BUDGET BUILDING. Christy Bischoff Justin Stidham Grants & Contracts Administrators Office of Sponsored Projects

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1 BUDGET BUILDING Christy Bischoff Justin Stidham Grants & Contracts Administrators Office of Sponsored Projects

2 Topics Budget components: Direct vs. Indirect costs Costing principles from the Uniform Guidance Allowability of Costs Cost Share Budget justification

3 Before you start a budget Review the sponsor s RFP, FOA, BAA, or other proposal guidelines for budget restrictions Check required budget items, prohibited budget items, total allowed, indirect cost rate allowed, how many years can be budgeted, and cost share requirements Check the requirements for the budget narrative Note: Send RFP to OSP to notify of a PI s intentions to submit a proposal

4 Budget Categories and Components Direct Costs: Costs that can be identified specifically with a particular final cost objective, such as a Federal award, or other internally or externally funded activity, or costs that can be directly assigned to such activities relatively easily with a high degree of accuracy (2 CFR Chapter I and II, Part ) Salaries: for Principal Investigator, Co-Principal Investigators, project team, and students Base budgeted salaries on the start and end date of the project Use current salary and escalate for future budget periods by including annual raises (3%, 5%, etc) for multi-year budgets 9 month vs. 12 month employees Supplemental salary- typically not allowed without sponsor approval Administrative and clerical salaries are typically included in indirect costs unless they can be directly attributed to the project Can be based on percentage of effort, person months (preferable), or hourly (only use for senior personnel if required by sponsor)

5 Budget Categories and Components cont d Fringe benefits Current rates are listed and updated on Rates effective 8/31/16: Faculty/Staff academic year: 35.96% Summer rate for 9 month faculty: 23.94% Retiree: 24.05% Intermittent Employee: 8.30% Student or Grad Assistant: 0.54% if enrolled, 8.30% summer rate if not full time enrolled

6 Budget Categories and Components cont d Travel Can itemize by trip then by expenses included airfare, hotel/lodging, car rental, per diem, etc. Some required travel, meetings, or conferences may be mandated in the RFP Some sponsors want domestic travel and international travel broken out MSU has set per diem and mileage rates: Per diem: and Effective 10/1/15, meal allowances are $41/day - $55/day depending on travel location Mileage: Effective 1/1/16, $0.54/mile when no state owned vehicle is available and $0.19/mile when a state owned vehicle is available Participant Support Costs: Support to participants in a project paid directly to those participants; does not include MSU employees Include number of participants Can include per diem, stipends, or travel costs for participants Participant costs are treated differently from agency to agency These costs are excluded from indirect costs

7 Budget Categories and Components cont d Contractual Services Consultants- individual or organization hired to provide advisory services when the expertise is not available within the University; can NOT be an MSU employee Publications, service centers, or recharge centers Long distance phone charges Printing and shipping/mailing costs Registration and conference fees Commodities (Supplies) Office supplies- if can be shown to be used specifically for this project only; otherwise, general office supplies are included in indirect costs Materials or lab supplies Can include computers if the unit price is less than $5,000 and they are necessary for the project

8 Budget Categories and Components cont d Equipment MSU and federal sponsors define equipment as nonexpendable, tangible property having a useful life of more than one year with an acquisition price of $5,000 or more per unit State, local, private, foundation, and other sponsors may have different guidelines on equipment Equipment is excluded from F&A Subawards Subaward vs. vendor vs. consultant (See for guidance on how to tell them apart) Each subawardee must complete the Subrecipient Commitment Form ( signed by their Authorized Organizational Representative along with their SOW, budget, and budget justification (and biosketch, current and pending, etc. depending on sponsor) Subaward budget must comply with sponsor guidelines, subrecipient institution guidelines, and all federal regulations F&A can only be collected on the first $25,000 of each individual subaward

9 Budget Categories and Components cont d

10 Budget Categories and Components cont d Other Direct Costs Graduate Assistant Tuition: 71% rate for GTA and GSA (FY17 = $602/month) 100% rate for GRA (FY17 = $853/month) Excluded from F&A Graduate Assistant Insurance (FY17 = $101/month) Not excluded from F&A Can place under Contractuals Rates updated each fiscal year Rates escalate 5% each year

11 Budget Categories and Components cont d Indirect Costs/Facilities & Administrative (F&A)/Overhead: Costs that are incurred for common or joint objectives and cannot be identified readily and specifically with a particular sponsored project (2 CFR Chapter I and II, ) Examples of facilities: Depreciation Debt interest on buildings Equipment and capital improvements Operation and maintenance expenses Library expenses Examples of administrative: General administration for University-wide offices (ie- President s office, General Counsel, etc.) Departmental administration Office of Sponsored Projects

12 Budget Categories and Components cont d MSU s current federally negotiated F&A Rate Agreement is valid through 6/30/17 On-campus vs. off-campus rates Research on-campus: 45.5% Research off-campus: 26% Instruction on-campus: 50% Instruction off-campus: 26% Other/Public Service on-campus: 27.2% Other/Public Service off-campus: 22.8% IPAs: 11.1% F&A based on Total Costs, Total Direct Costs, or Modified Total Direct Costs MTDC exclude equipment, capital expenditures, tuition remission, patient care, rental costs of off-site facilities, participant support costs, scholarships, fellowships, and the portion of each subaward in excess of $25,000

