BASIC BUDGET

1
BASIC BUDGET DEVELOPMENT
Regina A. Smith
Melissa D. Mottley Office for Sponsored
Programs

2
Objectives

• Introduce budget development basics
• Budget Structure
• a) Direct Costs
• b) Indirect Costs
• Budget Components
• Specific Budget Terms and Processes
• a) Budget Justifications
• b) Cost Sharing
• c) CASB Exceptions
• d) FA Waivers

3
Parts of a Proposal

• Summary/Abstract
• Introduction/Lit Review
• Problem Statement
• Goals/Objectives/Aims
• Methodology/Work Plan
• Data Analysis
• Conclusions/Future Plans
• Budget
• Budget Justification

4
Budget

• A budget is a mirror image of your proposal,
  written in numerical terms
• Expenses can be covered by the sponsor, UGA, or a
  3rd partyin any combination
• Direct Costs
• Indirect (FA) Costs
• Total Project Cost

5
Direct Costs

• Expense items that are easy to identify,
  quantify, and link directly to a project
• Comprised of Personnel and Non-Personnel costs
• Approved budget should be your spending guide
  (i.e., few to no changes, except as authorized by
  sponsor)

6
Indirect Costs

• AKA overhead, FA, OVPRs cut
• Expenses not easily identified, quantified, or
  linked to a project
• Represent very real costs associated with a
  project
• Budgeted as a percentage of direct costs
• Percentage derived from expenses in 7 cost pools
• Facilities
  Administrative
• Building Depreciation
  General
• Equipment Depreciation
  Departmental
• Operations Maintenance
  Sponsored Programs
• Libraries

7
Indirect Costs continued

• UGA has multiple FA rates negotiated for
  specific project types and sponsors
• All are on the OVPR website http//ovpr.uga.edu/o
  sp/frequent-Info
• OSP will make final determination regarding which
  rate to use

8
Indirect Costs continued
  Federal Non Federal
Research On-Campus 48.5 50
Research Off-Campus 26 33
Experiment Station 39 39
On-Campus Public Service 37 38
Off-Campus Public Service 26 33
Marine Institute 38 38
Marine Extension 46 46
Cooperative Extension 26 26
SREL Provisional 30 38
Instruction On-Campus 56 57
Instruction Off-Campus 26 33
9
Lets Discuss Direct Costs

• Must be
• Allowable
• Allocable
• Reasonable
• Some items may not be direct charged, except with
  special justifications
• Administrative salaries
• Office supplies
• Phones/cell phones and use charges
• Memberships
• Books/journals
• Computers, printers, and their supplies
• Postage

10
Direct Costs continued

• Exceptional circumstances set by Federal
  regulations
• Office of Management and Budget Circular A-21
• Cost Accounting Standards Board (CASB)
• CASB exceptions will be discussed in
• detail later

11
Determining Personnel Costs

• 2 parts to calculate
• Salary
• Fringe benefits

12
Determining Personnel Costscontinued

• Federal rules prohibit an employee from earning
  more than 100 of his/her salary
• Rule applies even across multiple awards, federal
  or non-federal
• Salaries are determined by Human Resources
  Employment Classification System

13
Determining Personnel Costscontinued

• You cant increase your salary just because a
  sponsor will pay it
• All employees---whether paid from a grant or a
  state account---are UGA employees

14
Determining Personnel Costscontinued

• Salaries can be increased in project out years to
  reflect anticipated raises, promotions, or
  reclassifications
• Current COLA is 3
• If no raises at UGA in a given year, the unspent
  salary dollars can be rebudgeted
• Dont forget fringe benefits!
• They are part of personnel costs
• They must be paid

15
Fringe Benefits

• Rates change yearly
• Posted on OVPR Website (http//www.ovpr.uga.edu/os
  p/frequent-info)
• Designed to be an average
• Charged at actual rate (will vary from month to
  month)

16
Fringe Benefits CONTINUED.

• Caution! Health insurance options may affect your
  fringe benefits budget
• If youve under budgeted, your project is still
  responsible
• Sick and vacation pay and holiday pay are to be
  met by the grant (you may require grant-funded
  employees to take regular leave days!)

