Detailed Budget Development and Templates

1. Detailed Budget Development and Templates Presented by: Office of Sponsored Programs March 12, 2009

2. Objectives • Overview of the Policies governing budgets • Approach to compiling a budget • Major Categories of a budget (i.e. distinguishing between direct and indirect) • Calculating a budget – navigating the 398 & 424 budget templates • Proper budget justification • Required Documentation

3. Budget principles are governed by: • The Office of Management and Budget (OMB) oversees the preparation of the federal budget and supervises its administration in Executive Branch agencies • OMB A-21 contains the principles for determining the costs applicable to research, training and other sponsored work performed by colleges and universities under grants and other agreements with the federal government • http://www.whitehouse.gov/OMB/circulars/index.html

4. Budget principles are governed by: (cont’d) Sponsor Grants Policy Statement- e.g. NIH • The National Institutes of Health (NIH) operates under the general policy guidance of the Department of Health and Human Services (DHHS) • DHHS develops, issues and maintains regulations that govern its grant process, including regulations that implement the OMB Circulars and are codified in the Code of Federal Regulations • The NIH Grants Policy Statement provides extensive guidance about how NIH is organized, the terms and conditions of NIH awards, and the mission and functions of its Institutes and Centers http://grants.nih.gov/grants/policy/nihgps_2003.

5. Budget principles are governed by: (cont’d) Proposal and Award Terms • By signing the grant application, the Authorized Organizational Official and the Principal Investigator certify that the applicant organization intends to comply with applicable policies, assurances and/or certifications referenced in the application instructions • The Notice of Award (NOA) is the legally binding document that notifies the grantee than an award has been made • The NOA contains or refers to all terms and conditions of the award and documents the obligation of federal funds

6. The Philosophy: • Budget / costs must be: • Allowable • Allocable • Reasonable • Consistent treatment • Expression of the project in number terms • Payment for work you will be providing

7. The Approach: • Identify the expertise that will be needed to carry-out the project • Identify equipment, supplies, travel, & etc. • Develop a timeline • Contingency plan

8. Sample Timeline

9. Direct Costs • Definition: Direct costs are those costs that can be identified specifically with a particular sponsored project and that can be directly assigned to such activities relatively easily with a high degree of accuracy (OMB A-21, Section D.1) • Where an institution treats a particular type of cost as a direct cost of sponsored projects, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution • Non-federal projects have been determined to be “unlike circumstances”

10. Indirect Costs (F&A) • Definition: Facilities and Administration (F&A) costs are those costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project (OMB A-21, Section E.1) • It is that portion of the UTMB infrastructure that supports research, such as: general and departmental sponsored project administration; equipment depreciation; operations and maintenance (e.g., electricity, water, etc.); and the library

11. Major Projects • Major Project is the term applied to those sponsored projects that, because of the nature of their work, may be allowed to direct charge some costs that are normally charged only through F&A (OMB A-21, Exhibit C) • R01 basic research awards generally do not represent Major Projects • If a sponsor agency approves administrative/clerical costs as direct charges in a budget, it does not necessarily make them appropriate charges • The federal government expects UTMB to follow its approved costing policies

12. Direct Cost Categories • Personnel • Consultants • Equipment • Supplies • Travel • Patient Care Costs • Other Expenses • Consortium / contractual

13. Pertinent Direct Cost Information • Salary Cap • Applies only to NIH • Current cap is $196,700 • Equipment • Items in which the cost exceeds $5,000 per item or for the total unit

14. Office supplies Printer / toner cartridges General purpose equipment (network servers, copy machines) Computers, printers Postage Local telephone charges, telephone equipment Fax machines Cell phones, pagers Individual memberships, professional dues, license fees Food/alcohol Uniforms, lab coats Laundry services Items that normally are not allowed

15. Items that normally are not allowed • The exceptional case in which these kinds of items could be charged to a federal project as direct costs requires the following conditions to be met: • The project’s need for the item is extensive in nature • The item is not one generally provided by the department • Adequate written justification is provided in the budget • The items are specifically identifiable to the project • The items can be shown to directly benefit the project • Supporting documentation must be sufficiently detailed

16. Calculating the F&A • UTMB has a negotiated indirect cost agreement • On-campus rate of 51% • Off-campus rate of 24% • Modified Total Direct Cost (MTDC) is the total direct cost minus any equipment, patient care costs, alterations/renovations, tuition, & subcontracts over the first $25,000

17. Case Study • Case Study #1 • Converting a Modular Budget to a Detailed Budget • Case Study #2 • Detailed Budget for the NIH Challenge Grants

18. The budget justification • Personnel – should identify the role of the individual, why they were chosen, their responsibilities for the grant and what effort they will contribute “Sue Smith, PhD, Co-Investigator (1.2 cal months). As a trained dietician, Dr. Smith will be responsible for developing the nutrition plans of the enrolled subjects. In addition, she will monitor the caloric intake of the enrolled subjects and in consultation with the PI, make adjustments as necessary.”

19. The budget justification (cont’d) • Consultants – list who is serving as consultant and how they will contribute to the project. Also list the agreed upon payment. The letter of support from the consultant should contain the same information • Equipment – list each piece of equipment and why it is needed for the project (i.e. a -80 freezer for storing lab samples)

20. The budget justification (cont’d) • Supplies – list each supply, the quantity and the purpose (e.g. pregnancy test kits 40 @ $25 per for years 1 and 2) • Travel – list the number who will be traveling, the destination and the purpose of the trip (e.g. travel for the PI and Co-I to attend the national meeting to present results) • Patient Care Costs – itemize the procedures to be performed, the cost per procedure and the number of times the procedure will be performed. (a CBC at screening, visit 1, 3, 5 and 7 for 40 patients times $15 per test)

21. The budget justification (cont’d) • Other expenses – Also detail the items, the cost per item and the number needed. Anything that is not normally allowable will have to have an expanded justification (pagers, computers, office supplies, etc.) • Consortium / Contractual – list each entity in which a subcontract will be issued and the role of the subcontractor. For non-modular grants you will need to include a detailed and entire project period budget for each subcontractor.

22. Additional documents • Routing form • Non-Exclusive Public Access License for NIH • Patient Care Rate Agreement • Approval to submit if over $500,000 • Subcontracts • Intent to establish a consortium / face page • Scope of work • Detailed budget and justification