Developing the Budget With Dollars and Sense

Sponsored Programs at NYU: Developing the Budget With Dollars and Sense Betty Farbman, Associate Director, Office of Sponsored Programs Nancy Daneau, Associate Director of Research Administration Training & Institutional Liaison

What we’ll cover…. • Resources and budget categories • What can (or can’t) be charged to a sponsored project? • Making the calculations • How to treat and incorporate a budget from collaborator(s) • F&A: what is it and why do we care? • Cost sharing • Justifying the cost estimate • Tools and references

Common Budget Categories • Direct Costs • Salaries and Wages • Fringe Benefits • Equipment • Materials and Supplies • Travel • Consultant Services • Participant Support Costs • Patient Care Costs • Subcontracts • Other Direct Costs • Tuition remission • Stipends • Rent • Human Subject Payments • Facilities and Administrative (F&A)/Indirect Costs

Salaries and Wages • Principal Investigator (PI) and Senior/Key Personnel • Technicians (programmers, scientists) • Post docs • Graduate Research Assistants • Undergraduate Students • Administrative support (direct charge only when allowable and justifiable)

Salaries and Wages (cont’d)… • To charge salary, individuals must be NYU employees • External collaborators are not employees; correctly identify as consultants or subawards • PI must commit effort to conduct research or oversee project activities • $’s requested for faculty and other key personnel must be in proportion to the effort devoted to the project • For key personnel, entering $0 dollars and no effort is unacceptable • Total dollars, equivalent to 100% effort may not exceed annualized salary • Define effort in person months • To convert percent of effort to person months: • Utilize person-months/percent effort calculator found at: grants.nih.gov/grants/policy/person_months_conversion_chart.xls • On internal budgets, note both person months and percent effort

Salaries and Wages (cont’d)… • Check for agency limitations • Ex: For NSF, no academic year salary may be charged • Summer salary across all NSF-funded grants may not exceed two-ninths of academic year salary (2 summer months) • NIH imposes a cap on salaries charged to awards; refer to http://grants.nih.gov/grants/policy/salcap_summary.htmfor current rates

Salaries and Wages (cont’d)… • To calculate amount of salary to be requested: multiply person months x monthly base salary • 9 month appointments • Divide 9 month base salary by 9, then multiply by the # of person months devoted to project • 11 month appointments • Divide 11 month salary by 11, then multiply by the # of person months devoted to project • 12 month appointments • Divide 12 month salary by 12, then multiply by the # of person months devoted to project • Salaries that span fiscal years should be “weighted” to incorporate increases

Calculating salary across fiscal years • Project period 1/1/2008-12/31/2008 • Base Salary in FY’08 = $50,000 • Base Salary in FY’09 = $51,500 (3.5% increase) • (12 month employee) • Salary calculation • Jan – Aug = $33,336 • Calculation - 8 mos @ $4,167/mo • Sept – Dec = $17,168 • Calculation – 4 mos @ $4,292 • Budget for project period = $50,504

Salaries and Wages (cont’d)… • To calculate salary on NIH proposals subject to the cap • Salary for 9 month appt = $160,000 • Annualize to 12 months • $160,000 / 9 = $17,777/month x 12 = $213,333 • With salary for FY 07 capped at $186,600, monthly rate is capped at $15,550 ($186,600 / 12) • Salary request for 2 person months in summer totals $31,100 ($15,550 x 2)

Salaries and Wages (cont’d)… • Post-docs • Years of experience in field typically drives rates for post-docs • Check with Administrator or HR personnel for salary rates specific to your school/dept • For NIH NRSA institutional training grants and individual fellowship applications • NIH sets rates, based on years of experience, for post-docs http://grants2.nih.gov/grants/guide/notice-files/NOT-OD-07-052.html

Salaries and Wages (cont’d)… • Graduate Research Assistants • Check with Administrator or HR personnel for salary rates specific to your school/dept • NIH maximum: zero level postdoctoral stipend • In addition to salary, GRA’s entitled to tuition remission • Goes in “Other Direct Costs” budget category • Rates • FAS & CIMS: 37% of salary • All Other Units: 51% of salary

Salaries and Wages (cont’d)… • Undergraduate Students • Check with departmental administrator or HR personnel • Hourly rate must be at or above minimum wage • Number of hours per week limited to 15-20 for enrolled students • May work full-time (35 hours) during breaks and summer • Not entitled to fringe benefits

Salaries and Wages (cont’d)… • Administrative Support • Salaries of admin and clerical staff • Generally part of the administrative portion of the F&A/indirect cost pool and therefore not direct-charged • Exceptions: • Major projects or center grants (defined in Exhibit C of OMB Circular A-21, Cost Principles for Educational Institutions) http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html#exc • Projects requiring extensive data collection and analyses • Conference grants requiring administrative support for making extensive travel arrangements

