Developing your budget …

1. Developing your budget … And introduction to the cost principles and allowable costs and ….. OSP awareness December 17, 2015

2. Cost Principles (Standards) Premise: Project costs = Allowable direct costs (DC) + allowable indirect costs (IDC (or F&A)) These provide the general framework from which budgets are built Guiding Principles – Costs must be: • Reasonable, • Allowable, • Allocable, and • Consistently treated

3. What’s Reasonable? When you bought the item at price X and quantity Y • You acted prudently – others would have made similar decision given facts and circumstances at the time. • necessary to fulfill project objectives; • followed good business practices and applicable laws and regulations, and sponsored agreement terms and conditions; • followed institutional policies • If your purchase were posted on a newspaper headline how would folks react?

4. What’s Allowable? • Must be necessary and reasonable for the performance of the work; • Allocable to sponsored agreements; • Consistently treated; and • Conform sponsored agreement. • Sponsored agreement trumps all principles.

5. What’s Allocable? • Item can be assigned (allocated) to an award/project, or function • In proportion to benefit received • Direct costs – exclusive benefit to project or can be reasonably assigned to multiple projects • Indirect costs – benefit many projects or activities, can’t be reasonably assigned

6. What’s Consistency? • All costs incurred for the same purpose in like circumstances are treated the same • If in F&A pool, there it stays, UNLESS cost is not for same purpose… • Once a cost is allocatedto one award, ordinarily can’t shift to another award (i.e. cost transfers) • If charge to one award, can’t shift to another just because there’s $ left ‘on the table’.

7. Federal government’s concern • Bear its fair share of sponsored project costs, (but not more than its fair share!) • Why is this important? • Protect public’s interests (taxpayer $$) • Protect public’s trust

8. What is a budget? • Financial expression of your work plan (aka statement of work) • Personnel costs • Other than personnel costs • Best estimate of financial resources needed to perform the work proposed • Accurate • Costs should pull from actual sources • Scope of the project and the project budget should be consistent with the costs available under the program

9. Who is responsible for budget preparation? • The responsibility varies across campus - department budget managers, center staff, school/college grants development staff, or OSP research administrators • Some PIs prefer to be ‘do it yourselfers’ • Check within your school/college for available support, or ask OSP • Some departments do not have available support for budget development; OSP fills in that role • OSP is here to help, so budget questions, no matter how small can be asked throughout the process!

10. Read sponsor guidance for budget preparation • Check for unallowable costs • Some costs may be required (e.g.- PI meetings) • Some cost items may have limitations or thresholds (e.g.- F&A) • Budget category terminology may differ among sponsors • Placement of cost items on sponsors forms may differ

11. Personnel Costs (a direct cost) • SU folks whose effort will allow project objectives to be accomplished • Key or senior personnel • Folks responsible for project – ordinarily faculty • Others • Technicians • Project managers • Postdocs, grad students, undergraduates (remember to account for graduate tuition!) • Admin/clerical (in rare circumstances)

12. Personnel Costs • Salaries and wages • How much? • Proportion time allocated to grant • Represented in person months or % effort • Fringe benefits • Federally negotiated rates • http://www.osp.syr.edu/forms%20and%20pages/pages/Budget%20Rates,%20DUNS%20and%20Face%20Page%20Information.html • Annually updated • Five employee classifications • 1) Reg staff/AY faculty; 2) summer faculty; 3) Grad Res Asst; 4) Part time Hourly/ Extra Service / Overload; and 5) Adjunct

13. Administrative / Clerical support costs, allowable? • May be allowable when all of the following requirements are met: • The necessity of admin support explicitly included in the budget • Individuals work is directly linked with and integral to the project • The work performed is not for standard admin duties routinely performed by SU personnel • Cost cannot also be recovered as F&A • OSP will review admin/clerical in budgets on a case-by-case basis for appropriate application - took effect for new federal awards or award increments that occur on or after 12/26/14

