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									Assisting Faculty in Creating
    Sponsored Budgets
               Vicki Spadaccio
Associate Director for Contracts, College of Education
         The Pennsylvania State University

                Sharon McCarl
     Associate Dean, Mellon College of Science
            Carnegie Mellon University
 Participants will learn the basic theory and rules to
 assist faculty to develop an accurate budget

 Participants will acquire basic knowledge of
 required budget components and format

 Participants will learn to translate the budget needs
 of faculty
 “The   Budget Plan is the Financial Expression of
      the Project or Program as Approved During the
      Award Process”
      (OMB Circular A-110, Subpart C, Section _.25).


 Business Side -What do I need to accomplish
  the goals of this project?
ALL costs (direct and F&A) that can be identified with a
 particular sponsored project should be identified and
 budgeted (somewhere) AT THE PROPOSAL STAGE


ALL costs (direct and F&A) of a particular sponsored
 project should be borne by the sponsor (to the
 maximum extent possible)
Code of Federal Regulations (CFR) 2CFR220
   Office of Management and Budget (OMB) Circular A-21
               http://www.gpoaccess.gov/CFR/

    Cost Accounting Standards Board
          2CFR220 Attachment A to Appendix A
   http://www.whitehouse.gov/omb/rewrite/procurement/casb.html
              4 Apply to Educational Institutions


Code of Federal Regulations (CFR) 2CFR215
                     OMB Circular A-110

                Institutional Policies
Reasonable
Allocable
Allowable
Treated Consistently
 Test - Is the expense reasonable? Logical?


 Reasonable person test


 Is it normal for this type and level of expense to be
 charged on projects of a similar nature?

 Market Value-Appropriate Bids
 Was the cost incurred solely for the advancement of
 the project?

 Can the expense be clearly identified with the
 project?

 Assigning inappropriate expenses is FRAUD!
 Reasonable and necessary

 2CFR220 (a.k.a. A-21 section J)

 In conformance with limitations/exclusions
     (examples: salaries, foreign travel, equipment)
Cost Accounting Standards

Must be able to defend cost estimates
501-Estimating, Accumulating and Reporting Costs

502-Consistency in Allocating Costs Incurred for the
 Same Purpose

505-Accounting for Unallowable Costs

506-Consistent use of Cost Accounting Period
Estimate and propose costs in the
manner that they will actually be
expended and invoiced and in no
greater detail than costs will be
accumulated and reported.
Direct Costs
   “…costs that can be identified specifically with a
    particular sponsored project…” (OMB Circular A-21,
    Sec.D.1)

Facility and Administrative Costs (Indirect Costs)
   “…costs incurred for common or joint objectives and
    [that] therefore cannot be identified readily and
    specifically with a sponsored project…” OMB Circular
    A-21, Sec.E.1
 Sponsor
    Federal, Non-federal (what rates and rules apply)
    Special Rules or Instructions (caps, F&A)

 Project Dates

 Subcontracts or Multi-departmental Budgets

 Special Approvals (animals, human subjects, cost-
 share)
 Personnel
 Fringe Benefits
 Equipment
 Supplies
 Travel
 Subcontracts/Consultants
 Other
 I want a course release

 I want as much summer supplemental pay as
 possible

 I need Dr. X (University employee) as a consultant
 When will you work on the project?
     Academic months?
     Summer months?
 How much effort will be required?
 Who will work on this project?
 What is this person’s status? Employee, graduate
  student, wage, consultant?
 Type of Appointment (Category for Fringe Base)
 Where will this person work?
 Are there security or conflict of interest issues?
 Generally no administrative positions
 Request salary in proportion to project effort
  using base salary
 100% effort in summer for faculty on academic
  appointments means 100% effort in summer
 Include fringe benefits (full or part-time)
 Include salary increments
 Remember salary caps
All direct administrative and clerical costs must be
 approved by the funding agency prior to
 expenditure.

 Examples of Major Projects 2CFR220 Exhibit C



                   Justify
 Current or Estimated monthly rate     x

 Estimated merit increase (if applicable) x

 % of Effort   x

 # Months


 Example:    $5,394 x 1.03 x .20 x 9 = $10,000
Stipend (and associated costs which may include
 Fringe Benefits and F&A)


Tuition (no F&A)
 Expenses directly associated with employment.
 May include:
   Group insurance, workers’ compensation, social
   security/Medicare, retirement, grant-in-aid, paid time off,
   and employee benefits office.

 Allocated to a budget based on audited, negotiated
 percentages of salary and wage costs.

 Rates are approved by the cognizant federal agency
 of the Institution

 Different rates for different salary/wage categories
Salary category x applicable fringe rate for that
 category

Example:
$10,000 Category I Salaries x Category I Fringe
 Benefit rate of 25% = $2,500
 Cost  $5,000 & Useful Life  2 Years


 Exclusive use by project
I want a lap-top computer for everyone on the project

I want a super-duper environmental chamber
   (I can also use for consulting work)
 What do you need?
 What is the importance of this item to the research?
 Does it qualify as capital equipment?
 Is it general purpose equipment?
 Will the equipment be used exclusively for this
  project?
 Is it available elsewhere? Borrow or share
 Cost analysis Lease vs. Purchase
 Must be specific to project (check 2CFR220)

 Avoid general purpose items

 Itemize and justify


    Examples:
       Chemicals, glassware, non-capital equipment
 I need a computer

 I need a new oak desk to match my file cabinets

 I need office supplies
 What do you need?
 Why do you need it?

 What is the best way to estimate the cost?

   Do the numbers-avoid excessive guessing
   Check recharge rates, facility charges, historical
    expenses
   Match budget detail to accounting system
 I need $10,000 for travel


 I need to travel to Zimbawa


 I need a trip to our University for my consultant
 Itemize and justify

 Who, what, when, where, why and how

 Include business purpose and destination

 Separate domestic and foreign travel
 Is foreign travel allowable?

 Do not include patient care or consultant travel
 Consultants
 Animal housing
 Publication and page charges
 Subject incentive and travel reimbursement
 Rental & maintenance contracts
 Equipment Usage (# hours and rate)
 Long distance toll costs
 Itemized budget
 Statement of work
 Commitment to perform (w/signature)
 Negotiated rate agreement
 Justify need and selection criteria
All costs necessary for conducting the sponsored
  activity.

Such expenses would not occur if the sponsored
 activity was not funded.
Total of all direct costs excluding:
1.   Graduate Assistant Tuition Remission
2.   Subcontract Costs in excess of $25,000
3.   Equipment Purchases >$5,000
4.   Plant Construction
5.   Building Amortization
“…costs incurred for common or joint objectives and [that]
 therefore cannot be identified readily and specifically
 with a sponsored project…”
    2CFR220, Sec.E.1

 Two Components
    Facilities
    Administration

     Applied to Modified Total Direct Costs
 I don’t have enough funds to pay F&A


 Can I use the off-campus rate if I work at home?


 I’m not paying for services I won’t use
 Rates are negotiated an approved by University’s
  cognizant federal agency.

 Expenses essential to the conduct of sponsored
  activities which cannot be readily attributed and
  directly charged to specific individual projects.

 Example include: office space, facilities, utilities,
  office of sponsored programs, accounting, payroll,
  ground and building maintenance, etc.
       F&A is applied to MTDC

TDC of $100,000 less Tuition of $12,000 =
 MTDC of $88,000
MTDC of $88,000 x F&A @ 50% = $44,000
Total Project Costs = TDC + F&A = $144,000
 Budget
   Form
Example
Thank
 You!

								
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