Submitting Budgets for Federal Grants and Research Projects

1. Submitting Budgets for Federal Grants and Research Projects Office of Sponsored Programs www.osp.vt.edu Lisa Cotting, Pre Award Administrator Travis Hundley, Pre Award Administrator Lauren Magruder, Associate Director of Pre Award

2. Objectives • Overview of policy and regulatory frameworks for developing a budget. • Overview of the project budget from proposal to award. • Provide an Excel spreadsheet budget example. • Highlight salary & fringe escalation rates, direct & indirect costs, and cost sharing.

3. Agenda • Successful Budgeting Steps • Regulatory Framework • Budget Life Cycle • Direct versus Indirect Costs • Cost Sharing • OSP Forms • Sample Budget

4. Why get OSP approval • Ensure that auditable pricing data is submitted to sponsors • Request the appropriate amount • Prevent under funding or over funding issues. • OSP has to approve budgets for sponsored research account to be established. • Budget variables change frequently. • Ensure regulatory compliance

5. General Regulatory Framework • Federal OMB Circulars • Sponsor’s implementation guidelines • VT institutional policies and procedures • Sponsor’s award-specific requirements

6. Successful Budget Steps • Read the formal proposal solicitation • Contact your pre-award administrator • Justify all costs • Allow ample time for developing the budget and processing OSP forms

7. Provide Pre-Award With • Solicitation and guidelines • Budget information • Due date if not specified • Period of performance • Budget information See Handout 1

8. Group Participation Exercise • Turn to your neighbor and describe a an experience that you had with a challenging budget for a sponsor. • How did you resolve the challenge? • How did OSP help you? Be prepared to share your experience with the class.

9. Budget Life Cycle • Pre-award contacted by PI with solicitation and budgetary needs • Pre-award & PI reviews solicitation for any special requirements • PI prepares draft budget according to RFP restrictions • Pre-award reviews prepared budget and advises PI if changes are needed

10. Budget Life Cycle (cont.) • PI completes the internal OSP forms and obtains signatures • OSP should receive forms and final copy of proposal at least 48 hours before deadline • OSP makes copies and sends proposal to sponsor or submits electronically

11. Direct Vs. Indirect Costs • Direct: Costs that can be specifically identified with a particular project or program. • Indirect: Real costs that are incurred… for common or joint objectives and which therefore cannot be identified with a particular project or program.

12. Direct Costs • Principles • Reasonable and necessary • Allocable and verifiable • Allowable under regulations • Examples • PI salary and fringes • GRA stipend and tuition • Equipment or materials/supplies.

13. Indirect Costs (AKA Facility & Administrative or Overhead) Examples • Department Head salary • Administrative salaries • Lab utilities • Shared services such as library, computing, etc. • Office supplies

14. Indirect Costs Rates Research On Campus = 56% Off Campus = 26% Adjacent = 27.5% Public Service On Campus = 38% Off Campus = 22.7% Instruction On Campus = 57% Off Campus = 26% Note: Only one overhead rate can be charged. For more info visit: http://www.osp.vt.edu/rates.html

15. Indirect Costs (cont.) Ways to calculate indirect • Modified Total Direct Costs (MTDC) • Most often used for budgets • Total Direct Costs (TDC) • Used when specified by sponsor, or when the indirect rate is limited

16. Indirect Cost Calculations Modified Total Direct Costs (MTDC) Direct Cost – equipment – tuition –subcontract > $25,000 = MTDC MTDC x Indirect Rate = Indirect Costs

17. Indirect Cost Calculations (cont.) Total Direct Costs (TDC) All costs incurred and allowed by the sponsor. TDC x Indirect rate = Indirect Costs

18. Major Categories of Costs

19. Major Categories of Costs • Personnel (salaries, wages, & fringe benefits) • % of effort (budget vs. justification) • Typically largest cost • Based off actual payroll records from Banner • GRA Costs • Stipend • Approved Step Level • http://www.grads.vt.edu/financial/assistantships/index.html#types • Tuition • Must match effort on project • http://www.bursar.vt.edu/

20. Standard Salary Escalation Rates* * Salary escalations are only estimates and do not guarantee a salary increase.

21. Fringe Benefit Rates 7/1/06-6/30/07 • Regular Faculty 33.25% • Special Research Faculty 35.50% • Classified 44% • Wages, Part Time, SUMR Faculty 8% • Graduate Research Assistant (GRA) 8.50% • Part-Time Faculty 16.25% • Rates will change again for fiscal year 2008 • http://www.osp.vt.edu/rates.html#Fringes

22. Major Categories of Costs • Equipment • $2,000 or greater and useful life of >1 year • Cost estimates based on state contract or vendor quote • Materials/Supplies • Items needed to conduct the research. Lab supplies, field supplies, etc. • Office supplies & administrative items are not included, they are covered by indirect cost. • Contractual Services • Obtaining a routine service for a fee • Service centers • Consultant costs • Independent contractor • Letter of agreement

23. Major Categories of Costs (cont.) • Subcontracts • Contributes to deliverable / vital to project • Requirements-SOW (Statement Of Work), detailed budget, & letter of commitment • Approval required if contractual services exceed 50% of budget. (includes subcontracts, consultants, etc.)

24. Major Categories of Costs (cont.) • Travel – International travel requires admin. approval • Indirect Costs • Documentation required from sponsor if rate varies from negotiated rate (Solicitation or company policy required) • Waiver requires approval by authorized executives

25. Cost-Sharing • Financial support contributed by University to the Sponsored Project-this is a real cost that must be reported to the sponsor • Form A should always be completed if the proposal involves cost sharing/matching • OSP depends on the accuracy of the information on the Form A in determining the source of funds for cost sharing • Must be in OSP budget • OSP approval required for all cost share not directly required by sponsor.

26. Budget Narrative • Justify each item (or group of items) in each category • Provide justification for initial year budget and escalation/exceptions for additional budget years (including fringe) • Good idea to establish a budget narrative template • http://www.osp.vt.edu/forms/budgetjustificationexample.doc See Handout 2, Budget Justification

27. Types of Contract • Fixed Price • If cost overages then non-sufficient funds policy takes effect • If cost under then remaining fund are transferred to residual account • Cost Reimbursable • If cost overages then non-sufficient funds policy takes effect, sponsor may increase funding (approval required from sponsor) • If cost under budget the remaining funds are returned to sponsor

28. Proposal Submission • Internal Forms – www.osp.vt.edu/formsandpolicies.html See Handout 1

29. Budget Preparation • Budget Example(Handout 3) • Budget Exercise(Handout 4A & 4B)

30. Automated Budget Template • An automated budget development website for faculty use • In Beta testing now. (Contact Greg Reaves, greaves@vt.edu to participate) • All faculty will have access; Administrative staff can obtain access at department’s request • http://sppdedev.stl.vt.edu/sppde/index.html

31. References Office of Management and Budget (OMB) Circular A-110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-profit Organizations Office of Management and Budget (OMB) Circular A-21, Cost Principles for Educational Institutions University Policy 3245: Cost Sharing on Sponsored Projects University Policy 3240: Consistency in Charging Administrative and Clerical Costs

32. Travis Hundley thundley@vt.edu 231-9168 Lauren Magruder lmagrude@vt.edu 231-8054 Lisa Cotting lcotting@vt.edu 231-9373 Contact Us