13 Costing Principles Reasonable Allocable Allowable Consistent

14 Reasonable Costs Use the Prudent Person Test : are these costs that a prudent person showing careful, good judgement would approve? Reasonable costs: Recognized as necessary and ordinary Comply with Federal and State laws and regulations Individuals acted with due prudence Do not deviate significantly from established practices and policies Are comparable with market prices

15 Allocable Costs Expenses are incurred specifically for that Federal award Expenses benefit both the Federal award and other work in a proportion that can be approximated Split purchases are allowed to allocate expenses to projects Expenses are necessary to the operations of the non-federal entity and are assignable in part to the Federal award

16 Allowable Costs Must conform to limitations and exclusions in the Uniform Guidance Cost Principles or in the Federal award Applies to both direct and indirect costs Some costs may be allowable only as indirect costs Costs must be treated consistently as a direct or indirect cost in like circumstances MSU s Cost Accounting Standards Board Disclosure Statement for Educational Institutions:

17 Allowability as a Direct Cost Can I charge a computer to my project? It depends! Computers are allowable for devices that are essential and allocable, but not solely dedicated, to the performance of an award. Computers may not be purchased for reasons of convenience or preference.

18 Allowability as a Direct Cost Can I charge my dues for a professional organization to my project? Typically no, due to lack of allocability Benefit is not to any specific project and benefits other activities of the university See also CFR 200, Appendix III, B.6.b.(2) membership treated as F&A Allowable in rare circumstances when the scope of work requires the membership

19 Allowability as a Direct Cost Can I charge office supplies to my project? Typically no, due to lack of allocability See also CFR 200, Appendix III, B.6.b.(2) - office supplies are normally treated as F&A costs However, they are allowable when in unlike circumstances Used in a programmatic way: conference materials, pamphlets, etc.

20 Allowability as a Direct Cost Can I charge my administrative assistant to my project? How is this project an exception as opposed to other similar projects? What is required that makes this direct charge necessary and how is it above and beyond the normal level of support? What specific circumstances is the project experiencing that make this different? The salaries of Administrative and Clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs be appropriate only if all of the following conditions are met: Administrative or clerical services are integral to the project or activity Individuals involved can be specifically identified with the project or activity Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and The costs are not also recovered as indirect costs

21 Consistent Costs Costs must be given consistent treatment Costs incurred for the same purpose in like circumstances should be considered either direct costs only or indirect costs only This means that the same cost cannot be charged as a direct cost or an indirect cost incurred for the same purpose and circumstance on different projects

22 Cost Share Cost share: Any costs necessary to complete a project that are not paid for by the sponsor Check RFP to see if cost sharing is required Voluntary cost sharing is highly discouraged Options for cost sharing: Salaries Fringe benefits Materials and supplies Equipment Other Third Party Contribution (must have letter of commitment with $ value) F&A on cost share F&A not allowed by sponsor Can NOT cost share other federal dollars

23 Cost Share continued 2 categories of cost share: Committed- funds must be tracked by the University Mandatory- funds are required by the sponsor as listed in the RFP and MSU commits to the funds in the proposal Voluntary- funds not required by the sponsor as listed in the RFP but MSU commits to the funds in the proposal (not expected by the sponsor or encouraged by MSU) Uncommitted- funds do not need to be tracked by the University Volunteering MSU resources No specific amount is provided in the proposal A general mention of resources with no dollar figure attached

24 Cost Share continued To be an allowable cost share expense, it must be allowable as a direct cost Expenses must be incurred during the project period Expense may not already be included under F&A costs Unrecovered F&A can be cost shared only with prior sponsor approval

25 Allowability of Cost Share The sponsor does not allow me to charge F&A on the project. Can I use this unrecovered F&A to meet my cost share requirement? Only with the prior approval of the Federal awarding agency See (c), Unrecovered indirect costs, including indirect costs on cost sharing or matching may be included as part of cost sharing or matching only with the prior approval of the Federal awarding agency.

26 Allowability of Cost Share I have two related federal projects. Can I use my NSF funds as cost share for my USDA project? No, unless authorized by federal statute to be used as cost share. See (b) (5), except where the Federal statute authorizing a program specifically provides that Federal funds made available for such program can be applied to matching or cost sharing requirements of other Federal programs.

27 Allowability of Cost Share I bought a piece of equipment a couple of years ago that I am going to use on my project. Can I use that as cost share? Questions: Was it purchased with federal funds? Are the feds already paying for this (through F&A)? Is it in the F&A pool? Is it fully depreciated? If all answers are No, then you could use the depreciation value as cost share.

28 Budget Justifications

29 Budget Justifications cont d

30 Budgeting toolkit and templates Links to a basic 5 year budget template, a sample budget justification, and a budget template in NSF format

31 Sample Budget

32 QUESTIONS? Christy Bischoff: Justin Stidham: Office of Sponsored Projects 133 Etheredge Hall