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Developing your budget …. And introduction to the cost principles and allowable costs and ….. OSP awareness Oct 19, 2011. What is a budget?. Financial expression of your work plan (aka statement of work) Personnel costs Other than personnel costs

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Developing your budget

Developing your budget …

And introduction to the cost principles and allowable costs and …..

OSP awareness

Oct 19, 2011


What is a budget
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 accomplish project

    • Accurate


Personnel costs a direct cost
Personnel Costs (a direct cost)

  • SU folks whose effort will allow project objectives to be realized

    • Key or senior personnel

      • Folks responsible for project – ordinarily faculty

    • Others

      • Technicians

      • Project managers

      • Postdocs, grad students, undergraduates

      • Admin/clerical


Personnel costs
Personnel Costs

  • Salaries and wages

    • How much?

      • Proportion time allocated to grant

      • Full time, half time, 25%; 1 sum month

  • Fringe benefits

    • Federally negotiated rates

    • Annually updated

    • Five employee classifications

      • Reg staff/AY faculty; summer faculty; Grad Res Asst; PT/ES/OL; Adjunct


Other than personnel costs
Other than Personnel Costs

  • Everything else…

    • Travel

    • Equipment (>$5,000)

    • Materials & Supplies

    • Non-SU people

      • Collaborators/consortia, consultants

      • Participants

    • Tuition

    • Publications

    • ………


What about that tax su charges
What about that ‘tax’ SU charges

  • Also called “indirect costs”

    Or

  • Facilities & Administrative costs

    • Negotiated with federal government

      • Research – on campus (47% FY 12), (48% FY 13)

      • Instruction – on campus (32%)

      • Other – on campus (33%)

      • Off-campus Research, Instruction and Other (26%)

    • Percent of what?

      • Modified total direct costs

      • Direct costs – tuition, equipment, subcontract > 25k, rent


Estimating direct costs
Estimating direct costs

  • Check out osp.syr.edu

    • http://osp.syr.edu/budget-development/Conceptualizing%20your%20Budget/Personnel.html

  • 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


Cost principles standards
Cost Principles (Standards)

Premise:

Project costs = Allowable direct costs (DC) + allowable indirect costs (IDC (or F&A))

Guiding Principles – Costs must be:

  • Allowable,

  • Allocable,

  • Reasonable, and

  • Consistently treated


What s allowable
What’s allowable?

  • Must be reasonable (!);

  • Allocable to sponsored agreements;

  • Consistently treated; and

  • Conform sponsored agreement.

    • Sponsored agreement trumps all principles – no means no.


What s reasonable
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;

    • followed good business practices and applicable laws and regulations, and sponsored agreement terms and conditions;

    • acted prudently given the circumstances; and,

    • followed institutional policies

  • If purchase posted on public blog, or NYS Times etc etc – how would folks react?


What s allocable
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


What s consistency
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…

  • If allocate to one award, ordinarily can’t shift to another award

  • If charge to one award, can’t shift to another cause there’s $$ in the pot.


Basically allowable as direct cost
Basically …Allowable as Direct Cost…

  • Essential to support project

  • Cost to sponsor in proportion to benefit received

    • They pay the whole cost, they are the sole beneficiary

  • University and sponsor allow


Allowable in f a not dc
Allowable in F&A (not DC)

  • Needed to support many projects

  • Not reasonable to assign proportion of benefit, including but not limited to

    • Sect’y/clerical (cost of doing business)

    • Lap top computers (general purpose equipment)

    • 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)


Federal government s concern
Federal government’s concern

  • Bear its fair share of sponsored project costs

    • Protect public’s interests ($$)

    • Protect public’s trust


Areas where folks stumble post award
Areas where folks stumble (post award)

  • Allocability

    • Yale 7.6M: “Spending down” awards (cost transfers); deferred effort (did not work during summer)

  • Consistency

    • Charging admin personnel and ‘stuff’

      • Duke 1.6M


And stuff like food
And stuff like: Food….

  • That’s entertainment!! (j.17)

  • Unless conference or meeting (j.32)

    • PURPOSE – disseminate sponsor’s results (Remember: How does expenditure allow you to achieve project’s objectives?)

    • Characteristics of meeting:

      • Formerly announced;

      • Agenda;

      • List of attendees;

      • Minutes,

      • Proceedings etc.


Or stuff like travel
Or stuff like travel

  • Go to <city> for conference

    • Stay extra time

    • Can’t charge ‘extra time’ to grant

  • Rent car to travel to <city>

    • Lexus with all bells and whistles

    • Return

    • Gas receipt time stamped after car returned

  • Lack itemized receipts for procard transactions


Core questions when developing budget and spending
Core questions when developing budget AND spending $$..

  • How does purchase/expenditure (as DC) help accomplish the project’s objectives?

    • If cost in generally in F&A, how is situation non-routine, unlike?

  • Not allowed in solicitation / agreement?

  • Is prior approval necessary?

    • If yes, and not obtained, not allowed.

  • Reasonable purchase?

  • DOCUMENT in budget justification and when money $$ how purchase advances project’s objectives


What do you think 1
What do you think, #1?

  • Sydney wants to buy a lap top using NSF grant dollars.

    • Not in budget narrative

    • Lap top will likely be in Sydney’s office

      • Allowable cost?


What do you think 2
What do you think, #2?

  • George has included secretarial support in his budget narrative for specific project activities. Project Awarded

    • 25% of employee’s work load.

  • George’s project is winding down and is now in the last year. The sec’ty quit at yr 4. George wants to charge 2% of senior administrator effort to grant.

    • Allowable cost?


What do you think 3
What do you think, #3?

  • Morgan wants to fly to Europe to disseminate his NSA project results. Tickets charged to NSAaward, which requires prior approval before making the expenditure.

    • Did not get prior approval

    • Allowable cost?


What do you think 4
What do you think, #4?

  • Helen has a grant to encourage increased representation of minority students in STEM fields. An important element is networking events, which involve …… food.

  • Helen is not charging the cost of food to the sponsor, but wants to use the cost to meet mandatory cost-sharing.

    • Allowable cost?


What do you think 5
What do you think, #5?

  • Fred wants to buy a special freezer to store samples acquired during the award period. His department is running out of space and he has been asked to allocate ½ the freezer space to dept purposes.

    • Allowable cost?


What do you think 6
What do you think, #6?

  • Margie has weekly lab-group meetings to discuss progress on various sponsored projects. To encourage participation, she provides pizza and beer and wants to charge the costs to the grant.

    • Allowable cost?


Summary
Summary

  • Follow the cost principles…AARC

  • Justification, documentation of expenditures is essential & starts with budget narrative.

    • Make compelling case why needed, why cost in proportion to benefit.

  • Rarely black and white… many shades of grey..

    • Sponsors want to pay for their fair share

    • Sponsors don’t want to pay for “cost of doing business unrelated to their business”

  • But, sometimes, no means no…


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