Front Office Department Pre Opening Budget

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Front Office Department Pre Opening Budget Powered By Docstoc
					  Budgeting
   Basics




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

•   Colleen Grogan
    773-755-6335
    cgrogan@childrensmemorial.org


•   Tara Massimino
    773-755-6566
    tamssimino@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.


              Year 1     Year 2      Year 3      Year 4     Year 5
    Budget $250,000     $225,000    $225,000    $225,000   $225,000
                  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 dates
    http://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…

				
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