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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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