1. MAY 10, 2011 SESSION 6 OF AAPLS – BUDGET PREPARATION & IMPLICATIONS OF COST SHARE APPLICANTS & ADMINISTRATORS PREAWARD LUNCHEON SERIES Module C: Budget Basics

2. Overview of this Session Importance of the budget in the proposal Regulatory guidance Cost share Tests of allowability of costs Selected categories of costs

3. Why is budget important? Provides information about the cost of performing the project Persuades the agency to pay for project expenses The agency will cut expenses that don’t appear realistic, reasonable, credible and self-explanatory

4. Regulatory Guidance OMB Circular A-21 “Cost Principles for Educational Institutions” “Purpose. This Circular establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions… The principles are designed to provide that the Federal Government bear its fair share of total costs, determined in accordance with generally accepted accounting principles…” Sponsor policies and proposal instructions

5. Institutional Share of Costs Total cost of the project consists of costs reimbursed by the agency AND costs borne by the institution (cost share or matching) Cost share can be required 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 To avoid cost share conceive projects with the scope that is commensurate with the available funding

6. Implications of Cost Share Increasing institutional cost share lowers F&A rate for future years due to the impact on the formula calculations for the rate Cost share is burdensome to track and report Fulfillment of cost share commitments is a high risk audit area Institutional resources needed elsewhere may be unavailable due to cost sharing obligations

7. Tests of Allowability Reasonable–a prudent person would have incurred the costs under the circumstances prevailing at the time when the expense was made Necessary for the performance of the sponsored agreement Consistent with institutional policies and practices Allocable – can be assigned to a specific sponsored project

8. Personnel When apportioning salaries, total individual’s effort cannot exceed 100% Charges should be based on regular compensation (salary base) Note the NIH salary cap currently at $199,700 Distinguish between personnel and consultants Budget annual increases (usually 2% or 3% for budget purposes) Use fringe benefits rate in effect during the budget period Salaries of general administrative support personnel are not allowed except for complex projects

9. Equipment "Equipment" -nonexpendable, tangible property having a useful life of more than one year and an acquisition cost which equals or exceeds $5000 Excluded from F&A base in computations of overhead Describe why equipment is necessary for the project. Explain the scientific purpose of the equipment. Make logical connections with the available facilities and resources available at Tufts. Avoid general purpose equipment unless it can be strongly justified Think through equipment maintenance costs during and after the end of the grant

10. Travel Describe purpose, relation to project, destination and number of people Budget for trips to meetings required by the sponsor Including all trips in the proposal eliminates the need for agency approval of each trip during the award

11. Other Selected Items of Costs Suggestions from the audience

12. Take Away Points Recognize the importance of well thought out budget Avoid cost share if not required by the agency Use current Tufts rates for fringe and F&A Subject each cost on the budget to the four Tests of Allowability Know internal Tufts policies for expenditures under sponsored projects