Basic Budgets

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Basic Budgets

• Danielle McElwain

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Course Objectives

• You will understand the difference between
  allowable and unallowable costs.
• You will learn the steps to prepare a proposal
  budget and budget preparation resources.
• You will become familiar with typical direct cost
  budget categories.
• You will learn to calculate facilities and
  administrative costs (FA) and fringe benefits.
• You will develop a budget.

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What is a Budget?

• An Estimate of Costs Required to Perform a
  Statement of Work Over a Specified Period of Time
• Costs Based on Proposed (Technical) Effort
• May Require Several Drafts Before Finalization
• May Vary in Structure and Complexity

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Why is a Budget Important?

• A Poorly Prepared Budget May NegativeIy Impact a
  Funding Decision
• The Budget is the 2nd Most Scrutinized Part of
  the Proposal
• The University is Responsible for Accurate Cost
  Information
• The Awarded Budget is Based on the Proposed Budget

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A Good Budget

• Is Clearly Justified
• Is Consistent with the Narrative
• Is Adequate
• Is Complete
• Follows Sponsor Guidelines

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Guidelines for Budgets

• Relevant OMB Circulars
• RFA Guidelines
• Negotiated FA Agreement

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Allowable vs. Unallowable Costs

• Reasonable and Necessary
• Allowable
• Allocable
• Consistently Treated
• Conforms to Any Limitations or Exclusions by an
  Agency or Generally Accepted Accounting
  Principles (GAAP)

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Activity

• Allowable vs. Unallowable

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Preparation Steps

• Review Sponsor Guidelines, Instructions, and
  Forms
• Review Proposal Budget Preparation Guide
  (http//sam.research.sc.edu/prepguide.html)
• Notify SAM as Soon as Possible and Ask Questions
• Identify All Proposal Submission Deadlines
• Identify the Maximium Allowable Costs
• Identify Limitations on Facilities and
  Administrative (FA) Costs
• Determine Start Date and Grant Period
• Review Proposal

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Direct Costs

• Definition Costs That Can be Identified
  Specifically With a Particular Sponsored Project
  or Can be Directly Assigned to Such Activities
  Readily With a High Degree of Accuracy
• Direct Cost Categories
• Personnel (Salary and Fringe Benefits)
• Consultant Costs
• Equipment
• Supplies and Materials
• Travel
• Consortium/Contractual Costs/Subawards
• Other Expenses/Costs

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Personnel Costs

• Salary for Faculty and Staff
• Calculate Using the Institutional Base Salary
• Use Percent Effort, Not Hourly Wage
• Total Commitment Must Not Exceed 100
• Faculty Summer Salary vs. Release Time
• Apply Appropriate Escalation Factor on Multi-year
  Budgets
• Salary for Undergraduate and Graduate Students

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How to Calculate Academic Salary

• Dr. X is paid 120,000 on a 9-month appointment.
• Examples
• Calculate his salary for 2 months academic time
• Calculate his salary for 20 Effort

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Daily Salary Table
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How to Calculate Summer Salary

• Salary (9-month appointment) divided by 195 days
  daily rate
• Multiply daily rate X the number of days (65
  days) extra compensation
• Example
• Dr. Paidwell is paid 80,000 on a 10-month
  appointment.
• What is his salary for the summer?

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Fringe Benefits

• Definition - Costs Associated With Personnel
• Include FICA, Workman Compensation, Retirement,
  and Insurance
• If Personnel Costs Are in the Budget, Then Fringe
  Benefits Must be Included
• Specifically Identified to Each Employee
• Check SAM Website for Current Rates
• http//sam.research.sc.edu/guidepersonnel.htmlfbe
  nefits
• Fringe Benefits Calculator is Available

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Current Fringe Benefit Rates

• Fringe Benefits
• State Retirement 12.63
• FICA 7.65
• Unemployment Compensation 0.10
• Workers Comp 0.70
• Total 21.08

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Current Fringe Benefit Rates

• Health and Dental Insurance

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How to Calculate Fringe Benefits

• Dr. Lucky has listed 30,000 in his proposal to
  be paid during the academic year. He has a nine
  month appointment. He currently carries full
  family insurance.
• Calculate the fringe benefits to be included in
  his proposal.

