Budget Basics for Administrators

1. Budget Basics for Administrators Sean Hine Branch Chief Office of Grants Administration National Cancer Institute June 2014

2. What we will be discussing: • Let’s discuss some logistics • How do you start the request? • Electronic submission • Discussion of costs • Overarching rules • Types of budgets • Dive into the nitty-gritty – budget specifics • Pre-award considerations • After the award

3. We have an idea for a project…now what? • All applications to the NIH must be in response to a Funding Opportunity Announcement (FOA) • Be sure you understand the specifics of the FOA • Including: period of support, type of budget(s), limits in $ levels, additional reporting, etc. • Abide by any provided submission dates

4. Welcome to the electronic world! • NIH has completed the process of transitioning all competing applications to the electronic (SF 424) process • This includes multi-project proposals • More information at the following Guide Notice: http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-075.html • The requirements may change from mechanism to mechanism – be careful!

5. All about costs • A grantee is responsible for following and NIH for ensuring that all cost considerations are met • Ensure your understanding of the applicable cost principles • Particularly with the change to the uniform principles • Grantees may shape their own systems as long as the principles are followed and the CFR standards are met for financial management systems • Four tests for determining allowability: • Reasonableness • Allocability • Consistency • Conformance

6. Costs (cont.) • Differentiation between a Direct Costs and Facility & Administrative (indirect) Costs • Directs – can be identified to a specific grant, project, etc. • F&A – common or joint costs that cannot be readily identified with a specific grant • More information including discussion on cost transfers, reimbursement of F&A, specific items of cost, etc. can be found at the following within the NIH Grants Policy Statement: http://grants.nih.gov/grants/policy/nihgps_2013/nihgps_ch7.htm

7. Costs (cont.) • It is NIH’s responsibility as stewards of Federal funds to ensure that a grantee’s financial management systems are adequate to receive support and that all costs being requested within a proposal are allowable • If we have any concerns, we will be in touch!

8. Salary Cap • Effective Jan. 12, 2014, the salary cap for Executive Level II has increased to $181,500 • Guide Notice announcing the change: http://grants.nih.gov/grants/guide/notice-files/NOT-OD-14-052.html • This level also applies to consortia

9. General Rules/Considerations • Bona Fide Need • In any request, please be sure that the expenses you are including can be reasonably expected to be expended in the request time of support • A budget tells NIH what is needed in terms of $ for the proposed research. It is not used to assess the merit of that research; only accounted after the merit has been established

10. General Rules/Considerations (cont.) • Cost Sharing • Not required • Is assumed however when an expense is listed but there is no reimbursement requested (includes personnel contributing effort exceeding the level of salary support) • Application requesting more than $500,000 Direct Costs (exclusive of consortia F&A) must seek permission from NIH at least six weeks prior to submission • Understand the specifics of the FOA

11. General Rules/Considerations (cont.) • Well-funded investigators should discuss appropriateness and specific-Institute policies prior to submission • Responsibility for the Fiscal Management of the award rests with the award recipient and listed principal investigator(s)

12. Types of budgets • Modular • Categorical/Itemized • Inclusion of consortia (modular & categorical) • Program specific: • SBIR/STTR • Ruth L. Kirschstein National Research Service Awards – Fellowship & Training • Research Career Development Awards

13. Modular Budgets • Availability of use is dependent on mechanism: R01, R03, R15, R21, R34 and others as identified on FOA • Application and associated review process does not require a detailed (categorical) budget • Capped at $250K direct costs per year (exclusive of consortium F&A costs) • If you exceed $250K directs, you are moving to the categorical budget request • If mechanism listed above, modular budget must be used if at or below $250K

14. Modular Budgets (cont.) • Grantee should begin with a categorical budget for all years to craft the “module” request • Module = $25K direct costs • General example: All five years of an R01 budget is $841,432. The average per year is $168,286. Modular budget request per year (rounding to next module) would be $175,000. • No escalation per year • Request may fluctuate if appropriate per FOA or one-time expense (i.e. equipment) but it should be justified

15. Modular Budgets (cont.) • Full justification on personnel • Personnel should include names, person months and description of role • Include other information as you deem appropriate to assist in clarification of request • Consortia costs are calculated separately but same justification (personnel) requirements apply

16. Modular Budgets (cont.) • A few more things: • If NIH needs further information, even a detailed budget explanation, we may ask for it • The NIH Salary Cap should be accounted for in your calculation/estimate of the number of modules needed • Be thorough in your personnel justification