17
Equipment

• State law rules supreme!
• Definition Any item, basically non-consumable
  and non-expendable, with a useful life expectancy
  of three years or more and an acquisition cost of
  5,000 or more
• Equipment is normally exempt from FA (overhead)
  charges
• Sometimes, components costing lt5,000 can be
  considered a system

18
Equipment continued

• Equipment must be used for the project on which
  it was purchased
• Equipment must be purchased during the project
  period
• Equipment cannot be purchased too late in the
  project period
• Equipment purchases not included in the award
  budget may require sponsor approval

19
Supplies

• Typically refers to consumable goods
• Tip Always differentiate between office
  supplies and lab supplies
• Office Paper, pens, notebooks, computers
  lt5,000, software
• Lab/Research glassware, reagents, solvents,
  test booklets, special tape, chemicals

20
Supplies CONTINUED.

• Why?
• Office supplies are included in UGAs FA charges
• Lab/Research supplies arent
• Requests to purchase lab supplies will be
  approved more expeditiously if they are clearly
  identified as such

21
Communications

• You may charge long-distance calls to a grant
• You may charge a dedicated phone line to a grant
  (if needed to meet project aims)
• You cannot charge an office or lab phone to a
  grant, and
• You cannot charge a cell phone or a cell plan to
  a grant, unless.they are approved as CASB
  exceptions

22
Consultants

• Dont confuse a consultant with a subcontractor
• Consultant
• A firm or single individual providing
  professional or highly technical advice or
  assistance
• UGA controls the results but not the manner in
  which the service is performed
• Work is done over a short period of time and
  procured through a professional services
  agreement
• Consultants dont engage in programmatic decision
  making

23
Subcontractor

• Subcontractor
• A fiscal assistance mechanism
• Used when the intent is to have another
  institution (or entity) carry out an integral
  portion of a projects scope of work
• Sponsor terms and conditions are flowed down
• FA is expected to be included in a subcontract
  budget
• A detailed budget, justification, scope of work
  and letter of support is required for each
  subcontract

24
Memberships, Books, Journals

• All are considered FA costs
• Allowed only if approved as a CASB exception
• Must you join in order to access data, for
  example?
• Is the book or journal unavailable in UGAs
  libraries?
• Do you need the book or journal to complete your
  scope of work?

25
Postage

• Postage and mailing expenses are included in
  UGAs FA rate
• Allowed only if approved as a CASB exception
• Applies to routine mailing (reports,
  correspondence, proposals, etc.)
• Does not include shipping

26
Budget Justifications

• A narrative clarification of each of the budget
  components
• It explains how dollar amounts were determined
• It does not provide a rationale for the amounts
  requested
• It does, however, indicate how each item relates
  to the research plan
• All budget items need to be justified dont
  assume their use is obvious to reviewers

27
Sample Budget Justification

• Budget Justification
• Personnel Bibbons and Green are rehired retirees
  who work 48 time to direct
• and administer the program. They also give talks
  and tours and develop materials
• (brochures, safety handouts, safety videos,
  etc.). The Research Professional is in
• charge of scheduling and gives talks and tours.
  The Program Specialist works
• closely with the animal caretaker to schedule the
  use of live animals and gives talks
• and tours. (Much of his focus is on talks to
  K-12). The animal caretaker cares for
• the live animal collection that serves the SREL
  Outreach program and our safety
• presentations. The Post Doctoral Associate gives
  talks and tours and develops
• materials and maintains the safety portion of our
  website.
• Travel Travel funds are requested for the
  research professional and post
• doctoral staff members to attend one meeting,
  workshop, or training course per
• year. The program specialist may attend one
  meeting or workshop per year to
• enhance educational program development.

28
Sample Budget Justification continued

• Travel-continuedAll of the personnel supported
  on this project who give tours talks
• and may attend one meeting per year to receive
  training relevant to the subject of
• environmental safety. Travel may also be required
  to acquire animals for the project.
• Equipment No equipment funds have been
  requested.
• Materials and Supplies Printing Funding will
  be used to reprint the booklet Snakes of
• Georgia and South Carolina for distribution to
  safety talk attendees. 3,750 copies will
• initially be printed. A second printing will be
  made if needed. Up to 20 additional
• educational brochures will be developed. A
  Venomous Snakebite Protocol Card will be
• printed and laminated and distributed for handy
  reference. CDs of a PowerPoint
• presentation will be developed and approximately
  20 copies will be made.
• Other This category includes miscellaneous
  supplies which support the scope of the
• project and will be purchased as needed. These
  include, but are not limited to, animal
• food, cages, bins, and bags, and racks for
  transporting and housing animals. Snake
• hooks, tubes and tongs for handling animals will
  also be purchased. Representative
• animals currently not in our live collection may
  be purchased.
• Indirect Costs Indirect Costs are calculated at
  30.

