Creative Budgeting….. Within Federal Guidelines

1. Creative Budgeting…..Within Federal Guidelines G. Maggie Griscavage Andrew Parkerson-Gray University of Alaska Fairbanks

2. Federal requirements… 2CFR220 (OMB Circular A-21) Cost Principles For Educational Institutions Defines allowable and unallowable costs (the “J” section) Establishes Cost Accounting Standards. • CAS 502: • Consistently allocate costs incurred for the same purpose, in like circumstances, as either direct or F&A costs as they relate to the final cost objective

3. An “allowable” cost is one that is eligible for reimbursement by the federal government. Contrast with: • PERMISSIBLE BY INSTITUTION: A cost is permitted by institution, as outlined in its various administrative procedures. • ALLOWABLE BY AGENCY: A cost is permitted by the terms of the sponsoring agency. • An "unallowable" cost is one that is not eligible for reimbursement by the federal government.

4. It all begins with good planning! • The Scope of Work • The Budget Narrative • The Budget • Proposal writing skills are important! (How exquisitely can your PI articulate their need?)

5. The first necessity… • The Proposal stage – if you want guns, knives and furs, you need to explain that thoroughly in the justification page • Example: A high-powered Winchester magnum rifle is required for protection against polar bears while the research team is working on the North Slope. This rifle may be used on subsequent federal awards because a lot of this PI’s work is tundra-related and may occur in the same area.

6. Or….. • If you want to hire a gun-bearer, with his/her own gun, then the same principles apply: • Example: The PI will hire a local villager who is familiar with the area, and who has the necessary competency and equipment (rifle) to protect the group. The individual will receive a modest stipend, travel and per diem via a direct payment, according to federal and university regulations and procedures.

7. Believe it!!!

8. Also during the proposal… • When asking why they want a gun, you might get: • Hiring a hunter would not help, as the gun is not for protection but rather for an experiment the PI wants to conduct. (Of course, I haven't seen a narrative yet, so I'm not sure what the experiment is!)

9. For the hospital folks… • Buying drugs shouldn’t happen on the street corner! • Follow your institutional acquisition procedures • Make sure you do have an Institutional Review Board (IRB) protocol active number (clinical trial #)! Example: Budget line item, commodities: One kilo cocaine Justification: Under IRB protocol #.., supply will be acquired and administered per SOW.

10. Is it really Participant Support? • Participant support can cover quite a lot of grey areas, but again… needs to be explained and be defensible. • Example: The researcher will hold instructional meetings at several villages (listed), and the culture here is such that an exchange is expected as a sign of respect. • While gifts are unallowable, you may be able to buy fuel coupons and issue them as ‘incentives.’

11. Alaska Road Map

13. It might not be that weird… The line item says: “Travel” But, comes across in a budget justification narrative as: “Vehicle, Aviation, Boat fuel” Or, “Equipment” And they list an all terrain vehicle, at $15,000… Suspicious?? Heck yes!! But…… ……

14. Budget detail: “Aluminum-bodied, brushless Electric Power Assisted Steering system, largest power steering units in the industry, easy maneuvering, the EPS in 4x4 diff. lock mode, in challenging terrain (mud, rocks, logs) and with loaded racks. Viper Blue, wearing Tungsten Metallic painted plastic. 12-inch machined aluminum wheels with black inlays…” Perhaps it’s the only vehicle that will get them there, and back!! Ask Questions, be open-minded…

15. Personal aircraft… • Situation: Univ. employee owns light aircraft and volunteers the plane to be custom-fitted with some altimetry equipment. It is proposed that we hire a contract pilot to fly the thing around for a while, over a period of three years. Not exactly sole source up here.

16. Arguments… • What does"volunteer“ mean? If it means no charge for the use of the aircraft, wouldn't that mean unfair competition with businesses who lease small aircraft? And "custom-fitted with altimetry equipment". That's an advantage for the owner when he's using it for his personal use, isn't it? • What’s the difference between using one's own personal automobile and one's own personal aircraft for federally-funded research? Do you feel compelled to call on the local car pool or rental agency for a car to test GPS equipment? Why then for an aircraft?

17. Possible answers… • Resolution 1: Get at least a few quotes prior to allowing your PI to do the job himself and get paid for it.  This would be a "less than arms length" arrangement.  Resolve insurance and equipment removal issues. A note to the sponsor might also be a good idea. • Resolution 2: Be careful about insurance issues. Put the cost of contracting the service in the grant in the first place, and thank the PI, but no-thanks.

18. Cell phone charges… “I have science crews heading into the Arctic or off to remote sites that can only be reached by ship or plane. We use Iridium phones because that's the only way we can guarantee them having some semblance of contact with the rest of the world in the case of an emergency. Good thing too - one of the teams didn't bring enough food this last season and we had to arrange a supply shipment to avoid a Donner Party incident! “

19. Cell phones, more… • With some cell phones - if we end up getting it specifically for a project, and it's only used for a project, than it is a project cost. We also have instruments remotely placed that we can only get the data transmitted via cell phone - so it is blatantly a project specific cost. • If your need is not as a regular activity, and the only reason you have the cell phone is because of the project work, then you can justify it as a directly related cost, and charge it to the program.

20. The Great Mustache Caper… Sometimes those workers have walked right by StaciaBackensto when she's wearing her moustache, which she bought at Party Palace in Fairbanks (she had to defend the expense to an accountant in the Institute of Arctic Biology business office). She's not sure yet if she's fooling the ravens. Excepted from “UAF in the News”

21. Travel questions.. • Researchers, invited from other countries, intended to meet in the U.S. for a conference. • BUT: Program officer has informed PI that the meeting needs to take place overseas instead. In Europe. • Question: How do we handle the overseas travelers?

