Children’s Memorial Hospital Office of Sponsored Programs (OSP)

Budgeting Basics Children’s Memorial Hospital Office of Sponsored Programs (OSP)

Presenters • Colleen Grogan773-755-6335cgrogan@childrensmemorial.org • Tara Massimino 773-755-6566tamssimino@childrensmemorial.org

First of all what is a “Sponsored Project” Sponsored programs are defined as those activities, sponsored whole or in part, by sources external to Children’s Memorial Hospital (CMH), for which there is an expectation (implied or specifically stated) on the part of the sponsor for performance, deliverable or outcome.

At the Pre-Award stage (before the proposal is funded) To successfully obtain a grant award the proposed research plan must clearly describe the research design, procedures or analyses to be used to accomplish the specific aims of the project.

At the Pre-Award stage (before the proposal is funded) The budget must reflect the project plan as precisely as possible and directly support the overall research plan design. If it does not, you risk opening the door to questions and potential negative opinions of the reviewers.

At the Pre-Award stage (before the proposal is funded) When a budget is carefully prepared it confirms that you have planned and taken into account the fiscal aspects of the project, therefore strengthening the overall proposal.

The Budget… “But you know what really blew me away? The budget. I looked at it, and looked at it, and I still couldn’t understand it. But it seemed incredibly well-considered. So, when I got a headache, I just decided to accept that some very good people had spent a lot of time working on this, and they must have gotten it right” -Anonymous Reviewer

At the Post – Award stage (once funded) This same budget created for the proposal will communicate the plan of expenses to: • The Office of Sponsored Programs (OSP) • Administration • Fund Accounting • The Sponsor

The importance of budgeting accurately: • Fund accounting will use the budget and translate this information into a fund account with a corresponding fund number. • They will communicate the applicable cost categories to the purchasing department therefore allowing purchases to be made under the various categories. • They will also use the budget as a basis for setting up a payment structure with the sponsor.

What if there needs to be a change in the budget? • Most sponsors do allow changes to the budgets or “re-budgeting” upon receipt of an award however some may require “prior approval” first. • Bottom line, check with your OSP as to what is required.

Most budgets are based on the concept of “Cost Reimbursement” • Most budgets are based on the concept of “Cost Reimbursement” • Your institution is actually covering the project costs up front, then getting reimburse by the sponsor. Therefore the budget and expenses incurred must be accurate and follow the federal cost principals in order for the hospital to be reimbursed. • All costs must be: Allowable, Allocable, and Reasonable.

Cost Principles • OMB Circular A-21 - Educational Institutions • OMB Circular A-122 – Non-Profits • OMB Circular A-87 – State/Local Governments • 45 CFR Part 74, Appendix E - Hospitals • 48 CFR Subpart 31.2 (FAR) – For-profits • Foreign institutions comply with the applicable cost principles depending on the type of organization • http://www.whitehouse.gov/omb/circulars/ • http://www.gpoaccess.gov/cfr/index.html

Encourage Investigators to work with you! Give investigators the tools and resources to assist with the building process. At CMH: • OSP “Fast Facts” website for commonly used budget information • Provide excel spreadsheets and current forms. • Constantly update website and resources available.

Did I read and follow the sponsor guidelines? Following the sponsor guidelines is a must! Today our Example will be geared towards a proposed budget for the National Institutes of Health (NIH), however it’s important to note that some sponsors do not allow such line items as: • Principal Investigator Salary • Travel • Equipment • Publications • Etc. Again, always follow the most recently published sponsored guidelines!

Always provide a budget Why create a detailed budget, the sponsor isn’t asking for one? • OSP will always require a detailed budget at the proposal stage as they are accountable for accurate and allowable charges to the sponsor and upon audit.

Make sure to budget for unanticipated increases! We know it’s impossible to predict the future and what products may cost when purchased at a later date. There’s good news… • The federal government and most sponsors allow for a standard yearly cost of living increase of 3%. • So take advantage of this and apply this increase across the board on all budget categories, including personnel.

