Budgeting, Budget Justification, & Templates

1. Budgeting, Budget Justification, & Templates Jonathon Jeffries Grants & Contracts Accounting Candice Ferguson Office of Sponsored Programs

2. Goals • To give an overview of the guidelines and fundamentals of a proposal budget • Discussions will include • 2 CFR 200 • Cost Accounting Standards (CAS) • Direct Cost • Indirect Cost • Project Budgeting • Cost Sharing

3. Cost Principles • 2 CFR 200 • Establishes principles for determining costs applicable to grants, contracts, and other agreements with non-federal entities. • Determines what costs can be included in the F&A calculation • Remember: addresses both direct and F&A costs as well as specific allowable costs • Electronic Code of Federal Regulations http://www.ecfr.gov/

4. Cost Principles – Cont’d • 2 CFR 200 • It incorporates fourCost Accounting Standards (CAS) • Consistency in estimating, accumulating and reporting cost • Consistency in allocating cost • Accounting for unallowable cost • Consistency in periods • The intent of CAS • Standardize university costing practices • Standardize requirements for recipients • Preclude a perceived over charge to the government • Prevent charging unallowable costs to the federal award

5. The Budget • Where to begin? • Read the Program Announcement • Write the research proposal • Create the budget and budget justification • Re-read the Program Announcement • Make any changes to finalize the budget • Initial Decisions • How much should I request? • What costs should I include? • Function of the Budget?

6. Budget & Budget Justification • Budget • A competitive budget is one that will provide the sponsor with a complete financial picture of the proposed project. • Budgets are reviewed by the sponsor to verify if the costs are reasonable and necessary to carry out the proposed project, and if it conforms to the sponsor's instructions. • Budget Justification • Provides further explanation of the direct costs involved with the project.

7. FY16 Provisional Rates • Fiscal year: Begins on July 1st and ends on June 30th • Fringe Benefits 30.0% • Yes - Employees (includes Post Docs) • No- Grad & Undergrad Students • Limited Benefits (50-74% time) 21.3% • Partial Benefits 1.5% • Tech Temps • Others • Graduate Student Health Insurance 3.0%

8. Mock Budget • Do the proposed cost directly assist in the performance of the project during the award period? • Will the service or materials comply with the sponsor’s rules for allowable expense? • Do the proposed cost exceed any budget category limitations Salaries (Faculty) $10,000 1 GRA $20,000 Fringe Benefits (FB) $3,600 Equipment (Radar) $10,000 Subaward $52,000 Tuition Remission $17,868 M&S $5,000 ___________________________ Total Direct (TD) Costs: $118,468

9. Direct Costs • Direct costs are those that can be specifically identified with a single sponsored project. • Direct costs should be reflected by major budget categories with an attached narrative detailing how the costs were calculated. • Salaries/wages • Fringe benefits

10. Direct Costs • Direct costs are those that can be specifically identified with a single sponsored project. • Direct costs should be reflected by major budget categories with an attached narrative detailing how the costs were calculated. • Equipment • Travel • Participant support costs.

11. Direct Costs • Direct costs are those that can be specifically identified with a single sponsored project. • Direct costs should be reflected by major budget categories with an attached narrative detailing how the costs were calculated. • Contracted services • Supplies • Communication • Awards (tuition remission)

12. F&AFacilities & Administrative (“Indirect Costs”) Costs incurred for common or joint objectives and, therefore, cannot be readily identified with a particular project or program. e.g., Utilities, Plant Maintenance

13. F&A • Facilities: • building depreciation • equipment depreciation • maintenance & repair • utilities • Administrative: • Salaries, supplies, telecomm, etc. of admin depts : • Purchasing Dept • Payroll Dept • Controller’s Office • Deans’ Offices • President’s Office

14. F&A Costs are Real • Reimbursement of expenses from the past to cover future costs. • Annual F&A rate proposal for negotiation with ONR • Some sponsors do not pay the fully negotiated rate (e.g., Ed, NIH training grants) • Negotiated rates may not cover our real costs • 2 CFR 200 limits the recovery of certain costs (i.e., administrative capped @ 26%)

15. A Brief History of Indirect Cost Policy • 1942 Green Book Navy Department • 1947 Blue Book Navy Department (ONR) • 1958 Budget Circular A-21 Bureau of the Budget • 1970s Fed MgmtDir 73-8 General Services Agency • 1979 Circular A-21 Back to OMB • 1990s #!%?*#&!!!! • 2014 2 CFR 200 Circular Reform

16. F&A Cost Calculation Facilities & Administrative Expense ----------------------------------------- MTDC Base F&A Rate

17. MTDCModified Total Direct Cost • F&A Rates are based on Modified Total Direct Costs which is the total direct cost (TDC) less equipment over $5,000, subcontract expenses in excess of $25,000, student tuition remission, participant support costs, and rental of off-campus space. i.e., Total Direct Cost minus Equipment Purchases > $ 5,000 Sub-Contract expenses > $ 25,000 Tuition Remission Participant Support Costs Rental of Off-Campus space = MTDC

18. Distribution Base F&A Cost Pools Allocation Base F&A Cost Allocated To F&A Cost Rate Building and Equipment Depreciation Space Instruction & Departmental Research MTDC Instruction & Dept. Research % Space Interest Space Operations & Maintenance Organized Research MTDC Organized Research % General Administration MTDC Other Sponsored Activities MTDC Other Sponsored Activities % Department Administration MTDC Sponsored Project Administration MTDC Other Institutional Actives Library MTDC Student Services MTDC