17. Time for the details – Categorical Budgets • Personnel • Indicate level of effort (calendar months) • Provide institutional base salary up to the NIH salary cap • If salary exceeds the cap, welcome to include a statement indicating as such in the justification • Apply applicable fringe benefit for position • Explain fluctuations in efforts! • Equipment • Generally, expected to be a one-time expense • Be sure to comply with institution’s definition of equipment (NIH defines as $5K or more and an expected life exceeding one year)

18. Categorical budgets (cont.) • Travel • Dependent upon the needs of the research but be sure it provides direct benefit to the project • Must be consistent with institution’s own travel policies • Comply with Fly America Act: http://grants.nih.gov/grants/policy/nihgps_2013/nihgps_ch4.htm#fly_america_act • Participant/Trainee Costs • With exception of Training grants, this section should be left blank unless specifically identified within FOA

19. Categorical budgets (cont.) • Other Direct Costs • Highly dependent upon the type of research being conducted – be realistic! • Must be well justified – explain fluctuations and atypical expenses in the justification section • Include tuition remission in this section

20. Categorical budgets (cont.) • F&A (indirect) costs • Be sure to follow the rate agreement in place at the time of the application explicitly • NIH will utilize whatever rate is in place at the time of award • If the indirect cost base calculation is rather complicated, it may be beneficial to include a brief explanation in the justification

21. Consortia Expenses • Modular budget • May exceed the $250K direct cost limit only for consortia F&A • May round to the nearest $1,000 • Beneficial to explain the direct cost need per year • Personnel justification still required • Categorical budget • Detailed budget and justification similar to the parent grantee required • Regardless, flow/pass-down rules are in effect!

22. Some Classic Mistakes • Did not request permission for submitting application greater than $500K directs • Modular with multiple consortia without a clear idea as to how much is needed for each site – we need to reflect their costs including appropriate F&A too! • Categorical budget does not justify fluctuations • Application indicates that the grantee is going to take care of the PI’s salary BUT when the award hits, not so much…

23. Some Classic Mistakes (cont.) • The listed calendar months when applied to the base salary does not equate to requested salary • Base salary exceeds current salary cap • Calendar months in budget differs from justification • Costs in budget differ from justification • Indirect cost base calculation makes no sense given rate agreement and costs

24. Reminder: • If you are submitting an R01 and the request is: • At or less than $250K each year, use a modular format • Above $250K in ANY year OR a foreign (non-US) applicant, use a categorical format • The $250K direct cost limit is exclusive of consortia F&A

25. Special Programs • The following programs have individual budgeting requirements: • SBIR/STTRs • NRSA • Career (K) awards • Be sure to comply with the specifics of the FOA and the listed budget requirements

26. Pre-Award Costs • Costs associated with a project that are incurred prior to the receiving of the NIH Award • Remember – only the award is a guarantee of the Federal commitment • Allowable up to 90 days prior the start date of a competing award • Beyond 90 days requires prior approval • Cost considerations still apply • Incurred at the grantee’s own risk and expense – no requirement of the Federal government!

27. You got the $!! Now what? • When receiving the award, be sure to: • Check that it was sent to the correct location • Ensure the funds are available in payment management • Understand the level of support - $ and time • Account for any terms & conditions; keep an eye out for any special restrictions on funds • Any restricted funds must be tracked by the grantee separately!

28. After the award (cont.) • Funds not matching what you asked for? • Study section cuts have been applied • Can discuss these with your awarding Institute/Center for reconsideration • Funding policies have been put into place • Not appealable and most likely being applied to all (i.e. you are not the only one!) • If there may be necessary changes, be sure to discuss any potential changes in scope to the project with the awarding Institute/Center

29. After the award (cont.) • Build an internal budget utilizing the information provided in the award • Again, be sure to track restricted funds separately • Follow all regulations and policies • If you are encountering start-up issues that may result in a large amount being unspent, have a pro-active discussion with your NIH staff • We are here to help!!

30. Last words… • This is all of our Federal tax $ at work – we have a mutual obligation to take care of it wisely! • There is a lot that goes into putting forward an application and conducting reviews – ask questions prior to help the process go smoothly • For investigators, learn what a great resource your own sponsored programs office can be

31. Resources • NIH Grants Policy Statement (10/13): http://grants.nih.gov/grants/policy/nihgps_2013/ • SF424 (R&R) Application and Electronic Submission Information: https://grants.nih.gov/grants/funding/424/ • NIH Modular Research Grant Applications: http://grants.nih.gov/grants/funding/modular/modular.htm

32. Thank you!! • QUESTIONS???