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Developing your budget …

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Developing your budget …

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  1. Developing your budget … And introduction to the cost principles and allowable costs and ….. OSP awareness Oct 19, 2011

  2. What is a budget? • Financial expression of your work plan (aka statement of work) • Personnel costs • Other than personnel costs • Best estimate of financial resources needed to accomplish project • Accurate

  3. Personnel Costs (a direct cost) • SU folks whose effort will allow project objectives to be realized • Key or senior personnel • Folks responsible for project – ordinarily faculty • Others • Technicians • Project managers • Postdocs, grad students, undergraduates • Admin/clerical

  4. Personnel Costs • Salaries and wages • How much? • Proportion time allocated to grant • Full time, half time, 25%; 1 sum month • Fringe benefits • Federally negotiated rates • Annually updated • Five employee classifications • Reg staff/AY faculty; summer faculty; Grad Res Asst; PT/ES/OL; Adjunct

  5. Other than Personnel Costs • Everything else… • Travel • Equipment (>$5,000) • Materials & Supplies • Non-SU people • Collaborators/consortia, consultants • Participants • Tuition • Publications • ………

  6. What about that ‘tax’ SU charges • Also called “indirect costs” Or • Facilities & Administrative costs • Negotiated with federal government • Research – on campus (47% FY 12), (48% FY 13) • Instruction – on campus (32%) • Other – on campus (33%) • Off-campus Research, Instruction and Other (26%) • Percent of what? • Modified total direct costs • Direct costs – tuition, equipment, subcontract > 25k, rent

  7. Estimating direct costs • Check out osp.syr.edu • http://osp.syr.edu/budget-development/Conceptualizing%20your%20Budget/Personnel.html • Talk to those with more experience? • What can you get done for the money? • What do sponsor’s expect when budgeting and expending money…. • Cost principles

  8. Cost Principles (Standards) Premise: Project costs = Allowable direct costs (DC) + allowable indirect costs (IDC (or F&A)) Guiding Principles – Costs must be: • Allowable, • Allocable, • Reasonable, and • Consistently treated

  9. What’s allowable? • Must be reasonable (!); • Allocable to sponsored agreements; • Consistently treated; and • Conform sponsored agreement. • Sponsored agreement trumps all principles – no means no.

  10. What’s Reasonable? When you bought the item at price X and quantity Y • You acted prudently – others would have made similar decision given facts and circumstances at the time. • necessary; • followed good business practices and applicable laws and regulations, and sponsored agreement terms and conditions; • acted prudently given the circumstances; and, • followed institutional policies • If purchase posted on public blog, or NYS Times etc etc – how would folks react?

  11. What’s allocable? • Item can be assigned (allocated) to an award/project, or function • In proportion to benefit received • Direct costs – exclusive benefit to project or can be reasonably assigned to multiple projects • Indirect costs – benefit many projects or activities, can’t be reasonably assigned

  12. What’s Consistency? • All costs incurred for the same purpose in like circumstances are treated the same • If in F&A pool, there it stays, UNLESS cost is not for same purpose… • If allocate to one award, ordinarily can’t shift to another award • If charge to one award, can’t shift to another cause there’s $$ in the pot.

  13. Basically …Allowable as Direct Cost… • Essential to support project • Cost to sponsor in proportion to benefit received • They pay the whole cost, they are the sole beneficiary • University and sponsor allow

  14. Allowable in F&A (not DC) • Needed to support many projects • Not reasonable to assign proportion of benefit, including but not limited to • Sect’y/clerical (cost of doing business) • Lap top computers (general purpose equipment) • Office supplies (cost of doing business) • Local phone calls (cost of doing business) • These are all administrative costs… • (the “A” in F&A (“F” = facilities)

  15. Federal government’s concern • Bear its fair share of sponsored project costs • Protect public’s interests ($$) • Protect public’s trust

  16. Areas where folks stumble (post award) • Allocability • Yale 7.6M: “Spending down” awards (cost transfers); deferred effort (did not work during summer) • Consistency • Charging admin personnel and ‘stuff’ • Duke 1.6M

  17. And stuff like: Food…. • That’s entertainment!! (j.17) • Unless conference or meeting (j.32) • PURPOSE – disseminate sponsor’s results (Remember: How does expenditure allow you to achieve project’s objectives?) • Characteristics of meeting: • Formerly announced; • Agenda; • List of attendees; • Minutes, • Proceedings etc.

  18. Or stuff like travel • Go to <city> for conference • Stay extra time • Can’t charge ‘extra time’ to grant • Rent car to travel to <city> • Lexus with all bells and whistles • Return • Gas receipt time stamped after car returned • Lack itemized receipts for procard transactions

  19. Core questions when developing budget AND spending $$.. • How does purchase/expenditure (as DC) help accomplish the project’s objectives? • If cost in generally in F&A, how is situation non-routine, unlike? • Not allowed in solicitation / agreement? • Is prior approval necessary? • If yes, and not obtained, not allowed. • Reasonable purchase? • DOCUMENT in budget justification and when money $$ how purchase advances project’s objectives

  20. What do you think, #1? • Sydney wants to buy a lap top using NSF grant dollars. • Not in budget narrative • Lap top will likely be in Sydney’s office • Allowable cost?

  21. What do you think, #2? • George has included secretarial support in his budget narrative for specific project activities. Project Awarded • 25% of employee’s work load. • George’s project is winding down and is now in the last year. The sec’ty quit at yr 4. George wants to charge 2% of senior administrator effort to grant. • Allowable cost?

  22. What do you think, #3? • Morgan wants to fly to Europe to disseminate his NSA project results. Tickets charged to NSAaward, which requires prior approval before making the expenditure. • Did not get prior approval • Allowable cost?

  23. What do you think, #4? • Helen has a grant to encourage increased representation of minority students in STEM fields. An important element is networking events, which involve …… food. • Helen is not charging the cost of food to the sponsor, but wants to use the cost to meet mandatory cost-sharing. • Allowable cost?

  24. What do you think, #5? • Fred wants to buy a special freezer to store samples acquired during the award period. His department is running out of space and he has been asked to allocate ½ the freezer space to dept purposes. • Allowable cost?

  25. What do you think, #6? • Margie has weekly lab-group meetings to discuss progress on various sponsored projects. To encourage participation, she provides pizza and beer and wants to charge the costs to the grant. • Allowable cost?

  26. Summary • Follow the cost principles…AARC • Justification, documentation of expenditures is essential & starts with budget narrative. • Make compelling case why needed, why cost in proportion to benefit. • Rarely black and white… many shades of grey.. • Sponsors want to pay for their fair share • Sponsors don’t want to pay for “cost of doing business unrelated to their business” • But, sometimes, no means no…