to perform the project, like beakers, gases, etc. He estimates cost of $13,000 based on average prices.

Consultant Dr. Johnson from XYZ Corporation in year 3
$500/day x 7 days = $3,500

4/16/2017 Office Computer According to A-21, computers are an F&A expense NSF is not restricting F&A Therefore this request would not be allowable and should not be included on the budget

4/16/2017 Other Expenses Publication expenses in year 3 for presentation at the conference estimated at $500 Budget Form

4/16/2017 Budget Justification Personnel Dr. Smith, PI, (effort = 1.8 calendar months) will be responsible for the overall project management as well as experiment development, data analysis and reporting to NSF. Dr. Jones, Co-I, (effort = 2.25 academic months) will share the responsibility of overseeing the overall project management as well as supervising the graduate student. TBD, GRA, (1 full-time at .49 FTE) will be responsible for conducting the experiments and assisting in analyzing data. A 3% cost of living increase has been applied to all salaries in years 2 and 3.

4/16/2017 Budget Justification Benefits Faculty and Staff benefits are estimated at 28% of salary. GRA benefits include tuition remission estimated at 32% of salary and health benefits estimated at $970 in year 1; $1,020 in year 2; and $1,070 in year 3. The actual cost of benefits for each person will be charged to the project.

4/16/2017 Budget Justification Equipment Spectrometer 75000B, this spectrometer is necessary to perform the experiments for the direct benefit of the project. Travel The PI and Co-I will travel to DC annually to present the progress report at NSF. In year 3 the PI and one other person will travel to a conference to present their findings.

4/16/2017 Budget Justification Travel expenses to DC estimated at $900* per person Airfare: Lincoln, NE to DC $400 Hotel (2 nights) $300 Meal Allowance $100 Ground Transportation $100 *this amount is increased by 3% in years 2 & 3 for estimated price increases Travel expenses to conference estimated at $2,500 per person Airfare: Lincoln, NE to Conference Site $650 Hotel (4 nights) $650 Registration $700 Meal Allowance $250 Ground Transportation $250

4/16/2017 Budget Justification Supplies Costs are estimated at $13,000 in year 1 with a 3% increase in years 2 & 3 to purchase consumable materials and supplies for the proposed experiments, such as [give examples of the necessary supplies]. Consultant Dr. Johnson from the XYZ Corporation will be hired in year 3 of the project. She will provide consulting services for 7 days. Dr. Johnson’s rate is $500/day. We are requesting $3,500 in year 3 for her consulting services.

4/16/2017 Budget Justification Facilities & Administrative Cost UNL’s federally negotiated rate is 47.5% MTDC for organized research.

4/16/2017

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