The Budget Justification • Most sponsors will require a written budget justification to go along with the itemized budget. • The level of detail required for the budget justification varies among sponsors.

Modular Budget Justification NIH Proposals requested $250,000 or less per year • Modular budgets are requested in increments of $25,000 per module. • The narrative justification is provided only for personnel, and, when applicable, consortium or contractual costs. • Additional narrative budget justification is required if there is a variation in the amount of requested in each year.

Modular Budget Justification • For example, purchase of major equipment in the first year may justify a higher overall budget in year one, but not in years two through five.

Detailed Budget Justification NIH Proposals requested $250,000 or more per year • Provide the narrative justification for all budget categories.

How many years should I budget for? • The number of project years allowable varies by the sponsor and the type of funding mechanism. • As a general rule, projects run between one and five years. • Always refer to the sponsors guidelines for clarification.

What are direct costs? Direct Costs • Costs that are easily assigned to a specific research project and paid by its direct grant funding. • In other words the budget categories: supplies, travel, patient care, other, etc.

Facilities and Administrative Costs (F &A) Facilities and Administrative Costs (F &A) or also referred to as: • Indirect Costs • Indirects • Overhead They are costs that cannot be identified specifically with a particular sponsored project.

Facilities and Administrative Costs (F &A) Examples of F&A Costs: lights, heat, security etc. CMH has negotiated a standard federal rate with the federal government, which is Currently 47%. Per this Modified Total Direct Costs (MTDC) rate agreement, the F&A rate cannot be applied to the following budget categories: • Equipment • Patient Care • Tuition

F&A charges for subcontracts Can F&A charged on subcontract budget costs? Yes • F&A can be applied to the subcontract portion of the budget, however only on the first $25,000 per subcontract institution.

NOTE: • Not all sponsors allow F&A to be charged to a grant proposal. • Some sponsors only allow a certain percentage of F&A. • Always refer to the specific sponsor guidelines for accurate information.

Budget Components A Good Budget… • is complete • is adequate • is within sponsor norms • is consistent with the narrative • is justified clearly • includes changes in costs over the course of the project

Budget Components Many OSP offices require…. • a detailed budget for each year of the grant • even if it is submitted as a modular budget (25K increments) to the sponsor or the sponsor does not require it • See if your OSP is able to provide you with formatted excel spreadsheets; please don’t hesitate to ask OSP for help!

Start Dates Most RFA/RFPs will list potential start dates • NIH has standard start dates that correspond with submission dateshttp://grants1.nih.gov/grants/funding/submissionschedule.htm

Personnel • Key Personnel: All individuals who contribute to the scientific development or execution of a project in a substantive, measurable way, whether or not the salaries are requested (with NIH grants they are required to submit a biosketch) • Other Personnel: all others who will be contributing effort and receiving salary support on the project (Postdocs, Research Technician, graduate students, etc.)

Personnel • Administrative salaries are generally not allowed unless the RFA specifically allows it Some exceptions: program projects, cooperative agreements, administrative cores may allow administrative salaries • The number of personnel should be adequate to support the work being performed

Percent Effort / Person Months • Grant funded institutions are required to monitor the level of effort personnel charge to grants. • No one can exceed 100% 12 person months of effort • All key personnel paid on sponsored projects are required to complete effort reports. Some institutions will generate these reports quarterly, while others do so monthly.

Percent Effort / Person Months • Salary charged to grants is not in addition or on top of annual rate received by employee, it is there to reimburse the time the employee spends on the project • When preparing your budget you should estimate the amount of time an employee will spend working on the project

Percent Effort /Person Months • To estimate percent effort consider a work week to be 100% • Each day of the week is therefore 20% • If a person will be spending 2 ½ days a week on a project their effort would be 50%

Percent Effort /Person Months • To calculate calendar months 50% of a 12 month appointment = 12 x 0.5 = 6 PM • Person months calculator tool is available on the CMH OSP website (http://www.childrensmrc.org/docs/pmcalc.xls)