22. Solution • Consider these options: • Re-budget heavily to pay for their travel (and deal with the subsequent requests for foreign travel not in budget) • Subcontract to private facilitator • Ask for more money as a supplement Resolution: Contract out to a University near the foreign venue, and reimburse them for managing the overseas conference

23. Handling risk claims… • “I work with Oceanographers. They frequently, DELIBERATELY, throw very expensive equipment overboard, and hope that they can find it a year or so later. Most of the time we do find it. Sometimes we don't. Our institution is self-insured. We've had to file claims for four lost moorings this year. Our Risk Management office is starting to say that they are going to require us to put language/a provision in our awards to provide funds for replacement of lost equipment. “

24. Reactions… • They're smoking something. That is totally ludicrous and unreasonable and they can in no way require us to do this, and no agency would. The adjusters in our Risk office are trying really hard to get out of paying the bill. • I don't think it is unreasonable to put some of the cost of the unrecoverable equipment on the grant. It is justifiable that, due to the nature of the work (and the ocean), a certain percentage of the equipment will be lost.

25. More of the same… • We could propose that you will need to throw 5 widgets overboard in 3 years. Based on past experience, only 3 are recoverable, so you budget for 7 widgets. • Explain to your sponsor that there’s a high risk of unrecoverable items, and have them lift the requirement placed on us by OMB circulars to take good care of their equipment.

26. Effort certifications • Required by OMB Circular A-21 (Section J.10) • Certifies that salaries and wages charged to sponsored agreements are reasonable in relation to the work performed. • Certifies that expended effort meets the commitments made in the project proposal, even if the person was not paid from project funds.

27. Effort reporting… • Your proposal says a grad student will work 200 hours on a project over a five week period. • BUT! What if the project is in a remote location and there’s 24-hour daylight , and the boat is only available for five days?? • It’s all about the “effort.” Truth is, 100% effort is expended over five weeks, it’s just that it’s been exhausted (excuse the pun) within one week.

28. School of Fisheries and Ocean Sciences graduate student Cathy Hegwar prepares to dive near a sea lion rookery off Kodiak Island as part of a research project focused on the decline of Steller sea lions in Alaska's coastal waters.Credit: UAF photo by Brenda Konar

29. Those fed regs..… Be mindful of US Department of Labor laws, and discuss in advance the implications of hourly wages vs. stipend for the GA. Twenty hours a day on an hourly wage may exceed your budget…(ovetime implications) If you stick to effort, not hours, you will be within the guidelines for both agency and US DOL.

30. The Barrow, Alaska, Project • Exempt and Hourly employees from Fairbanks provide on-site support in Barrow, Alaska. Non-Exempt employees receive overtime because of excessive work hours during their on-again, off-again trips to Barrow. • Problem – What to do with the Exempt Employees who provide 60 hours or more of support per week?

31. Barrow, on a good day! Photograph by James L. Stanfield, courtesy National Geographic Society

32. Solution • State Statues state we can pay them geographical dislocation pay (+45%). Amounts equate approximately to what non-exempt employees make when they charge for overtime.

33. Compliance… • Your PI has to go to a foreign nation, and it is expected that there will be a need to “grease the wheels” in order for them to get to where they want to go. • Sample budget explanation: The PI will need to pay for services, in cash, at the foreign location. A cash advance is authorized, and the PI will keep records of payments, and obtain receipts where possible. If not possible, the record will be detailed and so state that no signature was given.

34. Lessons learned….. • Ensure compliance up to the last minute the project leaves your control. • Do the best you can, if there is an agreement, to make as clear as day for the recipient what your expectations are for them to follow guidelines, but don’t expect foreign recipients to do it the same way. • Your non-US participants may be compliant, but on their terms. Have them explain their version of Cost Accounting Standards. Talk to their accounting department if they don’t have comparative rules.

35. Some items that just didn’t make it These items just couldn’t be pinned down as “project-specific” and had to be nixed: • Gold parking decal (premium campus parking space) • iPod(s) • Prescription sunglasses Why? When asked, the people involved could not justify the reasons, other than “nice to have”…Not that we wouldn’t have been open to valid ideas! 

36. Tips: • Full disclosure and justification at the proposal stage; • Talk over the “what if’s” with your PI. If there are any ‘not sure what will happen’ areas, put a close explanation and say that this may be subject to change(s); • Respond immediately – don’t ignore because it’s a hard request.

37. Tips: • Use federal definitions to their fullest extent. • Talk to your grants specialist(s) when emails or letters won’t work – articulating your needs sometimes comes easier when you’re both feeling ‘chatty.’ • Trust your gut! If it’s just plain not going to work, you will know it there first!

38. Find A Way…. • Find a way to make it work, but work within the federal regulations, state statutes, institutional policies, or whatever… • Read, read, and read some more – there is generally a way to make it work that is ethical and legal • Demonstrate that you’ve done your homework, relate it to your circumstances.

39. And, yes, sometimes it IS rocket science!!A rocket launched in March 2003 from UAF's Poker Flat Research Range: Credit: UAF photo by Chuck Johnson

40. THANKS!!! • Any questions?? • And, ask anyway – you never know who else in the audience wants to ask the same thing but is shy! Maggie – gmgriscavage@alaska.edu Andrew – amgray@alaska.edu