19. FY16 Facilities & Administrative Rates • Research Capped 57.4% • Off Campus 26.0% • Research Uncapped (DoD Contracts only) 61.4% • Off Campus 30.0% • Other Sponsored 34.82% • Instruction 53.92% • Industrial (Non-Government) 61.8%

20. FY17 Facilities & Administrative Rates • Research Capped 57.8% • Off Campus 26.0% • Research Uncapped (DoD Contracts only) 62.0% • Off Campus 30.2% • Other Sponsored 34.82% • Instruction 53.92% • Industrial (Non-Government) 63.8%

21. Mock Budget Salaries (Faculty) $10,000 1 GRA $20,000 Fringe Benefits (FB) $3,500 Equipment (Radar) $10,000 Subaward $52,000 Tuition Remission $17,868 M&S $5,000 ______________________________ Total Direct (TD)Costs: $118,468 1

22. Modified Total Direct Cost • Items NOT included in MTDC • Equipment • Tuition Remission • Participant Support Costs • Rental of Off-Campus Space

23. SubAwards • F&A charged on 1st $25,000 • I.E., $50,000 subaward still only $25,000 • GTRI subawards = Interdivisional Transfers • Budget Justification with GTRI include a few lines explaining what GTRI is, why they are using them to do some of the research effort and include a short summary budget with only major category lines (Personnel, M&S, travel, consultant, tuition remission, overhead-combined)

24. Calculating MTDC 1 Total Direct (TD)Costs: $118,468 (Salaries, FB, Travel, M&S etc.) Equipment Costs -$10,000 SubAward -$27,000 ($52,000 - $25,000) Tuition Remission -$17,868 ------------------------------------------------ Modified Total Direct Costs $63,600 2

25. Calculating F&A Costs • F&A (Indirect) Cost Calculation: • $63,600 (MTDC Base)* 55.9% = $35,552 • Project Total (Direct & F&A) • $118,468 (TD) + 35,552 (F&A) = $154,020 2 3 1 3 4

26. Project Total • $118,468 (TD) + 35,552 (F&A) = $154,020

27. GTRI • GTRI recovers costs under the Federal Acquisition Regulations. • FAR 31.2 – Contracts with Commercial Organizations Reg. • Cost Categories: • Lab Overhead • General & Administration Rates • Cost Of Money(2) • Additional fees can be added • Contact your “SPA” rep.

28. Cost Sharing • Voluntary committed cost share is prohibited • Cost Sharing is the difference between the effort expended on a project and the effort that is paid by a sponsor. • Cost sharing must be written down (& authorized) by the department and the VP for Research. • Cost sharing dollars can only be used once (can’t count the same effort on two grants!) and must be verifiable. • Cost sharing cannot come from federal funds.

29. Types of Cost Sharing • Cash • Salaries & Fringes, Travel, Equipment, etc. • VP Research, Dean, Chair, External Partners • Non-cash (In-Kind) • Volunteers, Materials, Facilities, etc.

30. Audits: Documentation is Key • Defend the Debit! • Why did you charge the award this expense? • May be 4+ years before the award is audited. Document the file!

31. How Departments Influence Cost Recovery • Correct coding of expenditures • Correct assignment of expenditures • Treatment of sponsored direct costs • Treatment of “normally indirect costs” • Identification of unallowable costs • Understanding CAS • Know the requirements associated with Cost Sharing

32. Agency Specifics: NSF • Senior/Key Personnel • If no person months and no salary requested, person cannot be listed in Section A of budget • Consistency with NSF’s Cost Sharing Policy • GT personnel listed in Section A of NSF proposed budget should adhere to the GT minimum effort policy • If no person months and no salary requested, remove from Section A. Their names will remain on Cover Sheet • Role should be described in Facilities, Equipment, and Other Resources section of the proposal

33. Agency Specifics: NSF • Facilities, Equipment, and Other Resources • New format in FastLane • Consistency with NSF’s Cost Sharing Policy • No reference to cost, date of acquisition, and whether the resources are currently available or would be provided upon receipt of the award • If no resources to describe, then a statement to that effect should be included in this section of the proposal and uploaded to FastLane

34. NIH Modular Grants • Modular Grants • Less then or = $250,000 per year in direct costs • Individual Awards (R01, R03, R15, R21, R41, and R43) • Proposals can be rejected without review if format not followed • Key Features • Direct costs will be in $25,000 modules • Subawards are rounded to the nearest $1,000 • Utilize salary cap ($185,100) • Effective January 10, 2016 • Typically modular grants request the same number of modules in each year. [Can be increased for one year if purchasing equipment]

35. National Institutes of Health  • NIH Information • Georgia Tech still requires an internal budget! The university is required to adhere to many rules and regulations. • Policy: Subawards F&A are not included in the capped amount (i.e., $250,000 does not include the subs F&A costs – separately accounted form) • > $500,000 Need prior approval to send proposal • Just In Time (JIT) • NIH requires an itemization of all key personnel’s IRB training.

36. Mock Budget • Remember to stick to your budget! • (Grad Student vs. Post Doc!)

37. Review • Fundamentals of a proposal budget • Discussions will include • 2 CFR 200 • Cost Accounting Standards (CAS) • Direct Cost • Indirect Cost • Project Budgeting • Cost sharing

38. Any final questions? Thank you for attending the class. Remember we are here to help. Please ask questions!