Creating a Budget for a Sponsored Research Project

1. Creating a Budget for a Sponsored Research Project Division of Sponsored Programs

2. What is a Budget? • Best estimate of financial resources needed to accomplish a project • Includes a Budget Justification which provides an explanation of included costs • Allowablemeans the costs are: • Reasonable* • Allocable* • Consistently applied* • Agreeable with Sponsor specifications Allowable Direct Costs + Allowable Indirect Costs (F&A) = Total Project Costs *These terms are taken from the Uniform Guidance: http://www.ecfr.gov/cgi-bin/text-idx?node=2:1.1.2.2.1&rgn=div5

3. Creatinga Budget 1 2 3 4 5

4. Review Solicitation and Guidelines Look for: • Min./Max. duration of the project • Floor/Ceiling for budget • Budget limitations and restrictions Review: • Sponsor Guidelines • The Solicitation • Request for Proposal (RFP) It is helpful to note the specific proposal you are applying for in the internal budget Specific Sponsor/application questions? Utilize the appropriate DSP contact: https://dsp.research.uiowa.edu/dsp-staff-directory

5. Review Solicitation and Guidelines • You will need to create and submit any budget that is necessary for the Sponsor (formats/specifications vary from Sponsor to Sponsor) • A Budget Justification will most likely need to be included with the budget. • Check to see if the solicitation requires mandatory cost share; if not do not include cost sharing as part of the budget Keep in Mind: An internal budget provides an opportunity to include more details that a Sponsor budget may not require An internal budget may also need to be prepared alongside the Sponsor budget Why?

6. Direct Costs • Determine and specify what direct expenses fit within the Sponsor guidelines and are necessary to complete the project • Common Direct Costs • Salary/wages and fringe benefits for all personnel (including students) • Travel costs (both domestic and foreign) • Equipment ( ≥ $5,000) • Materials and supplies • Subawards (direct and indirect costs) • Other Direct Costs • Tuition • Participant support costs • Research subject compensation • Publication • Consultant services • Patient care costs • Computer service center charges This list is not all-inclusive

7. Direct Costs • Seek assistance from your HR rep. in determining salary base Personnel Costs – Salary/Wage Expenses • Salary is calculated using 3 basic salary/wage bases: • Calendar Year (CY) – 12 months • Academic Year (AY) – 9 months • Summer Term – 1-3 months Sponsors may impose a salary cap A salary and effort conversion table is available here: https://dsp.research.uiowa.edu/sites/dsp.research.uiowa.edu/files/Personnel%20Salary%20%26%20Effort%20Calculator.xlsx

8. Direct Costs Personnel Costs – Effort Calculations (1) Principal Investigator (PI) • AY appointment, Salary of $63,000 • Monthly salary of $7,000 (one-ninth of the AY) • 25% of the AY effort would equate to 2.25 AY person months (9x.25=2.25) • The budget figure for that effort would be $15,750 (7,000 multiplied by 2.25 AY months) (2) Principal Investigator (PI) • CY appointment, Salary of $72,000 • Monthly salary of $6,000 (one-twelfth of total CY salary) • 25% of the CY effort would equate to 3 CY months (12x.25=3) • The budget figure for that effort would be $18,000 (6,000 multiplied by 3 CY months)

9. Direct Costs Personnel Costs – Salary Cap Example PI salary: $200,000/year Salary Cap =$189,600 (subject to change) If the effort on the project is 25%, determine the amount of salary based on the Salary Cap, not the actual salary of the PI $189,600 x 25% = $47,400 $200,000 x 25% = $50,000  The difference of $2,600 would need to be covered by the individual’s UI Department • Specific Sponsors or awards may limit personnel salaries • It is recommended that salaries be increased at a rate of 3% per year when making future year budget estimates NIH Salary Cap Information can be found here: https://grants.nih.gov/grants/policy/salcap_summary.htm ($189,600 as of 1/7/18)**