29
Cost Sharing

• AKA Match
• Any portion of the total cost involved in
  carrying out a project not paid for by the
  sponsor
• UGA
• A third party (third-party match)
• Cost sharing may be
• Mandatory (required by sponsor of all applicants)
• Voluntary (offered by the proposer)

30
Cost Sharing continued.

• Cost sharing is real!
• In-kind (a portion of someones salary, AKA
  released time)
• Cash (to buy equipment, for example)
• UGA strives to keep cost sharing to a minimum
• Cost sharing nails down dollars that cannot be
  used for anything else
• Cost sharing reduces our FA
• Reduced FA means more state dollars must fill
  the void

31
Cost Sharing continued.

• A mention of cost sharing anywhere in the
  following sections of your proposal means UGAs
  accountants have to track and report it
• Proposal narrative
• Budget
• Budget justification

32
Cost Sharing continued.

• How is it tracked?
• A companion account is set up that is yoked to
  your grant account
• Anything cost shared (inkind or cash) has to be
  moved into the companion account
• Cost share obligations must be met

33
Cost Sharing continued.

• This is a lot of extra work
• Dont volunteer if not mandated
• Use sponsor funds to pay for your effort

34
Cost Share Budget
Sponsor UGA Total
Personnel
PI (25 X 100,000/yr) 25,000 25,000
Technician (100 X 37,000) 37,000 37,000
Undergraduates (4 X 200 hrs X 8/hr 6,400 6,400
Fringe Benefits 25,000 X 27 6,750 6,750
Fringe Benefits 37,000 X 42 15,540 15,540
Subtotal 84,290 6,400 90,690
Non-Personnel
Equipment 30,000 30,000 60,000
Lab Supplies 5,000 5,000
Long Distance 500 500
Publication 1,000 1,000
Travel 1,500 1,500
Subtotal 36,000 32,000 68,000
Total Direct 120,290 38,400 158,690
Indirect (_at_48.5 MTDC) 43,791 4,074 47,865
Total Project Cost UGA Cost Share 20.56 164,080 42,474 206,555
35
CASB Exceptions

• The following budget items are generally not
  allowed as direct costs
• Administrative salaries
• General Office supplies
• Computers, disks, printer, toner cartridges
• Books and journals
• Phones and cell phones (and their monthly use
  charges)
• Postage
• Membership Dues
• Why
• They are indirect expenses
• To charge as a direct expense would be double
  dipping

36
CASB Exceptions continued.

• Remember the FA cost Pools?
• Facilities
  Administrative
• Building Depreciation
  General
• Equipment Depreciation
  Departmental
• Operations Maintenance
  Sponsored Programs
• Libraries
• All are considered Administrative Costs
• And are part of the Departmental Administration
  pool
• Departmental Administration is the largest pool
• At UGA, Departmental Administration is 35 of our
  FA rate

37
CASB Exceptions continued

• To direct charge one of these typically indirect
  items
• You must provide a detailed written budget
  justification
• The justification must meet Federal CASB
  requirements for exceptions
• OSP must approve the justification (and maintain
  your justification as the official record
• Your justification must address
• What you wish to purchase
• Why it is necessary for completion of your
  project
• How it fits with your projects scope of work and
  is different from similar items provided by your
  department that are treated as FA costs

38
CASB Exceptions continued

• OSP approvals are typically done at proposal
  submission time
• Included in proposal Budget Justification
• May be done after award, however
• Use OMBA-21 Exception Request form
  (http//ovpr.uga.edu/docs/forms/osp/casb-exc...)
• Form pulls needed info by asking series of
  questions
• Contracts Grants wont let you spend award
  funds on items until CASB exception approval is
  in UGAs mainframe
• OSP has 2 guides (personnel and non-personnel) to
  help you (includes justification examples
  http//ovpr.uga.edu/docs/policies/osp/CASB-Non-Adm
  in-Exception.pdf)

39
Waivers of FA

• Waiver requests made in writing (letter or
  e-mail)
• Must be approved by David Lee or Regina Smith
• May waive all or some FA
• Waivers can be approved
• To meet mandatory cost share
• To meet funding caps
• When sponsor disallows/limits FA

40
Waivers of FA continued.

• No waivers provided for companies/industry
• Tantamount to taxpayer subsidy
• Letters from sponsor will be ignored
• If sponsors guidelines explicitly state no (or
  reduced) FA
• UGA/UGARF will accept sponsors policy
• No waiver request letter/e-mail required

41
Waivers of FA continued

• We hate to waive FA (but we will)
• Means state funds subsidize your project
• Means our FA rate could decrease in future
• Which means more state funds subsidize projects
• Waivers are cost share
• If shown on budget, will be tracked