How to Build a Budget Presented by the HSC Sponsored Projects Office - PowerPoint Presentation

1. How to Build a BudgetPresented by the HSC Sponsored Projects Office

2. Today’s objectivesGain an understanding of the regulations and laws that govern how we propose our budgetsGain a better understanding of what is looked for in the budgetsAnswer any questions you may have

3. Regulations and Laws All sponsored program budgets at The University of New Mexico are governed by the Cost Principles presented in the Code of Federal Regulations at 2CFR220, also known as the “Uniform Guidance” (formerly the Office of Management & Budget (OMB) Circular A-21), New Mexico State Laws and University policies.

4. Allowable CostWhat does “allowable” mean?An allowable cost must be:Consistently Treated- like costs must be treated the same in like circumstances, as either direct or indirect (200 C.F.R 403(d)) Reasonable- A prudent business person would have purchased this and paid this price. (200 C.F.R. 404)Allocable- It can be assigned to the activity on some reasonable basis. (200 C.F.R. 405)

5. Allowable costs con ’t Allowable costs are those that are eligible for reimbursement by the federal government and also conform University policiesContrast with:Permissible by institution: A cost is permitted by institution, as outline in its various administrative policies or proceduresAllowable by the agency: Cost is permitted by the policies of the sponsoring agency or the terms or an award.An “unallowable” cost is one that is not eligible for reimbursement by the federal government or state law, University Policy and/ or sponsor guidelines.Examples of unallowable costsAlcoholic beveragesEntertainmentFund raising Alumni events

6. Reasonable CostThe cost “does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was make to incur the cost.”(200 C.F.R. 414)

7. Deciding whether a cost is allowable or unallowableA cost may be “expressly” unallowable, i.e., it is always unallowable as either a direct or indirect.A cost may be allowable but only as an indirect (F&A) cost, not a direct charge, I.e., proposal preparation, paper, pencilsA cost that is allowable as a direct charge should n ot be included in the F&A rate. I.e salary of a lab technician

8. How is Allocability DeterminedIt is incurred specifically for the federal awardIt benefits both the work under the sponsored agreement and other work of the institution in proportions that can be determined without undue effort or costIf a cost benefits two or more interrelated projects in proportions that cannot be determined the cost may be allocated on any reasonable basisIt is necessary to the overall operation of the institution and assignable in part to the award.

9. Components of the Budget Direct CostsSalary and time commitments (FTE)Fringe benefits and ratesEquipmentTravelParticipant support costsOther direct costs- i.e. animals, housing for the animalsIndirect Costs or Facilities and AdministrationGeneral office supplies like paper, pens, pencilsSalary of administrative or clerical employeesThe cost to heat and cool the buildingThe cost of power to a buildingCost Share or match

10. Direct Costs Costs that can be identified specifically with a particular final cost objective…or that can be directly assigned to such activities relatively easy with a high degree of accuracy.(200.413(a))Some examples of Direct Costs:Salaries of those working on the projectFringe Benefits TravelMaterials and supplies

11. What are Indirect / F&A (Facilities and Administrative) Costs?Indirect costs are those that are incurred for common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives benefitted, without effort disproportionate to the results achieved. (200.56)Examples of F&AAdministrative costsGeneral office suppliesPay for power to your labWaiverF&A split forms

12. F&A waivers and split forms Guidance form for F&A waiver found on our website. http://hsc.unm.edu/financialservices/preaward/common/docs/guidance-docs/understanding-fa-waiver.pdfDr. Larson is the only one who can sign http://hsc.unm.edu/financialservices/preaward/common/forms/fa-waiver-request.pdfF&A split forms are for the University’s use only.Split forms should be submitted for an entire project period and done at the time of proposal.HSC internal split form is used when the F&A costs for a project will be split amongst two or more departments, schools, or colleges that are within the Health Sciences Center.When submitting to SPO, please included separate budget breakoutsThe Main Campus/HSC F&A Split Form is used when the F&A costs for a project will be split amongst UNM Main Campus or Branch Campus and the Health Sciences Center.Before submitting to SPO, be sure to have Dr. Larson sign first. Main campus requires that we provide the budget broken out into HSC and Main Campus.