10. Direct Costs Contact your HR representative for help with determining appropriate fringe “rate pools” Personnel Costs – Fringe Benefits • Fringe benefits include: • Social Security • University Retirement Programs • Life Insurance • Health Insurance • Disability Insurance • Etc. Example of some rate pools and rates Current/Projected Fringe Benefit Rates can be found at https://afr.fo.uiowa.edu/fringe-benefit-accounting/currentprojected-fringe-benefit-rates

11. Direct Costs The budget should specify the: • # of trips/days/people • per diem rates for food and hotel • transportation costs • destination(s) Travel– Domestic and Foreign • Keep in Mind: • Allowances for air travel should not exceed round trip coach accommodations. • Generally, only persons participating directly in the research may travel on award funds. • Sponsors require adequate justification on requested travel expenses – foreign travel, especially. • Sponsor guidelines may establish rates for specific costs. Use the more restrictive rate when UI rate differs. Note: Specifics may be unknown at time of proposal More information about specific costs, rates, etc. can be found directly from the Sponsor or at http://www.uiowa.edu/ap-purchasing/travel

12. Direct Costs Equipment– $5,000 or more Materials and Supplies Equipment costs include expenses for equipment items (useful life: 2 years) that individually cost $5,000 or more. Only allowable if it will be dedicated solely to the project. (Not intended for general desktop and laptop computers, office equipment, copiers, office furniture, etc.) • The expendable equipment (equipment costing less than $5,000) and supplies required for the project should be indicated with estimated costs. • There should be a breakdown of these items by general classification. • Sponsor guidelines usually indicate what needs to be itemized and justified. UI policy prohibits the recovery of indirect costs (F&A) on direct costs classified as equipment • More information on Equipment can be found on the Capital Asset Management (CAM) website or the DSP website: • http://cam.fo.uiowa.edu/content/policies-and-procedures • http://dsp.research.uiowa.edu/equipment

13. Direct Costs Subawards: A subaward is needed when the UI Department or Principal Investigator would like to collaborate with a colleague at a different entity to complete the goals of the project • See Sponsor guidelines or policy for any restrictions on F&A • The UI is allowed to recover indirect costs (F&A) on the first $25,000 of each individual subawardfor new and competitive proposals • Once the subaward’s total costs (which includes direct and indirect costs) reaches $25,000 the remaining subaward costs will be removed from the modified total direct costs bases (MTDC) in subsequent years for the UI Subaward Direct Costs + Subaward Indirect Costs = Total Subaward The total subaward costs are included in the UI Direct Costs Indirect costs recovered against first $25,000 of each new/competitive subaward

14. Direct Costs Subaward Example: A subaward has the following total amounts in the first 3 years of a Sponsored Project: Year 1: $12,000 Year 2: $15,000 Year 3: $17,000 What amounts would be included in the UI MTDC? In year 1 the full $12,000 is included in the UI MTDC, but in year 2 only the first $13,000 is included in the UI MTDC, and none of year 3 subaward costs would be included in the UI MTDC More information regarding subawards can be found here: http://dsp.research.uiowa.edu/subawards-university-iowa

15. Consultants • Compensation for a Consultant on a project may or may not be budgeted • If the person is a UI employee they will not receive any additional funding as a consultant • If the UI employee is integral to the research or if they would like publication recognition, then the employee should be included in the Personnel section where the appropriate salary and fringe rates apply **This applies to all UI employees, including those from other departments** • External consultants are allowable under most circumstances • For more information on how to determine if a person should be paid through a Professional Services Agreement (PSA) or a subaward please see the link below: http://dsp.research.uiowa.edu/subaward-or-fee-service

16. Direct Costs Participant Support Costs • Includes costs for non-UI participantsto attend a sponsored training, symposium, meeting, or workshop • Costs may include stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of the participants such as for a NSF Research Experiences for Undergraduates (REU) program • Participant Support Costs are not to be included as part of the MTDC base for calculating F&A • Participant support costs do not include patient • care costs or research subject compensation

17. Direct Costs Patient Care Costs These are costs of routine and ancillary hospital services provided to individuals participating in research programs • These are not costs of care that are specifically requested for the project (e.g. lab fees for special screenings) • Patient Care Costs are not to be included as part of the MTDC base for calculating F&A Note: Research scans performed at the MR Research Facility are not considered patient care costs and are subject to F&A. (Clinical scans are considered patient care costs) Patient care costs are separate from research subject compensation