Fringe Benefits • Includes social security (FICA), retirement, unemployment, worker’s compensation, health/life/disability insurance • Fringe benefit rate applied to salary dollars requested for full-time, eligible NYU personnel in proposed budget • Portion of fringe benefits estimated in proposal budget tied to person-months committed • NYU’s federally negotiated fringe benefit rates • 9/1/2007 to 8/31/2008: 27% • 9/1/2008 to 8/31/2009: 27.5% • Increases by .5 points per year thereafter • Fringe should be weighted across fiscal years • Ex: PI salary request = $25,000 • Fringe Benefits request = $6,750 • $25,000 x 27% = $6,750

Equipment • Defined at NYU as: • Acquisition cost of $3,000 or more per unit with at least one year useful life • Include fabricated items (even if individual components cost under $3K) • Defined as sum of individual parts to procure and build workable equipment item • On proposals to *federal sponsors*, do not request funds for desktop computers, laptops unless justifiable due to nature of project • Deemed to be part of F&A/departmental research support • Exclude from F&A/indirect cost assessment

Materials and Supplies • Laboratory supplies • Animals • http://www.nyu.edu/uawc/doc/animalperdiemrate.pdf • Software • Training/curricula/workbook materials • Publication/reprint costs • On proposals to *federal sponsors*, do not request funds for general office supplies, local telephone charges, postage, etc. unless justifiable due to nature of project • Deemed to be part of F&A/departmental research support

Travel • Airfare, lodging, car rental, mileage if using personal automobile, per diem for meals • Foreign travel: Fly America Act—use of U.S. air carriers required except in exceptional circumstances • Refer to Fly America Act: http://acquisition.gov/far/current/html/Subpart%2047_4.html • Provide detailed estimate • Number of trips, number of days per trip • Number of individuals traveling • Destination and purpose • NYU reimbursement rates • Maximum Per Diem for Meals (unsubstantiated): $50 per day • Maximum Expenses for Lodging & Meals (substantiated): $350 per day • Business Mileage Rate: 48.5 cents per mile • Refer to guidance on travel reimbursements: http://www.nyu.edu/cdv/site20/policies/busexp.html#travperm

Consultant Services • External collaborators • Provide expertise, service and support, and/or skills not found within NYU’s permanent staff • Do NOT utilize NYU resources, space, facilities, etc. to conduct work • No employer/employee relationship exists • Identify name, affiliation, hourly or daily rate • No maximum, but must be reasonable, based on market value • Estimate number of hours or days necessary • Budget for travel costs if applicable, i.e. airfare, mileage, lodging, per diem for meals, etc. • Use NYU reimbursement rates

Participant Support Costs (specific to NSF) • Transportation, per diem, stipends and other costs of trainees for: • Conferences • Meetings • Symposia • Workshops • Trainees may NOT be employees • Exception for NSF proposal budgets • Local school districts where teachers are trainees • In this case, stipends may be categorized as participant support as long as school district has accounting mechanism in place to track and report stipends separate from salary • Exclude from F&A/indirect cost assessment

Patient Care Costs • If inpatient and outpatient costs are requested, separate and provide detail for both • Include • Number of participants • Estimated cost per day/per patient • Expected number of visits/tests/trials • Estimated cost per visit/test/treatment

Subawards and Subcontracts with Collaborators • Transfer of a substantive portion of the programmatic effort to another organization/institution • Statement of Work drives the budget • Determine $ amount required by subrecipient to conduct assigned portion of the work • Include direct and indirect costs at subrecipient organization’s rates • Collaborating institution’s total budget estimate (direct and indirect costs) is shown as a direct cost on NYU’s proposed budget • Assess NYU’s F&A/indirect rate on only the first $25K of each subaward; remainder is excluded from indirect cost assessment

Other Direct Costs • Tuition Remission • FAS & CIMS • 9/1/97 to (until further notice): 37% of salary • All Other Units • 9/1/90 to (until further notice): 51% of salary • Stipends • NOT allowed on research grants • Permitted on training grants and/or fellowships • Different from salaries in that fellows are not NYU employees; they are NYU trainees • A set rate, no fringe benefits charged, no taxes withheld (yet income reported via 1099) • Used for living allowance

Other Direct Costs (cont’d)… • Rental expense (only if off-site facility is to serve as project site) • Specify rate per square foot and size of space needed • Specify lease amount per month, annualize • Human Subject Payments • Funds given to subjects for following protocol • Set amount for each visit • Can be lump sum based on completed participation

Facilities and Administrative (F&A) Costs • Costs that can’t readily be identified with one specific project • Called F&A, Indirect, Overhead • Cover a portion of institution’s operating costs including, but not limited to: • maintenance and management of research laboratories, libraries, and other facilities • departmental administration and support • central administrative support including payroll, OSP, SPA, University Animal Welfare Committee (UAWC), and University Committee for Activities Involving Human Subjects (UCAIHS)

