1. APPLICANTS & ADMINISTRATORS PREAWARD LUNCHEON SERIES Medford AAPLS Session 2 December 5, 2012 BUDGET PREPARATION

2. OVERVIEW BACKGROUND AND GETTING STARTED BUDGET DETAIL, JUSTIFICATION AND DOCUMENT PREPARATION SUMMARY AND QUESTIONS

3. I.BACKGROUND-WHY ARE BUDGETS IMPORTANT? A. Recipient Institution has a Fiduciary Responsibility Administration for all federal and nonfederal sponsor's funds B. Proposal Reviewers Use Budget/Project Costs in Evaluation Will the Reviewer fund or cut the budget and, ultimately, will Sponsor pay for the expense? C. Regulatory Requirements  OMB A-21 Cost Principles for Educational Institutions - (Section J)  Cost Accounting Standards Board Cost Accounting Standards 9905.501, 502, 505, 506 (CAS)  OMB A-110 Administrative Requirements  OMB A-133 Audits Page 2

4. I.BACKGROUND-WHY ARE BUDGETS IMPORTANT? (Cont.) D. OMB A-21 (Section J) and Cost Accounting Standards Costs Must be:  Allowable, Allocable, Reasonable and Consistent  Allowable versus unallowable  Allocable--Is the expense related to the project?  Reasonable--Is the cost of a type generally recognized as necessary for the performance of the project?  Consistent--Cost Accounting Standards.501 require: Consistency in estimating (budget preparation), accumulating, and reporting costs Page 3

5. I.BACKGROUND-WHY ARE BUDGETS IMPORTANT? (Cont.) E. Sponsor's Specific Rules, Regulations, Guidance  Program Announcement, guidelines, request for proposal  Sponsor's Policies and Proposal Instructions (NIH, NSF and Website online information) Page 4

6. I. BACKGROUND-WHY ARE BUDGETS IMPORTANT? (Cont.)  Allowable Costs versus unallowable (for example, some private, sponsor programs will not allow the purchase of equipment)  Salary Caps--HHS/NIH grants and contracts subject to the NIH salary cap  Sponsor's Available Funding and Funding Maximums  Cost Sharing  Project start and Funding Period Limitations  Indirect Cost Rate Limitations/Policy  Required budget format, information, and forms  Sponsor's reporting requirements Specific Sponsor/Program Rules Provide: Page 5

7. II.GETTING STARTED A. Use Sponsor's Form and Provide Detail  Use current sponsor’s application forms and instructions. B. Basis of Estimate/Budget Preparation  Historical data, experience with similar projects, vendor quotes, and price catalogues. C. Know & Use Tufts’ Current Fringe Benefit Rates and Indirect Cost Rate Per DHHS Negotiated Agreement D. Narrative Elements  Project Summary, Abstract, Overview, Task Description, Schedule – Use these sections as support of funds requested. Page 6

8. II.GETTING STARTED (Continued) Page 7 E. Definitions  Total cost of the project consists of costs reimbursed by the sponsor/agency (direct and indirect) and costs borne by the institution (cost share or matching)  Direct Costs – “Those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. “  Indirect Costs/Facilities and Administrative Costs – “F&A costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.”

9. II.GETTING STARTED (Continued) Page 8  Cost Share/Matching--that portion of project or program costs not borne by the Federal Government/sponsor.  Cost share can be mandatory or voluntary  Voluntary costs share can be committed (specified in the proposal with the dollar value) or uncommitted  Tufts University strongly discourages voluntary committed cost sharing  If cost sharing is not required by the sponsor, structure the project with a scope that is commensurate with the available funding

10. II.GETTING STARTED (Continued) Page 9  Institutional Impact of Cost Sharing:  lowers F&A rate for future years due to the impact on the formula calculations for the rate;  adds additional administrative burden due to tracking and reporting requirements;  is a high risk audit area; and  commits institutional resources needed elsewhere and may be unavailable due to cost sharing obligations.

11. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION A. Salaries and Wages  Distinguish whether Tufts University Employee(9 month v. 12 month appointment; academic v. summer, full-time v. part-time), Consultant, or Honoraria Payments--impact fringe applicability  Individual’s effort cannot exceed 100% for all projects combined (per OMB A-21), and need to meet sponsor’s minimum effort requirement, if applicable  Overbase--faculty/PI effort above 100% must be across interdepartmental lines and above normal responsibilities and approved by sponsor  Describe individuals' project function and unique role  Professional Salaries--Principal Investigators, Co- Principal Investigators, Post Docs Page 10

12. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)  Administrative/Clerical Salaries:  Normally would not be allowable as direct costs  Exceptions would need to comply with CAS justification requirements  Students (Graduate and Undergraduate)  Escalation Factors 3-4% for each budget period of the project subject to sponsor rules (Example: NIH currently limits escalation increases to 0%) B. Fringe Benefits  Use Tufts’ currently negotiated rates reference: http://viceprovost.tufts.edu/researchadmin/write-and-submit- proposal/budget-figures-and-rates/ http://viceprovost.tufts.edu/researchadmin/write-and-submit- proposal/budget-figures-and-rates/ Page 11

13. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) C. Consultants  Include number of days/hours, daily/hourly rate, relate expertise and function on project, statement of work, and letter of commitment  Travel section of budget should also include consultants’ related travel and per diem costs D. Subcontractors  Subcontractor's detailed budget, justification, statement of work, and letter of commitment  Subcontractor's indirect cost rates normally apply; however, if sponsor limits indirect costs, need to consistently apply to subcontractor Page 12

14. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)  Subcontractor should cost share consistent with sponsor's requirements (contributes to overall project cost sharing and reduces Tufts' actual cost sharing)  Justification relate expertise and function on project  First $25,000 of subcontractor's total cost included in Modified Total Direct Cost base for indirect cost computation; costs greater than $25,000 excluded for remainder of project Page 13

15. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) E. Capital Equipment  Per Tufts Negotiated Federal Rate Agreement—Nonexpendable items >$5,000 per unit and a useful life of > one year - Excluded from Modified Total Direct Cost base for indirect cost computation.  Shipping, installation, fabrication and operating costs (Sponsor/Tufts)  Describe equipment, model, vendor, use/need, and why critical to the project  Provide quotes for items costing >$25,000 or catalog pricing documentation (or documentation as may be required by sponsor) Page 14

16. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)  Scientific purpose equipment--Lasers, spectrometer, pumps, power supplies  General purpose equipment--General use; office, multi-purpose use Example: Computers and printers  Computer with Specific Scientific Purpose-- Example: Small personal computer system to supervise air and heater systems and alarms Page 15

17. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)  Make sure items budgeted are consistent with available institutional facilities and resources section of proposal  Schedule equipment cost consistent with the project schedule (if later years, explain in justification and include inflation factor) Page 16 Note: Reviewers likely to cut if last year of project or not well justified!

18. III.BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) F. Equipment Maintenance  Service contracts, repairs, maintenance and replacement parts/units G. Travel  Itemize per trip--Airfare, per diem, mileage  Describe purpose, relation to project, destination, staff, consultants, and total number of people  Budget for project sponsor required programmatic meetings Page 17

19. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) Page 18 H. Supplies, Materials, and Software  Itemize expendable items (such as glassware, chemicals) and non-capital equipment  Remote/off-site or survey type projects describe items such as stationery, folders, envelopes and justify in accordance with CAS requirements (normally, office supplies would not be allowable as direct costs)

20. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) I. Publication, Reproduction and Printing  Page charges, reprints, photographs J. Meeting/Conference Expenses (Conference Grants)  Include costs for speakers (honoraria), participants’ travel, and offsite facility/space rental K. Stipends (Training Grants)  Budget per trainee, in accordance with sponsor limits  Normally, excluded from Modified Total Direct Cost Base for indirect cost computation Page 19

21. III.BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) L. Tuition and Fees (Training Grants)  Budget per trainee, in accordance with sponsor limits  Tufts University – School of Arts and Sciences and School of Engineering Policy  Normally, excluded from Modified Total Direct Cost Base for indirect cost computation M. Human Subjects/Participant Incentives  Example: $5,000 participant incentives ($10 per survey respondent, estimated at 500 responses) N. Institutional Facilities  Applicable Animal Care, Computing Facility, NMR user rates, Machine Shop Page 20

22. Page 21 III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) “This is the easy part. The challenge will be figuring out the indirect cost for the grant proposal.”

23. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued) O. Facilities and Administrative Costs (aka- F&A, IDC, OH)  Current negotiated rates reference: http://viceprovost.tufts.edu/researchadmin/write-and-submit- proposal/budget-figures-and-rates/  Per OMB A-21, rate in effect at time of grant issuance applies for entire grant project period/competitive segment Page 22

24. III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)  Modified Total Direct Costs--per rate agreement exclusions:  equipment >$5,000,  subcontracts >$25,000,  tuition, stipends, participant support costs (NSF)  rental costs of off-site facilities.  Sponsor Limits may direct other exclusions  In general, if indirect rate is limited to less than full indirect, the usual exclusions might not apply Page 23

25. Modified Total Direct Cost Base Modified Total Direct Cost Base Indirect Cost and Total Project Costs Page 24 $100,000 - Total Direct Costs (25,000) – Subcontract ( 5,000) – Equipment ( 6,000) – Tuition & Fees $ 64,000 – Modified Total Direct Cost Base $100,000 - Total Direct Costs 34,240 – Indirect Cost* $134,240 – Total Project Costs * $64,000 * 53.5%= $34,240 III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)

26. IV. Summary & Questions  Allowable, Allocable, Reasonable and Consistent  Realistic, Credible, and Self-explanatory  Recipient Institution has a Fiduciary Responsibility and is Required to Comply with Regulatory and Sponsor Requirements  Will the Sponsor fund or cut the budget and, ultimately if awarded, will the Sponsor pay for the expenses?  Questions Page 25