18. Direct Costs Subject Compensation These are reimbursements given to human subjects for participating in a research project/study. Human subjects are defined as living individuals about whom an Investigator conducting research obtains data or identifiable private information through an intervention or interaction with the individual. • Payments may be made via check, cash, gift cards or any other item of value. • Reimbursements for travel or other costs are not considered compensation and are not covered under the Grant Accounting Office (GAO) policy for Subject Compensation. https://gao.fo.uiowa.edu/grant-and-contract-management/general-administration/research-subject-compensation-policy-procedures Note: These costs are included in the MTDC.

19. Direct Costs Tuition • Tuition costs for most Sponsors can be charged to a funding source up to 100% of the full amount of graduate tuition (this includes both grants and contracts) • For graduate students, UI departments are required to budget at least the minimum levels for stipend and tuition costs established by departments. • Tuition costs are excluded from the MTDC • More information regarding tuition: • http://www.grad.uiowa.edu/tuition-scholarships • Registrar office schedule with fees: • https://gao.fo.uiowa.edu/grant-and-contract-management/general-administration/research-subject-compensation-policy-procedures UI policy prohibits the recovery of indirect costs (F&A) on tuition-

20. Indirect Costs • Indirect costs are those costs that cannot be directly traced to a part of the project. These costs are also known as Facilities & Administrative (F&A) costs or overhead. • F&A or indirect costs are REAL costs that the UI incurs in order to operate. Allowable Direct Costs + Allowable Indirect Costs (F&A) = Total Project Costs Indirect Costs = Modified Total Direct Costs (MTDC) x Appropriate F&A Rate

21. Indirect Costs Determining the MTDC • The first step in calculating total indirect costs (F&A) is to determine the MTDC base Indirect Costs =MTDC x Appropriate F&A Rate • Exclusions x • Equipment ( ≥ 5,000) • Student tuition remission • Subaward costs above $25,000 • Participant support costs • Scholarships and fellowships • Patient care costs • Rental costs of off-site facilities • Capital expenditures MTDC = Total Direct Costs - Exclusions

22. Indirect Costs MTDC Example A budget is broken down as follows for a one year project. What is the MTDC base? Answer: a) $64,250             b) $45,750            c) $54,250 d) $55,750 Remember:tuition, equipment, participant support costs, patient care costs, and subawards greater than $25,000 of each subaward are excluded from MTDC, subject compensation is included. Personnel                 $37,000 Travel                                    $3,000 Equipment                          $10,000 Research Subject Compensation   $750 Materials/Supplies          $5,000 Tuition                                  $8,500 $45,750 

23. Indirect Costs F&A Rates • F&A (Facilities and Administrative) rates are established for reimbursing institutional overhead and other expenses associated with Sponsored Projects Indirect Costs =MTDC x Appropriate F&A Rate Check to see if the Sponsor limits or restricts indirect costs from anything other than the UI federally negotiated rates. For more help on which F&A rate to use: https://dsp.research.uiowa.edu/facilities-administrative-fa-costs *Federally Negotiated F&A Rates as of 12/11/18

24. Contract Budgets Do not forget to budget fringe benefit costs and F&A costs Total Request from Sponsor = Direct Costs + Indirect Costs Contract budgets follow the same University budgeting guidelines as grant budgets. Here are a few things to keep in mind: • Calculate the Direct Costs needed to complete the project by preparing an internal budget spreadsheet. • When working with industry, contract budgets require the full 54.5% F&A rate. Use the F&A Rate Decision Tool to determine any exceptions. • A fully-burdened budget can be presented to the Sponsor. • Include the internal budget on the UIRIS Proposal routing form.

