Budget Preparation

1. U N I V E R S I T Y O F N O T R E D A M E Budget Preparation Office of Research

2. Elementsofa Budget There are a number of elements that are important to building a budget. These include: Let’s explore each of these…

3. Allowable and Allocable Costs But first, a word or two on allowable and allocable costs… • All costs associated with sponsored research must fall into both of these categories: Allowable Those project costs that are eligible, reasonable, necessary, and allocable to the project. Allocable Costs that are assignable or chargeable to one or more cost objective in accordance with the relative benefits received or other equitable relationships defined or agreed upon by contractual parties. Costs Meaning: The cost has to be clearly related to the scope of the research project within the parameters agreed upon by the researcher and the sponsor.

4. Allowable and Allocable Costs The following are some examples: • Allowable • Advertising – Recruitment & Procurement • Conference & Convention Registration Fees • Contractual Services/Consultants • Equipment • Express Mail • Freight Related to Goods Purchased • Honoraria Payments to Study Subjects • Laboratory Supplies • Printing, Binding, Publication, Reproduction • Salaries/Benefits of Faculty • Salaries/Benefits of Graduate Assistants • Stipends • Telephone Toll Charges • Travel • Not Allowable • Administrative Costs • Alcoholic Beverages • Covering Overruns on Other Sponsored Projects • Donations and Gifts • Entertainment Costs • Fines & Penalties • First Class Travel • Fund Raising • Goods & Services for Personal Use • Lobbying • Memberships in Social & Civic Clubs • Office Supplies • Official Function – Receptions & Events • Postage • Pre-award Costs (unless approved by sponsor) • Subscriptions • Telephone Equipment, Pagers, Cell Phones

5. Direct Costs

6. Direct Costs General categories of direct costs include but are not limited to:

7. Direct Costs • Salaries and Wages • The money that is paid to personnel associated with the proposal. • Salaries and wages are related to effort. • Effort is defined as the portion of time spent on a particular activity expressed as a percentage of the individual's total activity for the institution, or as total months (calendar, academic, or summer) spent working on the project. • It’s also related to the appointment of faculty members contributing to the project—whether a faculty member has a 9- or a 12-month appointment impacts the way that salary is calculated. • Faculty on a 9-month appointment generally request summer salary in their grants (for June, July and August) • Examples • PI (Principal Investigator) • Co-PI • Post Doctoral Staff • Graduate Research Assts. • Undergrad Research Assts. • Exempt Staff • Non-exempt Staff • NOTE: Only individuals who are currently on Notre Dame’s payroll would be budgeted under the salaries/wages category. This category would not include extern- • al consultants and sub agreements.

8. Direct Costs • Fringe benefits comprise a normal and required direct cost category for most educational institutions. These costs need to be estimated for all employees proposed to work on a project. It comprises the employer-paid portion benefits and taxes for each employee. These costs are listed separately from the personnel salary on the proposal budget. • Notre Dame has specific percentages of salary it uses as fringe benefits rates, depending on the position of the individual. These rates are determined on a yearly basis by the University. • For the most current list of fringe benefit rates, please look at http://or.nd.edu/proposal-preparation/budget-preparation/fringe-benefits/. • Fringe Benefits • Examples • FICA/Social Security taxes • Unemployment insurance • Worker’s Compensation • Health, dental, life insurance • Retirement benefits

9. Direct Costs • Contractual services are the money that is paid to individuals who have been contracted to perform certain aspects of the research project • Generally defined as consultative work • Note: Consultants are required to provide their daily rate as part of the budget development process • Contractual Services • Examples • Any service directly related • to the project

10. Direct Costs • Equipment • Equipment is defined as an item of property that has an acquisition cost of $5,000 or more and an expected service life of more than one year. • It is important to note that the acquisition cost of equipment includes modifications, attachments, and accessories necessary to make the property usable for the purpose for which it was purchased. • Allowable items ordinarily will be limited to research equipment and apparatus not already available for the conduct of the work. • General-purpose equipment, such as a personal computer and office furnishings, are not eligible for support unless primarily or exclusively used in the actual conduct of scientific research. • Examples • Scientific and technical • Computer /software • (dedicated to the project) • Rental costs • Alterations/Renovations for • equipment • Maintenance contract • (dedicated-equipment) • Note: Requires justification explaining the expenditure’s direct application to the federal award. • Indirect Costs are generally not applied to Equipment costs.

