Brown Bag Series on Research Faculty Budgeting Demystified Gretchen Davis Richey, Office of Sponsored Programs December 16, 2011 Gerberding 142 University

Brown Bag Series on ResearchFaculty

Budgeting Demystified

Gretchen Davis Richey, Office of Sponsored Programs

December 16, 2011Gerberding 142

University of Washington


Outline

• Budget Categories, Formats, Object Codes• Identifying your costs • Finding hidden costs• Estimating your costs successfully• Writing good budget justifications• Calculating F&A accurately• Hints and best practices


Facts

• A well-developed budget will increase your chances of getting funding

• Salaries usually make up the majority of the budget so accuracy is important

• Always refer to GIMs for the latest rates: Benefits, F&A

• Don’t cost share unless it is required• Always follow sponsor requirements


Components

• Direct Costs• Facilities & Administration Costs• Budget Justification


The Goal

• Budget tightly matches the scope of work– Use the same terms and amounts

• Clear and concise, in non-technical terms• Further clarifies how the project will be

accomplished– X of subjects will be screened to get Y of subjects

who will complete the study protocol


Where to Start

• The first step of building a budget is a clear understanding of your scope of work and location of the project.

• The second step is understanding the allowable costs for the Program Announcement.


Budget Categories

• Step Three: Choose a set of budget categories to develop your budget (direct costs)– UW Object Codes– Sponsor Budget Categories

• Modular Budgets for NIH– Some funding vehicles allow non-itemized budgets

for projects <$250,000 per year.– Module = $25,000

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UW Financial Categories


Identify Budget Line Items

• Step Four: Use the budget categories to identify direct cost line items for your project

• F&A will be discussed later


Salary

• Department administrator or fiscal specialist can look this up in OPUS/HEPPS (payroll system). The SAGE Budget Tool will pull this data automatically.

• Institutional Base Salary (IBS) – UW portion is listed in OPUS/HEPPS – Additional Clinical Salary is paid to persons with

clinical appointments; the source is UWP or CUMG

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What is Institutional Base Salary?

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• See GIM 35• Non-clinical

– A = State Salary– B = Grant Funded (other)

• Clinical– X = University Salary– Y = Clinical Salary

• Additionally…– ADS = Administrative Support– ENS = Endowed Supplements


Salary• Remember to include increases for

promotions, merit increases (follow sponsor instructions & justify)

• Effort may fluctuate between project periods• Calculating person months (see OSP website

calculator)

• Sponsor Salary Cap– How should this be presented on the budget?– Any amount over the “cap” is cost sharing but

does not have to be documented on the eGC1• Allowable administrative salaries

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Benefits

• Benefit rate is determined by employee type. See GIM 3 for a list of current rates

• The SAGE Budget Tool will pull this data automatically

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Equipment & Supplies

• Supplies • Equipment

– >$2,000 and useful life is greater than one year– Certain projects may qualify for the Machinery &

Equipment Tax Exemption• See the EIO website

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http://f2.washington.edu/fm/eio/machinery-and-equipment


Travel

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• Travel office - http://f2.washington.edu/fm/travel/ – Fly America Act– Per Diem Rates– Adv approval required for any exceptions

• International travel has special considerations

http://f2.washington.edu/fm/travel/


Other items to consider

• Rent• International projects• Patient care costs• Animal care costs

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Usually Disallowed

• Admin/Clerical salaries*• Office supplies*• Food and alcohol• Any category not allowed by the sponsor

*These costs are covered by F&A


Off Campus Projects are an “Unlike Circumstance”

• Costs that are usually unallowable can be allowable, but must be justified

• Based on OMB A21• Includes:

– Telephone– Office supplies– Rent


Peel the Onion

• Once you have the basic line items identified, identify the hidden costs

• Shipping samples• Human or Animal Subjects expenses• Screening costs• Rent


Estimating Costs

Hints for success include:• Accurately calculate salaries, including clinical

(A/B) components, step increases for classified staff, expected promotions for faculty or staff

• Get up to date equipment cost quotes from vendors & attach in proposal


Budget Justification - Good

• Justification matches the cost categories and sufficiently “itemizes” the costs

• Written in non-technical language, understandable by someone without scientific background


Budget Justification - Bad

• Insufficient information from the reviewers perspective – “We have benefits included”

• Doesn’t match the budget request• “False elegance” – use of language to veil a

perceived weakness. Overly technical or condescending verbiage – “Program official said it’s okay” (provide proof)– Cut and pasted text from elsewhere in the

proposal


Reasonable vs Allowable vs Allocable

• Reasonable– A prudent person would find the costs acceptable

• Allowable– The sponsor instructions allow the costs (A21)– Under “like circumstances” costs are treated the same

• Allocable– Costs must benefit the project– You must be able to prove that the cost is directly

related to the project

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Facilities & Administration Costs

“F&A” are those costs that pay for expenses which cannot be

identified to a particular project, program or activity

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Calculating F&A – read GIM 13

• Read GIM 13 & Attachment A• Base

– Determine budget items excluded from the F&A calculation

– TDC vs MTDC• Location

– On campus– Off campus– Other options

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Base Type• F&A costs are calculated on a base amount• The base amount is the total of all line items

of a budget that are subject to F&A costs (per sponsor instructions)

• There are several base types:– MTDC = Modified Total Direct Costs– TDC = Total Direct Costs– S&W = Salaries and Wages– TDC less T&E = Total Direct minus Tuition &

Equipment29


Grocery Store Analogy

• In your cart– Meat, veggies, TP Direct Costs

• At checkout– Tax calculated on the paper products only F&A– Paper products = Base– Tax % = Rate– Total cost of groceries + Tax = Grand Total


Importance of Sponsor Instructions

• Provides overall instructions for the application• If sponsor approval is needed at the

preparation phase• Allowable costs• Salary caps• F&A rate & base• Budget format (modular or full, NIH only)• Overall policies

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Why are Instructions Important? • Most questions can be answered in the

sponsor instructions (read them before contacting OSP)

• All requirements in the instructions must be met

• Maximize opportunity to get funding (little mistakes may have big penalties)

• Some optional forms must be included if project includes this type of work (i.e., subcontracts)

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UW Tools for Budget Building

• SAGE Budget• Budget preparation tool• Pulls in salaries and benefit rates• Calculates subtotals and F&A• Able to attach to eGC1• Able to modify based on feedback• Able to use for multiple projects

• Sign up for SAGE Learning• http://www.washington.edu/research/main.php?page=

learningAbout

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http://www.washington.edu/research/main.php?page=learningAbout

http://www.washington.edu/research/main.php?page=learningAbout


Budget Documents

• Use SAGE Budget Tool or a spreadsheet to develop your budget

• Don’t create a pdf – it obscures the formulas• Identify line items excluded from F&A• Justify unlike circumstances• Show draft budget to expert for feedback


Hints• Initially prepare the budget using either the UW object

codes or the sponsor budget categories• When the budget is finalized, translate the budget figures

to other forms• Do use past proposals as models• Don’t simply copy a prior submission• Precedent may not be a valid reason for current practice

(rules change, people make mistakes)• Always attach a detailed budget spreadsheet

– No PDFs• Please consider contacting your OSP administrator early in

the preparation process if you have questions35


Budget Checklist

• PI must review and approve the final budget• PI assures you that all budget items are

allocable, reasonable and allowable• Confirm the current benefit rates are being

used• Check that the budget $ matches on all budget

and budget justification pages• Application meets sponsor requirements• Take and break and then review the final one

last time 36


Questions & Discussion


Thank You