PD Budgeting 101 Marano Macey

8/3/2019 PD Budgeting 101 Marano Macey

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Grant Budgeting BasicsDonna Marano

Director of Finance & Administration

Civil & Environmental Engineering

Denise Murrin Macey

Business ManagerEngineering and Public Policy

October 31, 2005 Sharon McCarl


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Session Focus

Theory-What is a good budget?

Practical-What are the pieces and how do Iput it together?

Routing and Approvals


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What is a good proposal?

A good idea, well expressed, with a

clear indication of methods for pursuing

the idea, evaluating the findings, andmaking them known to all who need to

know - NSF


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What is a quality proposal?

Manageable focus

Plan of work

Plan of resources needed


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Point to Remember

Throughout It All, Remember, Proposals

Are Approved Based on the Science,

Then Whether the Budget Is Justified.

A Good Budget Requires Justification

but It Is Not the Primary Factor in

Evaluation.


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Budgeting Defined

The Budget Plan is the Financial

Expression of the Project or Program as

Approved During the Award Process

(OMB Circular A-110, Subpart C, Section_.25).

Business Side-What do I need to

accomplish the goals of this project?


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Budgeting Principles

ALL costs (direct and F&A) that can be

identified with a particular sponsored

project should be identified and budgeted

(somewhere) AT THE PROPOSAL STAGE

ALL costs (direct and F&A) of a particular

sponsored project should be borne by the

sponsor (to the maximum extent possible)


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Costing Defined

The Process Used to Determine the Amount

Required to Acquire the Goods and

Services Necessary to Achieve Project

Objectives


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Pricing Defined

The Process Used to Determine the Amount

Requested from the Sponsor to Acquire the

Goods and Services Necessary to Achieve

Project Objectives


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Guiding Regulations

Office of Management and Budget (OMB)

Circular A-21http://www.whitehouse.gov/omb/circulars/a021/a021.html

Cost Accounting Standards Boardhttp://www.whitehouse.gov/omb/procurement/casb.html

22 Standards for Industry

4 Apply to Educational Institutions

OMB Circular A110http://www.whitehouse.gov/omb/circulars/a110/a110.html)

Institutional Policies


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Characteristics of Costs

Reasonable

Allocable

AllowableTreated Consistently


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Reasonableness

Test - Is the expense reasonable? Logical?

Reasonable person test

Is it normal for this type and level ofexpense to be charged on projects of a

similar nature?

Market Value-Appropriate Bids


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Allocable

Was the cost incurred solely for the

advancement of the project?

Can the expense be clearly identified with

the project?

Assigning inappropriate expenses isFRAUD!


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Allowable

Reasonable and necessary

A-21 section J

In conformance with limitations/exclusions(example foreign travel, equipment)


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Treated Consistently

Cost Accounting Standards

Must be able to defend cost estimates


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Cost Accounting Standards

501-Estimating, Accumulating and Reporting

costs

502-Consistency in Allocating Costs Incurred

for the Same Purpose

505-Accounting for Unallowable Costs

506-Consistent use of Cost Accounting Period


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OMB Circular A-110

Financial Management Standards

Rules for Accounting, Asset Management

Cost Sharing


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Cost Sharing

that portion of project or program costs

not borne by the Federal Government.

(OMB Circular A-110, Subpart A, Section

_.2(i))

Know your department or colleges policy

& procedures

NSF Statement 10/19/04 (NSB-04-157)


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Questions???


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Consider the Source of Funding

Sponsor Awarded FundingState or Federal Government

Industry

Foundations

Institutionally Provided FundingStart-up Fund

Seed FundFaculty Development

Cost Sharing


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Assess Budget Needs

Budget matches narrative

Amounts

Reasonable for scope of work

Well justified

In-line with program

Allowable

Includes adjustments for future years


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Types of Costs

Direct Costs

costs that can be identified specifically with

a particular sponsored project (OMB

Circular A-21, Sec.D.1)

Facility and Administrative Costs

costs incurred for common or joint

objectives and [that] therefore cannot beidentified readily and specifically with a

sponsored project OMB Circular A-21, Sec.E.1


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Types of Direct Costs

Personnel

Fringe Benefits

EquipmentSupplies

Travel

Subcontracts/ConsultantsOther


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Personnel

Individuals who are employees or students of

Carnegie Mellon

Vacant Positions (to be named)

Generally no administrative positions

Funding in proportion to project effort using base

salary

Include fringe benefits (full or part-time) Include salary increments

Remember salary caps


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Fringe Benefits

Pooled or composite rate

Rates proposed by Carnegie Mellon and

approved by the Office of Naval Research

Full-time 37.5 hours 29.50%

Full-time 37.5 hours Federal 25.90%

Issue: dependent tuition 3.60%


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Fringe Benefits

Part-time 17.5 and < 37.5 18.5%

Part-time Mandatory < 17.5 10%

Mandatory (FICA, unemployment, workers comp)

