Budgeting Basics

Budgeting Basics

Budget should • Reflect reality – salary should follow effort • Identify all project costs • Be consistent with proposal narrative and/or budget justification • Have approval from Research Support Services (RSS)

Standard Form 424ABudget Categories • Personnel • Fringe Benefits • Travel • Equipment • Supplies • Sub-Contracts • Construction • Other • Indirect Charges

Personnel – Faculty • 61266 Faculty Base Pay (base pay salary recovery => eligible for incentive pay) • 61250 Extra Comp (overload) (federal funding generally does NOT allow) • 61254 Summer Comp (limited to 2 months of base salary)

Personnel – Faculty • 61266 Faculty Base Pay (base pay salary recovery => eligible for incentive pay) This is the University’s way of offering some kind of compensation for effort on a project. You are encouraged to budget salary recovery for your effort during the academic year and receive up to 50% of that amount as incentive pay.

Personnel – Faculty • 61250 Extra Comp (overload) Federal costs principles - in general – do not allow faculty extra compensation during the academic year. Exceptions: • Across departmental lines or • Involves a separate operation or • Involves a remote operation • Work is in addition to regular departmental load. • Prior approval requirement has been met If extra comp is budgeted, a justification form must be completed prior to proposal submission

Personnel – Faculty 61254 Summer Comp (limited to 2 months of base salary) • Salary should follow effort. Compensation for work done during academic year cannot be paid as summer salary. • Two month limitation is a direct response to the Yale settlement.

Personnel – Faculty 61254 Summer Comp (limited to 2 months of base salary) • Things to consider when requesting summer salary from a sponsored project: • Classroom instruction • Work for department such as curriculum development • Mentoring graduate student(s) not working on this project • Vacation time (or any other break from this project) • Work on publications or presentations not directly related to this project • Work on any sponsored program application or proposal • Work on other sponsored program(s). If more than 2 months of summer salary is budgeted, acknowledgement form must be completed prior to proposal submission.

Personnel –Data Collectors and Service Providers • 61310 Clerical Support (hourly) (data management specialist, laboratory technician, etc.) • 61610 Professional Support (monthly) (data manager, project coordinator, research associate, etc.) • 61257 Graduate Assistants (be sure to budget for fee remission in “Other” category) • 61410 Student Assistants

Personnel – Staff FunctionsClerical/Admin Support Federal cost principles - in general - do not permit direct charging clerical and admin support costs. • Exception: Large complex projects. • Exception: Projects whose sponsors do not provide full F&A rate.

Personnel – Staff FunctionsClerical/Admin Support • 61310 Clerical Support (hourly) (admin assistant, secretary, etc.) • 61610 Professional Support (monthly) (business manager, financial services associate, etc.)

Fringe BenefitsRegular Full Time Employees • Monthly paid: 36.4% • Hourly paid: 60.1%

Fringe BenefitsRegular Part Time Employees • Monthly paid: 36.4% • Hourly paid: 60.1% <80% - not eligible for health insurance

Fringe BenefitsTemporary Employees Temporary employees are hired for a period not to exceed 1 year at a time (full time or part time – does not matter) • 7.7% for FICA-Medicare For multi-year projects, budget should provide for a regular position

Fringe BenefitsStudent Employees • Individuals must be enrolled at least half time to be considered “students” for payroll purposes • Student employees receive 0% benefits • Students enrolled less than half time may be hired as temporary employees (7.7% for FICA-Medicare) • Graduate Assistants receive fee remission (also known as tuition waiver) that must be budgeted under the “Other” category.

Travel • 73000 Travel Budget Pool • 73100 Individual In State • 73200 Individual Out of State • 73250 Individual Out of Country Check sponsor guidelines because many sponsors have special rules for travel.

Equipment • Unit cost over $5,000 • No F&A (indirect costs) on Equipment Warning: Computers (and other “non-capitalized equipment” costing less than $5,000) will trigger F&A charges when purchased. List such equipment under the category “Other” as one-time expenses to ensure the proposal F&A budget will be calculated properly. If you list as “Equipment,” then the F&A budget will be wrong and the grant/contract will become over expended when the item is purchased.

Supplies • 74500 Supplies Consumables needed to collect data or carry out the goals of the project. • Routine office supplies are considered administration expense and should NOT be direct charged.

Sub-Contracts • Sub-contractors have responsibility for programmatic decision making and carry out some portion of the program/project • Also known as sub-awards or sub-recipients • NOT for consulting or service contracts • 77830 First $25,000 of each subject to F&A • 77840 Over $25,000 not subject to F&A

Construction • Not normally a category for which funding is requested; therefore outside the scope of Budgeting Basics.

Other • GA Fee Remission ($4,085/semester) • Non-Capitalized Equipment (<$5,000) • Consulting Services (non UM employees)

OtherEverything not IncludeD Elsewhere • Printing • Duplicating • Communications • Shipping • Maintenance • Software • Advertising • Equipment Rental • Subject Payments • Animal per Diems

Indirect Costs – General • F&A: Facilities & Administration • Facilities: utilities, custodians, etc • Administration: accounting, payroll, purchasing, human resources, student services, library services, chairs, deans, etc. (and Research Support Services!)

Indirect CostsAllocation Problem Areas • Clerical/Admin Support Salaries • Routine Office Supplies • Postage • Local Telephone • Memberships • Any expense that benefits multiple programs or projects

Indirect Costs - Terminology • TDC: Total Direct Costs • MTDC: Modified Total Direct Costs (total direct costs less equipment, capital expenditures, charges for patient care, tuition remission, rental costs of off-site facilities, scholarships, and fellowships as well as sub-contracts in excess of $25K)

Indirect CostsFederal Negotiated Rates • Instruction: 55.0% MTDC • Research: 41.0% MTDC • Other Activities: 35.0% MTDC • Off Campus Activities: 26.0% MTDC • Facilities not owned by UM and rent direct charged to the project • Or more than 50% of project performed off campus (evaluate time and/or expenses)

Indirect CostsOther Common Rates • State Government: 15.0% TDC • Local Government: 15.0% TDC • Federal Training Grants: 8.0%* • REU Admin Allowance: 25.0%** *TDC less Participant Support Costs ** of Participant Support Stipends only

Indirect CostsLimitations • Some sponsors limit Indirect Costs in the program announcement. • Know your sponsor. • Know the rules.

Special Topics • Participant Support Costs • Multi-Year Projects • Cost Sharing

Participant Support Costs • Participants receive support to attend conferences, workshops, or other training activities • Support may be in the form of stipends, travel, subsistence, supplies, etc. • Many sponsors have unique rules with regard to participant support costs • F&A often not allowed

Multi-Year Projects • Future year budgets should be increased • Salary: 3% per year • GA Tuition: 9%

Cost SharingTerminology • Cost Sharing: Project expenses not paid by the sponsor • Mandatory: Required by Sponsor • Voluntary Committed: Not required by sponsor but included in the proposal to improve chances of funding • Voluntary Uncommitted: Not required by sponsor nor included in the proposal

Cost SharingDocumentation • Mandatory and Voluntary Committed must be recorded in financial records • Faculty effort (soft dollar match) requires appropriate labor distribution (salary split) and effort certification

Research Support services • Home page http://researchsupport.memphis.edu • Budget information (including template) http://researchsupport.memphis.edu/budupdate.html

Budgeting Basics