Overview: Building Your Budget
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Transcript Overview: Building Your Budget
Angie Templeton & Nicole Cobb
Grants & Contracts Administrators
Sponsored Programs Administration
OMB Circular A-21 General Principles
Direct vs Indirect Costs
Allowability of Costs
Mechanics of Building a Budget
Sample Problems
Provides allowability principles for the reimbursement of
costs associated with federally sponsored projects
Provides guidance for determining direct and indirect costs
http://www.whitehouse.gov/omb/circulars_a021_2004
*Note: Circular A-21 will be included in the OMB Uniform
Guidance that will take effect on December 26, 2014, so the
references at A-21 in this presentation will likely be
different when that begins.
DIRECT
INDIRECT
OMB A-21 D.1.
OMB A-21 E.1.
Can be identified
aka “F&A” or “Overhead”
specifically with a
particular project
Can be directly assigned
to projects relatively
easily with a high degree
of accuracy
Incurred for common or
joint objectives
Cannot be identified
readily and specifically
with a particular project
Salaries
Fringe
Travel
Commodities/Supplies
Contractuals/Services/Subcontracts
Equipment
Facilities
Depreciation and Use
Allowances
Interest of Debt
associated with certain
buildings
Equipment and Capital
Improvements
Operation and
Maintenance Expenses
Library Expenses
Administrative
General Administration
and Expenses
Departmental
Administration
President’s Office
General Counsel
Provost
Budget & Planning
Procurement
Compliance
Sponsored Programs
Administration
OMB A-21, C.2. (a.b.c.d.)
Reasonable
Allocable
Consistent
Allowable
REASONABLE
“Prudent Person Test”
Determining Reasonableness:
Necessary to the project
Complies with Federal and State Laws and
Regulations
Did the individuals make good judgements?
Were the actions taken consistent with
institutional policies and procedures?
ALLOCABLE
Expenses are incurred solely for the project
OR
Expenses benefit both the project and other work in a
proportion that can be approximated
Split purchases are allowed, and are often the most
appropriate way to allocate expenses to projects
CONSISTENT
Cost Accounting Standard (CAS) 502 requires consistent
allocation of costs
Incurred for the same purpose, in like circumstances, and are
either only direct costs or only indirect costs
REMEMBER:
Cannot charge the same cost both directly and indirectly when it
is incurred for the same purpose and circumstance
ALLOWABLE
Must follow requirements from:
OMB Circulars (soon to be Uniform Guidance)
Sponsor Guidelines
Award Document
Institutional Policies
Applies to both direct and indirect costs
Certain costs may only be allowable as indirect
Example: Sponsored Programs expenses are not allowable as
a direct costs, but are allowable as indirect
Costs must be treated consistently as either direct
costs or indirect costs, when in like circumstances
“Like costs in like manner”
Disclosure Statement (DS-2) also provides guidance:
http://www.controller.msstate.edu/cas/cdst/
Example:
Travel costs incurred while performing the function of
general university activity such as travel by executive officers
meeting with the State Board of Trustees to discuss general
university business would be classified as indirect costs.
Travel by a university employee related to carrying out the
functions of a specific contract or grant would be classified as
a direct charge to that contract or grant.
Can I charge a computer to my project?
IT DEPENDS!
Yes, if being used in a programmatic way
Computer needed to be connected to a scientific piece of
equipment for data collection
Computer needed to run simulations, analyze data, etc
No, if being used in a general way
Check email, browse internet,
word processing, etc
Can I charge office supplies to my project?
Typically no, due to lack of allocability
OMB A-21 F.6.b.(3).- normally treated as Indirect Costs
Allowable in unlike circumstances
Used in programmatic way (conference materials, pamphlets,
etc)
Can I charge my administrative assistant to my
project?
Typically no, due to lack of allocability
OMB A-21 F.6.b.(2).- salaries of administrative and clerical
staff normally treated as Indirect Costs
Appropriate on a “Major Project”
OMB A-21 Exhibit C
Anything necessary for the completion of the project
that is not paid for by the sponsor
Source of funds is irrelevant:
MSU- E&G (Educational and General) Funds
MSU- Designated Funds
Third Party Contribution
Other
Committed
Uncommitted
Must be tracked
Doesn’t need to be tracked
Required by sponsor
Typically after the fact
Not required, but
committed in proposal
Not required, but
implied through
regulation
“volunteering” of MSU
resources
As a PI, do I have to charge my time to the project?