13. Cost Share or MatchingWhat is it?Cost sharing is the portion of the cost of a project that is not funded by the sponsor.  Other terms for cost sharing are matching funds, institutional commitment, or in-kind contributions.  A cost sharing commitment is often met with employee services valued at regular pay plus fringe benefits, but may also be met with cash (unrestricted accounts), third party contributions, un-recovered F&A costs, services or property valued with applicable cost principles, volunteer services, donated supplies at reasonable and fair market value.  In any case, federal accounting requirements state that all such costs must be allowable and documented.  Proposals with cost sharing must include a completed Cost Share Commitment Form. http://hsc.unm.edu/financialservices/preaward/common/forms/costshare-form.pdf Mandatory vs. voluntaryUnder Federal research proposals, voluntary committed cost sharing is not expected. It cannot be used as a factor during the merit review of applications or proposals, but may be considered if it is both in accordance with Federal awarding agency regulations and specified in a notice of funding opportunity. –200.306

14. Building the Budget

15. Reading the Solicitation Sponsor and type of fundingIs it a grant, contract or cooperative agreement?Expiration dateDue date -Very important to let know SPO know ASAP especially if it is a federal contractFinancial Limitations- Cost Share? Special Conditions

16. Remember who your Audience is for your budget!ChairDeanSponsored Projects OfficeSponsorPost AwardAuditors

17. “Interviewing” the PI

18. Personnel Sponsor LimitationsCan the PI only work 5% FTE or are they required to work at least 50% on the proposed project? 100% Effort IssueIf the PI is going to be over committed, how do they intend to adjust their time?UNM School of Medicine Faculty are only allowed to work a max of 95% FTE on sponsored projects.Senior/Key Personnel vs. Other personnelJustifying the cost!! Budget Justifications are very important! They need to meet the sponsor requirements for formatting, etc. plus calculate and match the budgets forms as well as adequately explain why these costs are necessary, allowable, allocable, reasonable, etc.

19. Personnel Senior Personnel / Other Personnel CostsSalary and Fringe Benefits Should be the current annualized salary plus the .81% projected increase (The IBW has the automatically built in.) A PI may not increase his or her salary beyond what is normal and reasonably anticipated (i.e. cost of living increases, etc are allowable)Be sure you are using the correct FTE when filling in the IBW (makes a huge difference when requesting salary) How are main campus salaries calculated? Fringe Benefit rates (refer to the memo)When using the IBW, Fringe benefit rates are just an estimate and use Method 2. Contract and grant accounting charges actuals. Fringe benefits consist of pension plan contributions; social security; Medicare taxes; unemployment compensation insurance; subsidies for health, life, and disability insurance; vacation; and sick leave.Effort Detail- person monthsAcademic or calendar monthsNOTE: NIH salary cap is 187,000Who pays for the cost when the salary is over the salary cap?

20. Admin and ClericalThe salaries of administrative and clerical staff should normally be treated as F&A costs. Direct charging of these costs may be appropriate only if all of the following conditions are met: – Administrative or clerical services are integral to a project or activity; – Individuals involved can be specifically identified with the project or activity; – Costs are explicitly included in the proposal or have prior written approval from the sponsor. (200.413)

21. Personnel: Budget Justification ExampleGood Example of Personnel JustificationDr. Cruise, Principal Investigator (1.5 months) Dr. Cruise is a Professor in the Basic Science Lab within the Department of Biology. Dr. Cruise has over ten years experience in cancer research and is an expert in the study of cancer in mice. Dr. Cruise will be responsible for maintaining the overall scientific and procedural integrity of the project, including the experimental procedures. He will conduct weekly scientific meetings with his research team to discuss relevant aspects of the progress of the project. At the completion of each data collection phase, Dr. Cruise will oversee the data analysis and will be primarily responsible for the preparation of the scientific reports and dissemination of the results of the studies.

22. Personnel: Budget Justification ExampleBad Example of JustificationMs. Russett (1.8 CM) will assist Dr. Cruise and UNMHSC faculty and staff in administrative and planning activities—including scheduling meetings and yearly travel.

23. EquipmentDefined as having a useful life of more than one year and acquisition cost of $5,000 or more (or institutional level)Item is not already available within the university (or department)Beware of potential differences between equipment definitions (sponsor / institution /subcontractor)Justifying the costIs the proposed equipment integral to the project?