Non-CMU students

Additional Compensation 10%


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Equipment

Cost $1,000 & Useful Life 2 Years

Exclusive use by project

Computers

General purpose

equipment


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Equipment

Itemize and Justify

Competitive Pricing ( 3 bids > $2,500)

Price Reasonableness

Identify Sole Source Suppliers at the

Proposal Stage


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Supplies

Must be specific to project (check A-21)

Avoid general purpose items

Itemize and justifyExamples

Chemicals, glassware, non-capital equipment

Animal purchases, enzymes


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Travel

Itemize and justify

Who, what, when, where, why and how

Include business purpose and destinationSeparate domestic and foreign travel

Do not include patient care or consultant

travel


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Other

Animal housing

Publication and page charges

Subject incentive and travel reimbursementRentals & maintenance contracts

Equipment Usage (# hours and rate)

Long distance


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Subcontracts

Itemized budget

Statement of work

Commitment to perform (w/signature) Justify need and selection criteria

Include direct and F&A in your budget


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Consultants

Employee vs. Consultant (substantial fines)

Justify contribution to project and budget

Include name and affiliation Include all costs including travel & per

diem

Include biographical sketches


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Flags

Animal Research

Radioactive/DNA

Human Subjects

Effort > 100% Employees ???

Subcontract > 50%

Unallowable (get it inwriting)

Space or Cost Sharing


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Facilities and Administrative

Costs (a.k.a. Indirect Costs) costs incurred for common or joint

objectives and [that] therefore cannot be

identified readily and specifically with a

sponsored project OMB Circular A-21,Sec.E.1

Two Components Facilities

Administration


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Facilities and Administrative

CostsFederal rates set by our cognizant agency

ONR in negotiation with Carnegie Mellon

Applies to subcontracts with federal prime

Modified Total Direct Cost Base

Industrial Rate 56 %

Federal Rate 45% (DOD Contracts 49%)

Federal Rate Off-Campus 28.8%


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Facilities

Depreciation and Use Allowance

Interest on Debt (specific buildings)

Equipment & Capital Improvements

Operation & Maintenance Expenses

Library Expenses


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Administration

GA - General Administration

Executive & Administrative, Central functions

DA - Department Administration

Administrative and Clerical Staff, office

supplies, telephones, travel

Sponsored Project Administration

Student Administration & Services


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Calculation

Modified Total Direct Cost Base

Carnegie Mellon example

Total Direct Costs Less:

Equipment

1/2 graduate student costs

Portion of sub-awards in excess of $25,000

On-site vs. Off-site rate

Check Sponsor Terms


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Summary

Preplanning

Know regulations and sponsor requirements

Know special requirementsAnimals, Human Subjects, Subcontracts, CostSharing

Check Math


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Questions???


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Getting Started

Sponsor

Federal, Non-federal (what rates and rules

apply)

Special Rules or Instructions (caps, F&A)

Project Dates

Subcontracts or Multi-departmental Budgets

Special Approvals (animals, human

subjects)


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Personnel

Who will work on this project?

What will this person contribute?

Where will this person work?

What is this persons status? Employee,graduate student, consultant???

Type of Appointment

How much effort is required?Are there security issues?


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Equipment

What do you need?

What is the importance of this item to the

research?

Does it qualify as capital equipment?

Is it general purpose equipment?

Is it available elsewhere? Borrow or shareCost analysis Lease vs. Purchase


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Travel

How does this trip enhance the goals of the

proposed research?

Who will travel?

Where?

Why?


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Supplies and Other Expenses

What do you need?

What is the best way to estimate the cost?

Do the numbers-avoid excessive guessing

Check recharge rates, facility charges, historical

expenses

Match budget detail to accounting system

Controlled Substances?

Cost of an Audit


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Proposal Routing

Contact Business

Manager

SPEX Sponsored

Projects Exchange Generates Proposal

Routing and Sign-off

Sheet

Carnegie Mellon

Proposal Number


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Disclosure and Signatures

Investigator(s) Disclosure and Assurances

Must read and check appropriate box

Conflicts must be resolvedSusan Burkett

All proposals require approval prior to submission Signatures

PI

Department Head

Dean Pre-award Office

Associate Provost-Institutional Official


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Routing Time

Allow Adequate time for review

Carnegie Mellon reserves the right to

withdraw any proposal AND

You need time to copy and collate before

the express mail pick-up

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PD Budgeting 101 Marano Macey

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