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Budget Management

Effective budget management is crucial for the successful completion of sponsored projects, including modular awards. This guide outlines the foundational elements of grant budgeting, emphasizing the distinction between direct and indirect costs, and the necessity for prior approval during significant budget changes. It covers essential procedures for budget revisions, including justifications required for no-cost extensions, and the impact of rebudgets on facilities and administrative expenses (F&A). This resource aims to equip principal investigators with the knowledge to navigate budget complexities and ensure compliance with grant conditions.

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Budget Management

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  1. Budget Management

  2. Introduction • All sponsored projects require a budget • Including modular awards (for Institutional use only) • Budgets help ensure that all costs toward completing the project have been anticipated

  3. OMB Circular A-110 • Subpart C – Post-Award Requirements • .25 Revision of budget and program plans • Outlines the requirements for grants and agreements with Institutions of Higher Education

  4. Basic Grant Budgeting • Follow the RFP guidelines • Know the terms and conditions of your award

  5. Basic Grant Budgeting • Total Cost = Direct cost + Indirect Cost (F&A) • Direct costs are those costs that can be directly attributed to a specific project • Indirect Costs are those costs that cannot be directly attributed to a specific project

  6. F&A Costs Base X Rate = Indirect Costs (F&A)

  7. NIH Requirements • Prior Approval by agency required when: • Change in Scope • Transferring amounts from trainee costs • Capital expenditures (construction, land or building acquisition) • Need for additional NIH funding • Transfer of funds between construction and non-construction work

  8. No Cost Extensions • Request must be generated by the PI and go through ORSP • Provide written justification • ORSP will authorize the No Cost Extension when applicable or contact agency for approval

  9. Budget Revision Request • Budget revisions must be allowed under the terms and conditions of the award document. • Any prior approvals must be obtained by the department through the ORSP office prior to submitting the budget revision.

  10. Budget Revision • Be sure to recalculate the F&A rate when transferring funds to and from exempt categories. • Transferring funds from an exempt category to a non-exempt category will effect the direct costs available for the project.

  11. Effects of Rebudgets on F&A Expenses • Scenario 1 $50,000 budgeted in equipment is to be transferred to supplies. How much can be rebudgeted to supplies and how much is to be rebudgeted to F&A?

  12. Effects of Rebudgets on F&A Expenses • Answer: The amount being transferred from an exempt category (equipment) should be divided by (1.00 + F&A rate). This quotient can be moved into other direct non-exempt categories. The balance will be added to the F&A budget.

  13. Effects of Rebudgets on F&A Expenses • Example: • $50,000 decrease in equipment • At a 46% F&A rate • 50,000/1.46 = 34,246.57 • 34,246.57 is added to supplies • 15,753.42 is added to F&A

  14. Effects of Rebudgets on F&A Expenses • Scenario 2 • The PI needs to purchase an unbudgeted piece of equipment from the grant and wants to use funds from the supply line. How does this rebudget affect the F&A budget line?

  15. Effects of Rebudgets on F&A Expenses • Answer: • The amount being rebudgeted to an exempt line (equipment) should be divided by (1.00+ F&A rate). This quotient is the amount to be reduced in the supplies category. The difference is the amount to be reduced in the F&A category.

  16. Effects of Rebudgets on F&A Expenses • Example: • $50,000 increase in equipment • At a 46% F&A rate • 50,000/1.46 = 34,246.57 • $34,246.57 reduction to supplies • $15,753.43 reduction to F&A

  17. Questions?

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