No- BUT your time will be considered cost share, and
some portion of it must be committed and tracked
Doing so will require division approval on the IAS in the Cost
Share portion
OMB Memo 01-06
http://www.whitehouse.gov/omb/memoranda_m01-06/
All projects must have some committed effort, and therefore
must be tracked
Note: we do not encourage cost sharing if it is not
required by the sponsor
To be allowable as a cost share expense, it must be
allowable as a direct cost
Must be incurred during project period
Can only be used as cost share once
Cannot be already charged to the feds (F&A costs)
The sponsor does not allow me to charge F&A on the
project. Can I use this unrecovered F&A to meet my
cost share requirement?
Only if you have prior approval of the Federal awarding agency
(see OMB A-110 C.23.(b).)
If I have two related federal projects, can I use my NSF
funds as cost share for my USDA project?
No- unless authorized by federal statute to be used as
cost share (very rare to happen)- OMB A-110 C.23.(a).(5).
**Cannot cost share Federal funds with Federal funds.**
I bought a piece of equipment a few years ago that I
plan to use on this project. Can I use that as cost share?
1- Was it purchased with Federal funds?
2- Are the feds already paying for this (as F&A)? Is it in the
F&A pool?
3- Is it fully depreciated?
If you answer “no” to all of these, then you could use
the depreciation value as cost share.
Basic Principles
All costs must follow the
principles we’ve discussed:
Reasonable, Allocable,
Allowable, and Consistent
Properly budgeted as
Direct or Indirect Costs
All costs should be viewed
in relation to the project’s
needs
Specific RFP’s may
prohibit or require certain
classes of expenses- be
sure to read carefully!
Personnel
PI, Project Team, Students
Establish this section first
to help determine
expenses for other
categories
Calculations:
% effort or person months
Person Months
recommended
9 mo. Vs 12 mo. employees
Use current salariesescalations allowed for
future budget periods
Sometimes sponsors (particularly industries) will ask for an
hourly rate.
Hourly Rate for 12 month: Salary / 2,080
Hourly Rate for 9 month: Salary / 1,560
Because MSU uses level of effort percentage instead, hourly
rates are not auditable.
We can provide these rates if required, but we need to add
a disclaimer. SPA can work with the PI on what verbiage to
use.
Fringe Benefits
Treated as a Direct Cost
Effective August 31, 2014
Calculations
Rates are applied to
budgeted salaries
Faculty/Staff
(based on
$40,000 average
salary)
Enrolled
Students
Retirees
Other
Intermittent
Employees and
Non-Enrolled
Students
36.09%
0.73%
24.23%
8.48%
Graduate Student Tuition
Calculation is based on student’s budgeted effort
Note: Effective Fall 2015 (FY16), all GRA’s will have the
100% rate charged in budgets. GTA’s and GSA’s will
remain at 71%. (Kevin Edelblute)
Travel
Project related
conferences, meetings,
data collection, etc
For budgeted personnel
Per Diem
http://www.travel.msst
ate.edu/hcma/plhcma.
php
$41/day (min)
$46/day (max)
Mileage
http://www.travel.msst
ate.edu/mileage/mileag
e.pdf
$.56/mile if State owned
vehicle not available
$.235/mile if State owned
vehicle available
Equipment
Non-expendable
Tangible
Useful life of more than
one year
Acquisition cost of $5,000
or more per unit
Note: just because it can
be inventoried, does not
necessarily make it
equipment for budgeting
purposes
Commodities/Materials
and Supplies
Contractuals/Subcontracts
Services to be
Items to be used for the
project
Examples: Molecular
Biology Supplies
(enzymes, tubes, etc) to
be used for DNA
sequencing
performed by another
entity to complete the
project
Example: Third-party
vendor will perform
DNA sequencing
samples
Participant Costs
Broad definition:
Support provided when a sponsor funds a project or activity
in connection with formal meetings, conferences, or training
programs
Specific definition:
Costs paid to (or on behalf of) participants in such events
Treatment of participant costs vary from sponsor to
sponsor- check the RFP and sponsor requirements!
Facilities and Administrative Costs (F&A)
Research
45.5% MTDC On Campus
26% MTDC Off Campus
Instruction
50% MTDC On Campus
26% MTDC Off Campus
Public Service/Other
27.2% MTDC On Campus
22.8% MTDC Off Campus
*Current Federallynegotiated rates,
effective:
July 1, 2014June 30, 2017
(MTDC = Modified Total Direct Costs)
Total Direct
Costs
Exclusions
Modified
Total Direct
Costs
Exclusions:
Tuition
Sponsor may further
Equipment
restrict the F&A Rate
The maximum that can be
charged is our federally
negotiated rate
Patient Care
Off-site Rentals
Scholarships/Fellowships
All Subaward Costs
Exceeding $25,000
Angie Templeton: 5-2346
[email protected]
Nicole Cobb: 5-4775
[email protected]
Sponsored Programs Administration
133 Etheredge Hall
325-7404