14. Other than Personnel Costs • Everything else… • Travel • Equipment (>$5,000) • Materials & Supplies (includes computers) • Non-SU people • Subawards, consultants • Participants • Tuition • Estimate should reflect the actual needs of the student, if known • Publications • Purchased Services • Conference Hosting Costs • Computer Services

15. What about computers? • Computing devices are considered materials and supplies • Computing devices are allowable when: • Predominantly used in support of the sponsored project. • If not predominantly used to support the project, reasonable proportion of cost relative to how much it is used on the sponsored project is allowable. • Computers dedicated solely to lab or field use are allowable • In all cases, computers should be clearly justified in the budget narrative, including whether the entire cost is budgeted (e.g.- predominant use), or a reasonable proportion. • Except in extenuating circumstances, computers are not allowed for purchase at the end of an award.

16. What about that ‘overhead’ SU charges? • Also called “indirect costs” Or • Facilities & Administrative costs • Negotiated with federal government (FY16 – FY17) • Research – on campus (50%) • Instruction – on campus (34%) • Other – on campus (35%) • Off-campus Research, Instruction and Other (26%) • Percent of what? • Modified total direct costs (MTDC) (most commonly used F&A base) • Direct costs less tuition, equipment, subcontract > 25k, rent, scholarships & fellowships • Sometimes sponsors formulas will apply (e.g. – 15% of Salary + Fringe; 20% of Total Cost, etc…….)

17. Estimating direct costs • Check out osp.syr.edu • http://osp.syr.edu/budget-development/Conceptualizing%20your%20Budget/Personnel.html • Historical experience, vendor quotes, or actual published rates should be used • Budget figures are not pulled from thin air • Talk to those with more experience • What can you get done for the money? • What do sponsor’s expect when budgeting and expending money…. • Cost principles (2 CFR Part 200, Section 4xx)

18. So, In Summary … to be Allowable as Direct Cost… • Must be essential to support project • Cost to sponsor is in proportion to benefit received • If sponsor pays the whole cost, they are the sole beneficiary • In the case of computing devices, the use must be predominantly for the project charged, or a reasonable allocation. • Must adhere to sponsor policy/ guidelines as well as University policies

19. Allowable in F&A (not DC) • Needed to support many projects • Not ordinarily reasonable to assign proportion of benefit, including but not limited to • Sect’y/clerical (cost of doing business) • Office supplies (cost of doing business) • Local phone calls (cost of doing business) • These are all administrative costs… • (the “A” in F&A (“F” = facilities)

20. And other areas like: Food…. • That’s entertainment!! (200.438) • Unless conference or meeting (200.432) • PURPOSE – disseminate sponsor’s results (Remember: How does expenditure allow you to achieve project’s objectives?) • Characteristics of meeting: • Formally announced; • Agenda; • List of attendees; • Minutes, Not This!! • Proceedings etc. This!

21. Core questions when developing budget AND spending $$.. • How does purchase/expenditure (as Direct Cost) help accomplish the project’s goals and objectives? • If cost in generally in F&A, how is situation non-routine, unlike? • Is purchase/expenditure allowed in sponsor solicitation or agreement? • Is prior approval necessary? • If yes, and not obtained, not allowed. Prior really does mean prior. • Is this a Reasonable purchase?

22. Importance of a well crafted Budget Narrative • Start with OSP’s Budget Narrative Templates and adapt for your purposes • Give OSP enough time, and we can start your 1st draft • Clearly articulate, following the same order in detail budget: • the Personnel costs required, specific roles, and level of effort • your travel needs and itemization of required materials & supplies,equipment, & Other costs • items that would typically be unallowable, but have sufficient rationale to include; now is the time to justify the cost • Work with OSP on this language as we may have seen your scenario before and have creative suggestions • DOCUMENT in budget justification when and how purchases advance project’s objectives. • TELL THE STORY!!

23. The OSP Budget Template • It doesn’t do everything, but comes pretty close! • OSP Budget Template QUESTIONS?