11. Direct Costs • Supplies (and materials) are defined as tangible personal property, other than equipment, costing less than $5,000, or any other lower threshold consistent with the policy established by the proposing organization, used during the research project. • For some sponsors, cost estimates must be included for items that represent a substantial amount of the proposed line item cost. • Caution: Do not confuse supplies with equipment. While the wording seems similar, they play different roles in the research project and the budget. • Supplies • Examples • -Research data collection • Chemicals, pharmaceuticals • Glassware • Field supplies • Compressed gases and • liquids • Radioactive material • Software directly associated • with scope of work • Rare and precious metals & • non-precious metals • Animals • Books and reference • materials dedicated to • project • - Non-administrative supplies

12. Direct Costs • The estimated travel costs for a proposal budget. • For many agencies, travel costs must be separated into domestic travel and international travel. • Additionally, there may be certain guidelines on what travel costs are allowable, depending on the sponsor. Research administrators should always check the program guidelines or with a program officer if they have questions. • Travel • Examples • Airfare • Ground transportation • Fuel costs • Lodging

13. Direct Costs • Participant Support Costs • This budget category refers to costs for participants or trainees (but not employees) in connection with sponsoredconferences, meetings, symposia, trainingactivities and workshops. • For some educational projects conducted at local school districts, however, the participants being trained may be considered employees. In such cases, the costs must be classified as participant support if payment is made through a stipend or training allowance method. The school district must have an accounting mechanism in place (i.e., sub-account code) to differentiate between regular salary and stipend payments. • Examples • Stipends • Travel to/from training • Meals during training • Lodging during training • Space rental costs • Materials/supplies for • trainees • Note: Indirect Costs are generally not applied to Participant Support costs. Specific program guidelines should be referenced.

14. Direct Costs • The costs associated with disseminating research results from a particular project • The proposal budget may request funds for the costs of documenting, preparing, publishing or otherwise making available to others the findings and products of the work conducted under the grant. • Publication Costs • Examples • Documenting • Printing • Binding • Copying • Journal costs • Necessary illustrations • Data clean-up • Data storage • Indexing of data/databases • Software development, etc • Indexing of physical • specimens, collections, etc

15. Direct Costs • For some sponsors, the cost of computer services, including computer-based retrieval of scientific, technical and educational information, may be requested. Generally, this is acceptable only where it is institutional policy to charge such as direct costs. • General purpose (word processing, spreadsheets, communication) computer equipment should generally not be requested. • Special purpose or scientific use computers or associated hardware and software, however, may be requested as items of equipment or supplies (based on the actual cost of the item) when necessary to accomplish the project objectives and not otherwise reasonably available. • Computer Costs • Examples • Mainframe Computer Time • Research Core Services • Leasing equipment • Computer maintenance • and/or repairs • Note: Must be directly related to project only.

16. Direct Costs • Tuition • It is the current policy of Notre Dame to provide tuition waivers (through the Graduate School) for graduate student researchers funded on sponsored programs and may also be shown as cost sharing. • When using the value of a tuition waiver for cost sharing, care should be taken to use a tuition waiver value that accurately reflects the student’s expected course load. • When the sponsor specifically allows the budgeting of a program or institutional allowance that may be used to defray tuition costs (e.g., NSF IGERT) this cost should be included in the sponsor budget. • For more information visit the OR website: http://or.nd.edu/policies-and-procedures/procedures/cost-sharing-guidelines/ • Examples • Undergraduate Tuition • Graduate Tuition • Note: Be careful when using this as cost share because if the University fails to meet the guaranteed amount, severe financial repercussions may result and these must be resolved by the department and college. • Indirect costs are generally not applied to tuition costs.

17. Direct Costs • A subcontractor is a sub-recipient of proposal award funds. • To qualify as a subcontractor, the following must be met: • Subcontractor services are uniquely designed in response to each project and not provided commercially; • Subcontractor technical lead is usually a scientific collaborator, or even a co-Principal Investigator ("PI") on a project taking place at Notre Dame; • Subcontractor retains rights to intellectual property; • Subcontractor participates in development and execution of the statement of work; • Subcontractor's results are likely to be published in the scientific literature and/or subcontractor is likely to be co-author on a Notre Dame publication. • Sub-Contracts • Examples • Universities • Other institutions who • meet the subcontractor • guidelines

18. Direct Costs • Rental costs are those that are project-specific and rented off-campus from a 3rd party. • Rental costs include any direct-costed rent of non-University owned space and the cost of maintenance, if it is included in the rental agreement. • This category does not include other kinds of rental or lease costs such as hotel rooms, equipment or automobiles. These other kinds of costs are direct costs subject to overhead. • Rent is automatically included in the On-Campus Facilities and Administration Costs and will be paid out of the Facilities and Administration (i.e., Indirect) Costs recovered. • Rental Costs • Examples • Space • Equipment • Vehicles

19. Direct Costs • Any other cost directly associated with the project not attributable to the previous categories • Examples • - Consultant fees • Printing • Reprints and page charges • Photography • Photocopy charges • Repairs/maintenance (related to scientific-technical • equipment) • Animal care • Lab testing services • Computing network charges of dedicated computing • equipment • Recruitment of approved personnel • Promotion of conference, workshop, seminar • Long Distance Telephone (including fax) toll charges • Lab, scientific, and field non-capital equipment • Lease/rental of vehicles and other equipment • Lease/rental of off-campus facilities • Subcontract costs • Subject pay for survey, project participation • Consortia fees • Postage / Printing / Copying • (if the volume is ‘beyond routine’ it is an unlikely • circumstance) • Freight/express deliveries when needed to transport project • material in a timely manner • Justification/certification form required to be maintained with • the invoice in the award file • Telephone: • Long distance (Project specific) • Cellular (project specific, rare circumstances) • Consultants • Service Center Charges • Other Direct Costs

