From Proposal to Closeout

Budgeting Basics

Understand the implications of poor budget planning

Understand the rules governing budget management

Understand the budget revision process

Objectives

All sponsored projects require a budgetBudgets help ensure that all costs toward

completing the project have been anticipatedOMB Circular A-110, Subpart C.25, “Post-

award requirements, revision of budget and program plans” outlines the requirements for grants and agreements with Institutions of Higher Education

Introduction

Total Cost = Direct cost + Facilities and Administration costs (F&A) + Match costs

Direct Costs are those costs that can be directly attributed to a specific project

F&A Costs are those costs that cannot be directly attributed to a specific project

Match Costs are those costs borne by the Institution which are not reimbursed by the sponsor, also called cost share

Definitions

Is there a limit to the maximum costs?Are there exclusions of specific categories?Are there exclusions of specific entities to be

funded?Are there exclusions of specific individuals to be

funded?Is there a cap on F&A costs allowed?Is there a salary cap?Is there a mandatory cost share requirement?Are there any other crazy requirements we

haven’t thought of before?

Read and understand the Sponsor guidelines

Disclosure Statement (OMB Circular A-21 C.14)

Charges to Sponsored AgreementsCost TransfersExtra Compensation and Outside

EmploymentInstitutional Base SalaryIncentive PaySubagreements Issued to a Third Party

Read and Understand the University of Memphis Policies and Procedures

The budget should flow logically from the proposal narrative.

Does the budget narrative include quantified project costs that are specifically excluded by the sponsor? If so, these costs will become cost share to the Institution.

Does the budget narrative include quantified project costs that will not be borne by the sponsor? If so, these costs will become committed cost share to the Institution.

Prepare the Budget Narrative

I. Salaries and WagesII. Fringe BenefitsIII. TravelIV. SuppliesV. EquipmentVI. SubcontractsVII.Tuition/fees for graduate studentsVIII.OtherIX. Indirect Costs

Prepare the Budget Using the Template Provided

Total Project Costs - Proposed Budget for PI: name Project Period Start:  Sponsor:   Project Period End:  Project Title:   Budget Period Start 01/00/00Project Number: S- Budget Period End 12/29/00Budget prepared by:  

Banner Code  

Base Salary % Effort Sponsor UM Sponsor UM Sponsor UM

I.Salaries and Wages

Salaried (monthly) EmployeesA. Principal Investigator PI Name

Please indicate all effort on the project regardless of funding source.61266 1. Acad yr $ - 0% -   -   - - 61254 2. Summer (9 month appointments only) - 0% - - - -

B. Co-Investigator61266 1. Acad yr $ - 0% -   -   - - 61254 2. Summer (9 month appointments only) - 0% - - - -

C.Other (monthly)Personnel specify $ -  0% - - - -

- - D. Hourly (bi-weekly) Employees specify $ - 0% -   -   - -

- - E. Temporary Employees     -   - -

- - F. Student Employees # std Rate/mo - -

61257Graduate Assistants (include tuition amount below) - - - 1. Acad yr (9 mos)   $ - -      2. Summer (3 mos)   $ - -      

61410Student Workers - hourly   - - -

Total Salaries & Wages - - - - - - - -

II. Fringe Benefits - - 33.7% salaried employees (monthly) - - - - - - 57.1% hourly employees (bi-weekly) - - - - - - 7.6% temporary employees - - - - - -

62000 Subtotal II - - - - - - - -

III. Travel - Domestic or International (select)     - - 73000 Subtotal III - - - - - -

- - IV.Supplies < $5000 - -

74500 Supplies Prepare “Unlike Circumstance” justification for office supplies   - - 74504 Non-capitalized equipment < $5,000     - -

Subtotal IV - - - - - - - -

V.Equipment >$5000 Prepare “Unlike Circumstance” justification for general purpose equipment - -

Subtotal V - - - - - - - -

VI.Tuition/fees for graduate assistant(s) @ 9,612 - - - -

79713 est for 2011-12 Subtotal VI - - - - - - - -

VII.Consultant

NIH Definition: An individual who provides professional advice or services for a fee, but normally not as an employee of the engaging party. In unusual situations, an individual may be both a consultant and an employee of the same party, receiving compensation for some services as a consultant and for other work as a salaried employee. To prevent apparent or actual conflicts of interest, grantees and consultants must establish written guidelines indicating the conditions of payment of consulting fees. Consultants also include firms that provide professional advice or services. - - Subtotal VII - - - - - -

VIII.Subawards NIH Definition: A party that receives a subaward from a recipient or another subrecipient under a

Federal financial assistance award and is accountable to the recipient or subrecipient for the use of the Federal funds provided by the subaward.