Facilities and Administrative (F&A) Costs (cont’d)… • Indirect cost rates are negotiated with NYU’s cognizant agency DHHS and based on costs for research operations incurred during the previous FY • Rate applied to a modified total direct cost (MTDC) base • MTDC = Total direct costs less: • Capital equipment • Tuition remission • Subawards beyond the first $25,000 • Participant Support Costs • Apply stated rate to all proposal budgets unless F&A/indirect cost limited to a set amount or percentage in sponsor guidelines (sponsor policy must be in writing)

Facilities and Administrative (F&A) Costs (cont’d)… • On Campus • 9/2005 - 8/2007 53.0% MTDC • 9/2007 - 8/2008 53.5% MTDC • 9/2008 - 8/2009 54.0% MTDC • Off Campus • 9/2005 - 8/2007: 26% MTDC • 9/2007 - 8/2008 26% MTDC • 9/2008 - 8/2009 26% MTDC Per federally negotiated rate agreement with NYU’s cognizant agency DHHS, dated July 2, 2007 Off-site rate used only when a preponderance of work is taking place off-site and no NYU space or resources being utilized Refer to OSP website to obtain current rates http://www.nyu.edu/osp/policies/basicinfo.php

Two Cents About Cost Sharing • Costs of conducting a project borne by NYU and not charged to the sponsor • Most often in form of time and effort (salaries, fringe benefits, unrecovered indirect costs only when approved by sponsor) • NYU policy • Cost sharing allowed only when mandated by sponsor in written guidelines • Quantified • Specified as percentage or person months in proposal • = Voluntary committed cost sharing • Must be tracked in separate cost sharing account, reported to sponsor and included in organized research base for F&A calculation • Unquantified • Referenced in proposal or justification but not quantified • =Voluntary uncommitted cost sharing

Two Cents About Cost Sharing (cont’d)… • Voluntary committed cost sharing • Requires approval by Chair, Dean • Has negative impact on NYU’s F&A rate • Costs included in the organized research base portion of F&A • Results in lower F&A rate recoverable • Voluntary uncommitted cost sharing • Does not need to be quantified, tracked, or reported upon • No impact to the F&A base

Outside Support • Third Party Contributions • Cash • Document commitment of financial resources by letter of support stipulating amount and any restrictions • In-kind • Value of non-cash contributions • Ex: value of volunteer services

Budget Justification • Narrative to accompany the cost estimate • Breaks down each category of cost • Provides detailed explanation of how costs derived • Quantify total costs of each line item and document cost calculation • Specify line items for each year and time frame during which you expect they’ll be expended • Elaborate on line items—use narrative form to justify necessity; how costs will be used for successful project implementation

Hints and Tips • Costs must be allowable, allocable, and reasonable • A-21, Cost Principles for Educational Institutions http://www.whitehouse.gov/omb/circulars/a021/a21_2004.html#j • NYU and sponsor policies • Read the guidelines as they relate to budget development • Comply with sponsor-imposed limits based on funds available • Specify the budget period start and end dates • Budgeting in the out-years • Personnel (Salaries and Wages): Increase 3.5% each year • Other than Personnel Services (OTPS): Increase 4% each year • Tuition: Increase 5% each year

Hints and Tips (cont’d)… • Rules for federal sponsors differ from rules of foundations, corporations, others • Provides flexibility; it may be possible to direct charge items not normally allowable under a federal award • Agency specific instructions take precedence • Put cost estimates into agency specific language or budget format and forms as necessary • Justification of costs should follow the order listed on budget sheet • Make it easy for reviewers to understand how cost estimate derived by walking through details

Reference for Unallowable Costs • Per A-21, following are unallowable: • Alcoholic beverages • Alumni activities • Bad debts • Commencement or convocation costs • Charitable contributions, donations, remembrances • Development/fundraising costs

Unallowable Costs (cont’d)… • Entertainment costs: tickets to shows or sporting events, meals, lodging, rentals, transportation, and gratuities associated with entertainment • Fines and penalties • Goods or services for personal use of employees (including gifts) • Housing and personal living expenses of University officers • Investment management costs • Lobbying

Unallowable Costs (cont’d)… • Cost overruns on other sponsored agreements • Pre-award costs (unless approved by the sponsoring agency or permitted under expanded authorities) • Selling and marketing costs of any products or services of the institution • Student activity costs incurred for intramural activities, student publications, student clubs • Travel: First class tickets (unless extenuating circumstances)

Questions? Contact your Projects Officer in OSP or Betty Farbman – betty.farbman@nyu.edu Nancy Daneau – nancy.daneau@nyu.edu

Permission granted for use By Betty Farbman

Developing the Budget With Dollars and Sense