25. Fully Burdened Budget Example

26. Format the Budget • Different Sponsors require different formats for budgets • Check the solicitation and general guidelines to determine if a specific program, form, or system is required for submission Internal Budget • Remember: • Apply correct fringe and F&A rates to both the Sponsor and internal budgets • An internal budget should match Sponsor budget categories • The DSP website has several budget templates for your convenience: https://dsp.research.uiowa.edu/budget-templates-0 • If the Sponsor’s budget is not detailed, an internal budget should be prepared because it is helpful for DSP and Grant Accounting during the review/post-award management • An internal budget is required if submitting a contract or a fully-burdened budget

27. Format the Budget Cayuse Common Program Applications R&R budget DHHS agencies and other federal agencies (NIH, AHRQ, DOE, etc.) Modular budget Research.gov /Fastlane NSF NSPIRES NASA Iowagrants.gov IDPH Foundations/Private Funding Various forms and systems

28. Budget Justification Budgets usually require justification that is a narrative explanation designed to help the Sponsor evaluate the expenses proposed for the project • Budget Justification writing tips: • Follow the Sponsor proposal instructions closely • Organize and align budget items for ease of review • Provide adequate detail for items on the budget • Explain why every cost/cost category on the budget • is needed to accomplish the proposed project • Make it clear that all budget requests are reasonable • and consistent with Sponsor and University guidelines Budget Justification Template: https://dsp.research.uiowa.edu/budget-templates-0

29. NIH Modular Budgets • When can you use the NIH Modular budget format? • R01, R03, R15, R21, and R34 programs allow modular budgets (however, AHRQ does not accept modular budgets) • Project direct costs must be $250,000/year or less • How to budget? • Request DIRECT costs in $25,000 increments • Subaward/Consortium directcosts are included in these increments • Subaward/Consortium indirect costs are shown separately on the modular budget • INDIRECT costs are calculated based on the MTDC If the budget is less than $250,000 per year and using R&R, check the solicitation/FOA to make sure R&R may be used. For help with modular budgets, use this template: https://dsp.research.uiowa.edu/sites/dsp.research.uiowa.edu/files/Modular%20Budget%20Template%20edited%2012.17.18.xlsx

30. NIH Modular Budgets https://dsp.research.uiowa.edu/budget-templates-0 Modular Budget Template.xlsx

31. NIH Modular Budgets

32. NIH Modular Budgets

33. NIH Modular Budgets

34. Budget Justification • Modular Budget Justification • Personnel Justification is required for ALL modular budgets. This includes listing all personnel (names, person months, and roles). Salary information should not be included • An additional narrative should mention any MTDC exclusions • Subaward/consortium (if applicable) • The justification for modular budgets with subawards should include an estimate of total costs (direct and F&A), list of individuals and organizations, and the personnel justification for that institution.

35. Routing Form InitialYear ALL costs for ALL budget years

36. Cost Share

37. Summary 5 Steps for Creating a Budget 1. Review solicitation and guidelines from the Sponsor 2. Determine and compute the allowable direct costs 3. Calculate the allowable indirect costs 4. Develop and format the budget 5. Create a Budget Justification • More information regarding the MTDC basis and the University’s F&A Rate Agreement: • https://fa.fo.uiowa.edu/sites/fa.fo.uiowa.edu/files/wysiwyg_uploads/FA%20Rate%20-Fringe%20Agreement%2012-11-18.pdf • https://dsp.research.uiowa.edu/facilities-administrative-fa-costs#Bases

38. Resources • Fringe Rates • F&A Rate Decision Tool • F&A Rates • UIRIS (University of Iowa Research Information System) • SPRIE  (Sponsored Projects Research Information Electronically) • DSP Policies and Procedures • Cayuse • Research.gov • Fastlane • NSPIRES • Other e-Systems • Budget Templates • Budget Justification Template

39. Resources • Further questions? Start at the DSP website: http://dsp.research.uiowa.edu/ \ DSP Office Phone #: 319-335-2123 DSP email:dsp@uiowa.edu DSP Staff Contact List (specific agency questions) DSP Frequently Needed Information DSP Budget Preparation Information Grant Accounting Office Staff Contact List Grant Accounting Office Phone #:(319) 335-3801 DSP is located in: 2 Gilmore Hall 112 N. Capitol St. Main Office Hours: Monday through Friday 8:00 a.m. - 5:00 p.m. Gilmore Hall

40. Thank You