77830 Subcontracts $25,000 or less -

77840Subcontracts over $25,000 -

Subtotal VIII - - - -

VIV.Other (list)     - -

    - - Subtotal VIII - - - - - -

- - Total Direct Costs - - - - - -

Year 1 Year 2 Total

Banner Code   Sponsor UM Sponsor UM Sponsor UM

    For Research Support Services completion             - -

IX.Facilities and Administration Costs* - -

 Choose MTDC or TDC. Enter rate in one box and 0 in other box  

  MTDC 0.0%Full rate charged to sponsor - - - -   MTDC 0.0%University contribution - - -   TDC 0.0%Reduced rate charged to sponsor - - - -   MTDC 41.0%University contribution - waived F&A - - - -   79800 Subtotal IX - - - - - -   - -

          Total Project Costs     - - - - - - * F&A: Exception to the full federal indirect cost rate is requestedfor the following reason: Please provide an index number for all direct costs   State of TN agency @ 15% TDC borne by the University at the time the budget is submitted.

 Prime sponsor allows a maximum of _____% as verified by Multiple index numbers should be provided if portions of the

  sponsor guidelines (provide reference) budget will be charged to different accounts.

  Research Support Services

 Other exceptions require approval by Vice Provost for Research.Please provide justification.

To get the F&A costs, you must first find the base

Base = Direct Costs – Exempt ItemsTDC – Total Direct CostsMTDC – Modified Total Direct CostsExempt Items under MTDC Include =

Equipment, subaward amount over 25K, patient care costs, rent, tuition, scholarships, and fellowships

F&A Base

ResearchOn Campus 41% Off Campus 26%

Instruction On Campus 55%Off Campus 26%

Other Activities On Campus 35%Off Campus 26%

TN State Agencies and Local Governments: 15%

Off-campus rate is applied in cases where rent for off-campus facilities is budgeted as a direct cost.

F&A Rates

Email budget request to Researchsupportservices@memphis.edu

Submit at least 10 working days prior to submission deadline

Include scope of work and Sponsor guidelinesBudget will be reviewed, modified, approved,

and emailed back to the PI/PDSubmit approved budget with the Proposal

Routing Form

Budget Proposal Submission Process

Budget revisions for individual grants are processed on-line in self service and Grants Accounting will approve or disapprove.

Budget revisions must be allowed under the terms and conditions of the award document.

Any prior approvals must be obtained prior to submitting the budget revision.

There must be sufficient funds within the value category in order to transfer the funds

Be sure to recalculate the F&A rate when transferring funds to and from exempt categories.

Transferring funds from an exempt category to a non-exempt category will effect the direct costs available for the project.

Budget Revisions After Award

All budget revisions between salary account codes are to be discussed with the Grants Accountant and they will do the budget revision

Forms for budget revisions for base/current year along with information about basic budget revisions are available on the Financial Planning website.

Other Budget Revisions

Sponsor terms and conditions dictateChange in scope of workTransferring amounts from trainee costsCapital expenditures (construction, land or

building acquisition)Need for additional fundingTransfer of funds between construction and non-

construction work

Conditions Where Prior Approval by Sponsor is Required

Effects of Rebudgets on F&A Expenses

Scenario 1$50,000 budgeted in equipment is to be transferred to supplies. How much can be rebudgeted to supplies and how much is to be rebudgeted to F&A?

Effects of Rebudgets on F&A Expenses

Answer:The amount being transferred from an exempt category (equipment) should be divided by (1.00 + F&A rate). This quotient can be moved into other direct non-exempt categories. The balance will be added to the F&A budget.

Effects of Rebudgets on F&A Expenses

Example:$50,000 decrease in equipmentAt a 46% F&A rate50,000/1.46 = 34,246.5734,246.57 is added to supplies15,753.42 is added to F&A

Effects of Rebudgets on F&A Expenses

Scenario 2The PI needs to purchase an unbudgeted piece of equipment from the grant and wants to use funds from the supply line. How does this rebudget affect the F&A budget line?

Effects of Rebudgets on F&A Expenses

Answer:The amount being rebudgeted to an exempt line (equipment) should be divided by (1.00+ F&A rate). This quotient is the amount to be reduced in the supplies category. The difference is the amount to be reduced in the F&A category.