24. Materials and SuppliesUG definition- 200 C.F.R 453 Materials and supplies costs, including costs of computing devices. (a) Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal award are allowable. (b) Purchased materials and supplies must be charged at their actual prices, net of applicable credits. Withdrawals from general stores or stockrooms must be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied. Incoming transportation charges are a proper part of materials and supplies costs. (c) Materials and supplies used for the performance of a Federal award may be charged as direct costs. In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award.(d) Where federally-donated or furnished materials are used in performing the Federal award, such materials will be used without charge.Allowable only for unusual circumstances, beyond normal business operations – consider the definition of an direct vs indirect costsJustifying the cost

25. Travel Institutional (State) policy and sponsor guidelines have to be followed.Domestic and foreign travel need to be separatedJustifications should include the following:Who is travelingWhere they are travelingPurpose of the travelNumber of tripsCost of the air farePer diemLodgingCar rentals and any other associated costs with the travel

26. Travel: Budget Justification of TravelGood Example of Travel JustificationDomestic Travel: Funds are budgeted for the [PI, Co-I, or RA] to attend either one domestic conference per year of this project to present research results and/or to travel to collaborate with colleagues. Approximate travel costs are as follows: International Travel: Funds are budgeted for the _______ [example: PI, Co-I, or RA] to attend either one international conference per year of this project to present research results and/or to travel to collaborate with colleagues. Travel is anticipated to the following international destinations, but may be subject to change: ___________. Approximate travel costs are as follows: Purpose of Trip/Location (if known)No. of TravelersLodgingPer DiemNo. of DaysSubtotalAirfareTotalXYZ Conference, San Diego, CA3$95$594$1,848$750$4,098        Purpose of Trip/CountryNo. of TravelersLodgingPer DiemNo. of DaysSubtotalAirfareTotalXYZ Conference, China3$155$815$3,540$750$5,790        

27. Travel: Budget Justification of TravelBad Example of Travel JustificationTravel is budgeted for a total of $15,000 for Dr. Cruise to attend the annual conference of the XYZ Association, to be held in San Diego, CA and the international conference on ABC Society, to be held in Paris, France in the Spring of 2017. Dr. Cruise will present a paper covering the research conducted under this award with the intent of disseminating and sharing the results.

28. ConsultantsDefined as independent contractors, not employees , who provide a service that cannot be performed satisfactorily by existing University personnel during the performance of the projectConsultant costs would include the period of service or the number of days on the project, the professional fee, travel expenses and other related expensesYou can also refer to the Subaward/ Consultant document on our website to better help you determine what your classification will be. We also require a letter from the proposed consultant. http://hsc.unm.edu/financialservices/preaward/common/docs/guidance-docs/subaward-vs-consultant.pdf http://hsc.unm.edu/financialservices/preaward/common/docs/guidance-docs/consultant-subcontractor-sample.pdf

29. Sub-agreementsWhat kind of relationship is it?Contractor (formerly vendor) vs subrecipient (formerly subcontractor)Justifying the cost

30. Sub-recipient or Contractor?Sub-recipient (200.93)Performance measured against whether the objectives of the federal program are metHas responsibility for programmatic decision makingHas responsibility for adherence to applicable federal program compliance requirements.Contractor (200.23)Provides the goods and services within normal business operationsProvides similar goods or services to many different purchasersOperates in a competitive environmentProvides goods or services that are ancillary to the projectNot subject to compliance requirementsIf you are unsure which pertains to you, fill out the form SubK v Vendor from our website and send it to us and we will make the determination. http://hsc.unm.edu/financialservices/preaward/common/forms/subaward-versus-contractor-checklist.pdf

31. Documents required for a sub-recipientUNMHSC Sponsored Projects Office requires the following if you are proposing to have a sub-recipient on a project.Sub-recipient commitment form found on our website. This can also serve as a letter of intent. http://hsc.unm.edu/financialservices/preaward/common/forms/subrecipient-commitment-form.pdf A statement of work, budget and budget justification

32. Other Direct Costs Publication CostsHuman Subject IncentivesOnly can be in the form of merchandise cards. NO CASH!Animal Per DiemShould reflect the type of animal, number of animals and the unit cost per animalParticipant support costs- (excluded form MTDC base)Usually conference or workshop relatedStipendsTravelSubsistenceOther

33. F&A RatesUNM’s Federally Negotiated Rates- F&A agreement is found herehttp://hsc.unm.edu/financialservices/preaward/common/docs/guidance-docs/fa-rate-agreement.pdf Research- 51.5% Private/ Industry/ Non-profit- 54%Also DOD contracts (not grants)Refer to memoOther sponsored programs- 43.5%ConferencesOff-Campus- 26%Must meet the following criteria1. program is conducted in a leased facility where spaced related costs are directly charged to the program2. Or facilities made available at no cost to the program by a non-University organizationIf more than 50% of the project is performed off-campus, then the off-campus rate will apply

34. F&A Rate Base DefinitionModified Total Direct Costs (MTDC)MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of the cognizant agency for indirect costs.(200.68)

35. Questions???