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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
Electronic Submissions
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