Effects of Rebudgets on F&A Expenses

Example:$50,000 increase in equipmentAt a 46% F&A rate50,000/1.46 = 34,246.57$34,246.57 reduction to supplies$15,753.43 reduction to F&A

General Provisions for Selected Items of Cost

OMB A-21 Section J

ObjectivesUnderstand what are allowable and

unallowable costs to Federal grantsUnderstand the importance of properly

budgeting for costs on Federal grantsUnderstand the consequences of improperly

documenting costs on Federal grants

OMB A-21 Section JLists 54 items of costFailure to mention a particular item of cost is

not intended to imply that it is either allowable or unallowable; rather, determination as to allowability in each case should be based on the treatment provided for similar or related items of cost.

General CriteriaAllowable (A-21 C.2)Reasonable (A-21 C.3)Allocable (A-21 C.4)Consistent Treatment (A-21 C.11)Conform to limitations set forth in A-21 or in

the sponsored agreement as to types or amounts of cost items

Reasonable TestPrudent person ruleNecessary for the operation of the Institution

or performance of the sponsored programConsistent with regulations, state and federal

laws, and institutional policies and procedures

Allocable TestIt is incurred solely to advance the work

under the sponsored agreementIt benefits both the sponsored agreement

and other work of the institution proportionately

Cost principles, internal controls, direct cost allocation principles, and documentation

Documented in accordance with the Procurement Standards in OMB Circular A-110, Subsections C.40 – C.48

Direct vs. Indirect CostA cost is either

Allowable or UnallowableAnd

Direct or Indirect

F&A CostsF&A costs are those that are incurred for

common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.

Items of cost must be treated consistently across the Institution with respect to direct or indirect application

Allowable Charges

Allowable F&A Charges Unallowable

Equipment AdministrativeSupport Entertainment

F&A Allocation

Terms of AgreementIn case of a discrepancy between the provisions of a specific sponsored agreement and the provisions of the OMB, the agreement should govern.

Note: the program officer does not determine allowability of a cost. The Grants Management Specialist is responsible for the negotiation, award, and administration of the financial aspect of the project. Our Disclosure Statement (DS2) outlines how the Institution will allocate costs.

BudgetingBe specific about what you need to complete

the projectBe sure to budget your items in the correct

value categoryBe specific about what you label things, e.g.,

advertising vs. marketingBe sure to read the proposal guidelines

Proposal GuidelinesIn some cases the proposal guidelines

determine how the items of cost will be labeled

In case of a discrepancy between the provisions of a specific sponsored agreement and the provisions in Banner, the agreement should govern

Banner, however, cannot be modified to match the sponsored provisions

Therefore, off ledger adjustments may be necessary when reporting financial data to the sponsor

ConsequencesDuring an audit, costs deemed

unallowable must be removed from the grant along with the associated F&A costs incurred

Cost transfers that are not properly documented may be considered unallowable and must also be removed from the grant

These unallowable items become uncommitted voluntary cost share, i.e., costs to the department!

Commonly Asked QuestionsAre clerical salaries allowed on Federal grants?

Generally allowable as an F&A expenseAre office supplies allowed on Federal grants?

Generally allowable as an F&A expenseWhat about general purpose equipment, such

as copy machines, computers, and typewriters?Unallowable as direct charge, except where

approved in advance by the awarding agencyWhat about memberships, subscriptions, and

professional organizations?Allowable for institution only, except civic,

community organizations, country clubs, or social clubs. Institutional policy requires that the Sponsor must give prior approval of all professional memberships.

Commonly Asked QuestionsAre recruiting costs allowed on Federal grants?

Allowable under strict conditionsAre rental cost of buildings and equipment

allowed? Allowable under strict conditions

Are scholarships and student aid costs allowable? Only if the purpose of the sponsored agreement is to

provide training to selected participants (e.g., NIH Kirschstein-NRSA fellows)

Tuition remission can be paid in lieu of wages to students under certain circumstances (see section J.10 for reporting requirements). Institutional policy is that tuition remission is only allowed if the Dean of Graduate School waives the tuition in writing. Additionally, if the student receives salary on a grant, the tuition follows the salary.

Commonly Asked QuestionsWhat about Stipends?

These are Payments made to an individual under a fellowship or training grant in accordance with preestablished levels to provide for the individual’s living expenses during the period of training. A stipend is not considered compensation for the services expected of an employee.

Stipends are not allowable under research grants even when they appear to benefit the research project.

Although stipends are not considered salaries, this income is still subject to Federal and, sometimes, State income tax.

Questions?Websites for more information:Research Support Serviceshttp://researchsupport.memphis.edu/ Grants Accountinghttp://bf.memphis.edu/finance/accounting/gc.

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