20. Direct Costs • Each of these individual costs together equal the Total Direct Costs of the proposal budget. Direct Costs Total Direct Costs

21. Indirect Costs

22. Indirect Costs • General categories of indirect costs include:

23. Indirect Costs • Indirect costs cover a variety of different facilities and administrative costs (F&A) including the following examples: • Administrative and clerical salaries, wages, • fringe benefits • General purpose/admin. equipment • Copier, printer • Office furniture • Computer • Software (e.g., Microsoft Office) • Maintenance contracts (admin. equipment) • Maintenance and/or repairs • Parts and supplies for admin. equipment • Office Supplies • General computer costs • Lab supplies (administrative) • Custodial supplies • Forms • Books and reference materials • Dues/memberships • Recruiting costs • Public relations • Legal and financial services • Insurance • Printing/photocopy charges • Freight • Postage (including express couriers) • Computing network charges • Heating • Lighting • Other utilities • Telephone—basic service, installation, repair, and line • charges (including ATS, WATS, fax, pagers, Internet and • cell phones) • General purpose non-capital equipment

24. Indirect Costs • Indirect costs are not figured individually like direct costs, but are figured as a percentage of total direct costs. Indirect Costs

25. Indirect Costs • Equipment • Participant Support Costs • Tuition But first: • In order to determine the Indirect costs, the Modified Total Direct Costs need to be figured, as follows: Direct Costs - - - Modified Total Direct Costs =

26. Indirect Costs • The Indirect Costs are then figured as follows: F&A Rate x = Modified Total Direct Costs Indirect Costs

27. Indirect Costs • This rate is a percentage that has been negotiated between Notre Dame and the Department of Health and Human Services—Notre Dame’s cognizant agency • Check http://or.nd.edu/award-management/award-management/to see Notre Dame’s most recently negotiated rate. F&A Rate Cognizant Agency: To simplify relations between Federal grantees and awarding agencies, the US Office of Management and Budget (OMB) established the cognizant agency concept, under which a single agency represents all others in dealing with grantees in common areas. In this case, the cognizant agency reviews and approves grantees’ indirect cost rates. Approved rates must be accepted by other agencies, unless specific program regulations restrict the recovery of indirect costs. The cognizant agency for non-profit organizations is determined by calculating which Federal agency provides the most grant funding.

28. Indirect Costs

29. Indirect Costs • In some very specific instances, the F&A rate will be different than the negotiated federal rate. • Reference the program guidelines or consult with a program officer to identify these unique situations. • Waiving of Indirect Costs happens very rarely and under very strict circumstances. • Research administrators should speak with Director of Pre-Award regarding the waiving of Indirect Costs.

30. Cost Sharing

31. Cost Sharing • Some Important Comments about Cost Sharing:

32. Cost Sharing Cost sharing can be identified within one of two categories:

33. Cost Sharing • Mandatory • Cost Share • Voluntary • Cost Share • All mandatory and voluntary cost sharing is identified in the budget. Cost Sharing

34. Cost Sharing • The Office of the Vice President for Research has established some important policies that act as guidelines to help the research community at Notre Dame determine how to properly allocate and manage cost sharing. • These guidelines can be found at: http://or.nd.edu/policies-and-procedures/procedures/cost-sharing-guidelines/

35. NIH Modular Budgets • Modular budgets are applicable to certain research grant applications to NIH requesting $250,000 or less per year for direct costs. • Modular budgets are simplified; therefore, detailed categorical information is not to be submitted with the application. • For all modular budgets, request total direct costs (in modules of $25,000), reflecting appropriate support for the project. There will be no future year escalations. A typical modular grant application will request the same number of modules in each year. Provide an additional narrative budget justification for any variation in the number of modules requested.

36. NSF Budgets The budget data should then be added for the budget period in the corresponding budget areas… Note: The internal budget should contain all of the budget areas found in an NSF budget. Be sure to use the internal budget as a guide when entering data into FastLane. This will help to ensure accuracy. John Doe

37. NSF Budgets

38. NSF Budgets

39. NSF Budgets

40. NSF Budgets To properly calculate the indirect costs, the F&A rate and the Modified Total Direct Costs (MTDC) must both be entered in the Indirect Costs section. MODIFIED TOTAL DIRECT COSTS (MTDC)

41. NSF Budgets To calculate the total Direct and Indirect Costs, click here…

42. NSF Budgets When all budget data has been entered, the Calculate & Save button must be clicked in order to save all data. Once it has been saved, click the Go Back button and follow the same process for subsequent budget years.

43. Managing resources