MAY 10, 2011

SESSION 6 OF AAPLS – BUDGET PREPARATION &

IMPLICATIONS OF COST SHARE

APPLICANTS & ADMINISTRATORS PREAWARD LUNCHEON SERIES

Module C: Budget Basics

Overview of this Session

Importance of the budget in the proposal

Regulatory guidanceCost shareTests of allowability of costsSelected categories of costs

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

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

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 voluntaryVoluntary 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

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 reportFulfillment of cost share commitments is a

high risk audit areaInstitutional resources needed elsewhere

may be unavailable due to cost sharing obligations

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

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 $199,700Distinguish between personnel and consultantsBudget annual increases (usually 2% or 3% for

budget purposes)Use fringe benefits rate in effect during the budget

periodSalaries of general administrative support personnel

are not allowed except for complex projects

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

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

Other Selected Items of Costs

Suggestions from the audience

Take Away Points

Recognize the importance of well thought out budget

Avoid cost share if not required by the agencyUse current Tufts rates for fringe and F&A Subject each cost on the budget to the four

Tests of AllowabilityKnow internal Tufts policies for expenditures

under sponsored projects