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Fringe Benefit Calculator
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Consultant Costs

• Definition - An Individual That Provides
  Professional Advice or Services on the Basis of a
  Written Agreement for a Fee
• Restrictions
• USC Faculty/Staff Cannot be Paid as Consultants
  on a USC Grant
• State Employees Cannot be Paid as Consultants and
  Require Dual Employment Approval
• Requirements
• Complete Certification Form In USCERA
• Include Letters of Commitment

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Equipment

• Definition - Tangible, Nonexpendable Personal
  Property Having a Useful Life of More Than One
  Year and a Unit Acquisition Cost of 5,000 or
  More
• FA Costs Do Not Apply
• Sales Tax Exemption
• Complete Certification Form in USCERA

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Supplies and Materials

• Definition - All Personal Property Excluding
  Equipment, Intangible Property, and Debt
  Instruments
• Itemize by Category
• Use Tax
• Restriction
• Food Must be Specifically Requested and Justified

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Travel

• Definition - Expenses for Transportation,
  Lodging, Subsistence, and Related Items Incurred
  by Employees Who Are Traveling on Official
  Business of the Institution
• Fly American Act
• Itemize under Separate Categories
• Domestic (In-state and Out-of-state) and Foreign
  Travel
• Include Detailed Budget Information
• Use Current Mileage and Meal Allowance Rates
• Number of Travelers, Destination, Length of Trip,
  etc.

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Subawards

• Definition - An Agreement That Assigns a Portion
  of a Projects Scope of Work and Funding to
  Another Organization
• PI Collaborates With Subrecipient
• Requirements
• Separate Statement of Work
• Detailed Budget
• Written Confirmation of Institutional Commitment
• Certification Form in USCERA
• FA Costs is Only Collected on the First 25,000
  of the Subaward

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Other Contractual Costs

• Fee for Service to pay for services that the
  recipient organization normally performs.
• sample processing
• satellite imaging
• conducting surveys
• FA Costs is Collected on the Full Cost
• Complete Certification Form in USCERA

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Other Expenses / Costs

• Examples of Items Included
• Project-specific Long-distance Telephone
• Participant Support Costs
• Printing and Publication Costs
• Project-specific Postage
• Rentals and Leases
• Equipment and Animal Maintenance
• Service Contracts
• Stipends and Honoraria
• Incentive Payments
• Graduate Student Tuition

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Other ExpensesParticipants Support Costs

• Definition - Payments to Individuals Required of
  the Project With No Obligation to Provide Work or
  Services (e.g., Conferences, Symposiums,
  Workshops, etc.)
• Typical Costs
• Stipends
• Travel
• Materials/Supplies
• FA Costs Do Not Apply

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Other ExpensesGraduate Student Tuition

• Budget for Tuition is Recommended Not Required
• College, Department, Student, or Grant
• Tuition Calculations
• Tuition Must be Proportional to Graduate Student
  Salary
• Consult the Bursars Page for Full Rate
• Apply Appropriate Escalation Factor on Multi-year
  Budgets
• FA Costs Do Not Apply

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Facilities and Administrative Costs (FA)

• Indirect Costs

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Facilities and Administrative Costs

• Definition of FA Costs
• Costs That Can Not be Directly Allocated to a
  Specific Project
• Applied to ALL Sponsored Projects Unless Limited
  by the Sponsor
• Methods of Calculating
• Salaries and Wages Base
• Modified Total Direct Costs Base (MTDC)

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Facilities and Administrative Costs

• Modified Total Direct Cost (MTDC) Excludes
• Capital Expenditures
• Equipment
• Renovations and Alterations
• Buildings
• Tuition Remission
• Each Sub-award in Excess of first 25,000
• Rental Costs of Off-Site Facilities
• Participant Support Costs
• Patient Care Costs

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Facilities and Administrative Costs

• Rates are Based on Two Factors
• Function/Purpose
• Research, Service, Training, Instruction
• Predominant Location of Project
• On-campus, Off-campus
• http//sam.research.sc.edu/pdf/IDC20Rate20Agreem
  ent.pdf

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Activity

• Calculate FA Costs for a Project With Total
  Direct Costs of 150,000 That Include 90,000 for
  Personnel and Fringe, and 60,000 in Equipment.
• The FA Rate is 44.0 of MTDC

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Activity

• Calculate FA Costs for a Multiple Year Budget if
  FA is 44.0 of MTDC
• Year 1 Total Costs of 100,000 Which Includes a
  Subaward to Clemson University for 15,000
• Year 2 Total Costs of 100,000 Which Includes
  a Subaward to Clemson University for 15,000

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Total Budget

• Total Direct Costs
• FA Costs
• Total Budget

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Budget Checklist

• Verify Fringe and FA Rates Are Correct
• Check All Calculations
• Verify Budget is Consistent With Proposal
• Confirm Cost Share Commitments
• Verify All Required Forms are Complete

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Conclusion

• You understand the difference between allowable
  and unallowable costs.
• You have learned the steps to prepare a proposal
  budget and budget preparation resources.
• You are familiar with typical direct cost budget
  categories.
• You have learned to calculate facilities and
  administrative costs (FA) and fringe benefits.
• You developed a budget.