Salary Cap • The DHHS Appropriation Act for FY 2008 restricts the amount of direct salary of an individual under an NIH or any federal grant to Executive Level 1 of the Federal Executive pay scale. • Effective 1/1/2008 this amount is $191,300 • The level for FY07 was $186,600

Salary Cap • In order for the grant to charge the current salary cap its start date must be 01/01/08 or after • If the PI on a grant is over the cap a discretionary account must cover the difference, it cannot be charged to another sponsored project • Institutions have different allowances when preparing proposal budget with personnel at the current salary cap

Fringe Benefits • Each institution has its own fringe benefit rate that corresponds with the type of appointment a faculty member or employee has. • The current fringe benefit rate at CMH is 26% • Any grant charging personnel salary will also charge 26% fringe • This covers Social Security, Pension/Retirement, Health and Life Insurance and Disability • Remember, fringe benefits are a separate budget category than F&A costs.

Consultants • Defines statement of work and terms to a private individual to perform an activity on a research project • The individual’s private resources are used to carry out the project, not those of an institution • Rate agreed upon with PI and consultant, can be hourly, daily, etc. • These types of agreements are written and tracked by OSP offices

Equipment Most institutions follow Federal guidelines and define (capital) equipment as having a useful life or two or more years and the following: Single Item: Cost of $5,000 Aggregate Group: Cost of $5,000 Computer Software: Cost of $5,000

Equipment It is helpful to provide a quote from the vendor for any equipment to be purchased from this project. Please remember when planning for equipment in your project the following needs to be addressed: • space/location for the equipment • current and future service contract charges • installation charges • staff training costs • shipping costs

Supplies When budgeting for supplies you should only include items that are allocable to this project. Typical supply or “consumable” items to be included in the budget are: • lab supplies • animal purchase (separate from animal care) • glassware • plastics • survey materials

Travel Typical travel items include: • airfare • mileage using personal vehicle • conference registration • meals • transportation charges (e.g. taxi fare) (The current travel mileage reimbursement rate is 58.5 cents per mile.)

Travel Costs must be allocable to the project • Example: On a typical NIH grant CMH OSP will budget $1,800 per conference that PI plans to attend

Budget Components Patient Care Costs - No F&A Allowed • The costs of routine and ancillary services provided by a hospital to individuals, including patients and volunteers, participating in research programs • “Routine services” include the regular room services, minor medical and surgical supplies, and the use of equipment and facilities for which a separate charge is not customarily made. • “Ancillary services” are those special services for which charges customarily are made in addition to routine services, e.g., x-ray, operating room, laboratory, pharmacy, blood bank and pathology. • In a project that includes patient care costs, those procedures that a patient would undergo regardless of whether or not s/he were participating in a study are considered “standard of care” and are NOT typically charged to a grant. Any “extra” procedures that a patient would undergo as a result of participating in a research study would be charged to a grant, and those costs should be budgeted.

Budget Components Other direct costs typically include: • animal care • patient travel • publication costs • equipment maintenance • service contracts • tuition • capitation

Consortium, Subaward, Subcontract • The NIH defines Subcontract/Consortium Agreements as a formalized agreement whereby a research project is carried out by the grantee and one or more organizations that are separate legal entities. • Under the agreement, the grantee must perform a substantive role in the conduct of the planned research and merely serve as a conduit of funds to another party or parties.

Consortium, Subaward, Subcontract OSP offices usually require the following information for each subcontract/consortium in the proposal: • Fully Signed Face Page (Mandatory for NIH proposals) • Initial Budget (list the direct costs, F&A, and total costs) • Budget for the Entire Project (lists the direct cost, F&A, and total costs) • Budget Justification Continued…

Consortium, subaward, subcontract Continued… • Bio-sketch for all Key Personnel • Statement of Work • Checklist Page (for NIH proposals) • Resources Page (for NIH proposals) • Institutional Letter of Intent/Support

Let’s create a budget…

Children’s Memorial Hospital Office of Sponsored Programs (OSP)