Rebudgeting on Sponsored projects

1. Rebudgeting on Sponsored projects

2. characteristics of a Sponsored project • Externally funded • Governed by specific terms and conditions • Typically requires detailed accounting which may or may not require approval for re-budgeting

3. Definitions • Budget: A statement that outlines, by category or line item, how funds provided for a specific project will be expended. • Rebudget: The act of amending the budget by moving funds from one category or line to another.

4. The rebudget request • Though each Department may determine their own requirements for the rebudget request, at minimum each request should capture the information that is listed in the Rebudget Request form located on the SPA-EFS page at: • http://www.ospa.umn.edu/efs_sp/index.htm • The form is the last item under the “Forms & Tools” subsection.

6. can I approve the rebudget request? • When reviewing the rebudget request, remember the cost principals outlined in OMB Circular A-21: • Reasonable • Allocable • Consistently treated • Allowable NOTE: These apply no matter what the source of funding.

7. Is it Reasonable? • Per A-21, a cost is Reasonable if: • …the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made…

8. Is it allocable? • A-21 also says an expense is Allocable if: • …the goods or services involved are chargeable or assignableto such cost objective in accordance with relative benefits received or other equitable relationship...

9. Is it treated consistently? • A-21 also indicates a cost must: • …be given consistent treatment through application of those generally accepted accounting principles appropriate to the circumstances…

10. Is it allowable? • And finally, A-21 indicates a cost is Allowable if: • …it is “consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.”

11. summary

12. When must the request go to spa? • Most rebudget requests can be approved at the Departmental level. Those that cannot may include: • Requests that represents a change in scope • Requests that represent significant rebudgeting • Request that reach or exceed an agency defined threshold • In general, these type of requests would require prior agency approval and would be routed to SPA for review and submission to the agency.

13. Change in Scope • A change in scope is defined as a change in the objectives or specific aims identified in the approved grant application. • Potential indicators of a change in scope include: • Addition of human or animal subjects, when none previously indicated • Change in animal model being used • Incurrence of patient care costs when not previously indicated • Significant rebudgeting • Purchase of a large piece of equipment

14. Significant Rebudgeting • Significant rebudgeting occurs when expenditures in a single budget category deviate (increase or decrease) from the categorical commitment amount by a specific amount or percentage. • Some agencies have indicated “significant rebudgeting” may be a potential indicator of a change in the scope of work. • Agencies may or may not identify a threshold for significant rebudgeting. • NOTE: Significant Rebudgeting does not apply to NIH modular grants.

15. rebudgeting Thresholds • Whether the rebudget represents a change in scope or not, Agencies may have limits on the amount of rebudgeting that can be approved locally. These limits can be by percentage or dollar amount. When you reach the threshold, prior agency approval is required. Examples of such thresholds are: • NIH, HRSA, CDC and Other PHS entities - 25% or more of the total costs awarded during the period • The US Depts. of Defense, Commerce, Education and NASA - 10% on awards greater than $100,000. • NSF and the Dept. of Energy – no limit on the rebudgeting between the approved budget. • American Heart Association requires approve for the purchase of a piece of equipment totaling more than 25% of the annual budget; or rebudgeting for computers and components beyond the one-time expense of $5,000 • American Cancer Society has a limit of $15,000 and also requires approval for equipment purchase in excess of $5,000/year • Muscular Dystrophy Association has a limit of 15% of the annual award but also requires approval for changes to approved equipment and the adding of new budget categories

16. Submitting an agency approved rebudget requests • Rebudget requests that need prior agency approval are generally submitted to SPA in letter format. Before you send it to SPA, make sure you have confirmed: • The cost is allowable per agency guidelines. • Rebudgeting is allowable per agency guidelines. • Once these have been verified, prepare the letter. The letter must include: • A description and purpose of the rebudget • How it will benefit the project • How it affects the budget NOTE: Some agencies may also require a revised budget for entire period. As with most agency requests, the letter must be signed by the PI and Department Head (or 1 level above PI). Method of submission will be based on agency requirements.

17. Equipment Purchases • For most agencies, the purchase of general purpose equipment items (copiers, laptops, desktop computers, personal handheld computers, fax machines, scanners, etc.) that are used for general office purposes (rather than a well-justified, specific research purpose) would not be allowable as a direct charge against the award. • In addition, some agencies may limit the dollar amount, number or type of equipment that can be purchased on their awards. Always check your agency’s guidelines before proceeding with the approval of any equipment purchase.

18. Special considerations for equipment requests • If your award allows rebudgeting to purchase equipment not specifically identified in the original proposed/approved budget, the following should be considered prior to approval: • Item to be purchased • Project need or programmatic justification • Percent usage on project • Total cost and amount to be charged to the project (NOTE: For split usage, the amount charged to the project cannot exceed the actual usage the item will have on the project). • Can the need be met by existing equipment within the Department • Are funds available • Termination date of the award (NOTE: It is very difficult to justify charging the full cost of a piece of equipment to an award that is within 6 months of termination)

19. And finally…. • Remember: • The fact that a proposed cost appears to be included in the award amount as requested does not mean the cost is allowable. It is up to you to determine, based upon your agency guidelines, if the cost is allowable. • Each sponsor is different. If unsure, review the sponsor’s guidelines and/or call you SPA grant administrator to discuss your particular situation. • Each rebudget request should provide a justification that will enable you to make an informed decision. • The rebudget should have no affect on the overall award budget amount. Make sure the net of your line item increases and decreases is -0-. • Think twice about opening general purpose account codes such as General Supplies (720100) or General Services (720300), especially on federal awards, since once open they can continue to be used without your review of the expenditure. • Never open trainee-related cost lines (account code 800100 or 800600) on a research project. • On multiple project awards, all rebudgets between projects must be completed by SPA. • If rebudgeting between F&A exempt and non-exempt lines, make sure you properly adjust the F&A. • Don’t be afraid to ask questions and/or request a written statement of clarification from the PI.