APPLICANTS & ADMINISTRATORS

PREAWARD LUNCHEON SERIES

Medford AAPLS Session 2December 5, 2012

BUDGET PREPARATION

OVERVIEW

I. BACKGROUND-WHY ARE BUDGETS IMPORTANT?

A. Recipient Institution has a Fiduciary ResponsibilityAdministration for all federal and nonfederal sponsor's funds

B. Proposal Reviewers Use Budget/Project Costs in EvaluationWill 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

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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

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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)

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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:

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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.

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II. GETTING STARTED (Continued)

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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.”

II. GETTING STARTED (Continued)

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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

II. GETTING STARTED (Continued)

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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.

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

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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/

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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

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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

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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)

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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 useExample: Computers and printers

Computer with Specific Scientific Purpose--Example: Small personal computer system to supervise air and heater systems and alarms

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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)

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Note: Reviewers likely to cut if last year of project or not well justified!

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

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III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION

(Continued)

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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)

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

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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

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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.”

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 grantissuance applies for entire grant project period/competitive segment

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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

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Modified Total Direct Cost Base

Modified Total Direct Cost Base

Indirect Cost and Total Project Costs

Indirect Cost and Total Project Costs

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$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 Costs34,240 – Indirect Cost*

$134,240 – Total Project Costs

* $64,000 * 53.5%= $34,240

III. BUDGET DETAIL, JUSTIFICATION (NARRATIVE) AND DOCUMENT PREPARATION (Continued)

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

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