Preparing a Proposal Preparing a Proposal Budget Budget

PAD SeminarPAD SeminarJim BarbretJim Barbret

November 2010November 2010

Today’s Today’s Objectives/AgendaObjectives/Agenda

• Discuss principles around building a Discuss principles around building a proposal budgetproposal budget

• Provide some tips for the standard Provide some tips for the standard categories and “forgotten” costscategories and “forgotten” costs

• Discuss how and when cost sharing Discuss how and when cost sharing comes into playcomes into play

• What rules govern my proposal budget?What rules govern my proposal budget?• Demo WSU’s eProp application to Demo WSU’s eProp application to

develop the proposal budget develop the proposal budget

Budget Building Budget Building PrinciplesPrinciples

A budget shouldA budget should• flow logically from the proposal's research flow logically from the proposal's research and methodology plans with a breakdown of and methodology plans with a breakdown of costs per year; costs per year; • accurately fit the work to be conducted; an accurately fit the work to be conducted; an unrealistically lean or unduly inflated budget unrealistically lean or unduly inflated budget can count heavily against a favorable review; can count heavily against a favorable review; • be both an estimate and a be both an estimate and a firmfirm offer on the offer on the part of the University. After an award has part of the University. After an award has been made, renegotiation is difficult. been made, renegotiation is difficult.

Budget Building Budget Building PrinciplesPrinciples

• The proposal budget section has two The proposal budget section has two components: a financial budget and components: a financial budget and budget justification. budget justification.

• The financial budget presents each The financial budget presents each line item or budget categoryline item or budget category

• The justification explains why each The justification explains why each item is necessary for the project. item is necessary for the project.

Budget Building Budget Building PrinciplesPrinciples

• Primary principle and driver – what do Primary principle and driver – what do you need to complete the proposed work?you need to complete the proposed work?

• Build a budget based on this fact …. then Build a budget based on this fact …. then apply appropriate constraints/guidelinesapply appropriate constraints/guidelines

• Remember – few Federal agencies define Remember – few Federal agencies define what is allowable and the one that does what is allowable and the one that does define doesn’t give grants!define doesn’t give grants!

• So it is up to you to “make the case” for So it is up to you to “make the case” for your costs your costs

Constructing a BudgetConstructing a Budget

Primary CategoriesPrimary Categories•Personnel – the salary, wages and fringe Personnel – the salary, wages and fringe benefits of the WSU staff working on the projectbenefits of the WSU staff working on the project•Consultants – the costs of key experts (non-Consultants – the costs of key experts (non-WSU) that will provide advice/consultationWSU) that will provide advice/consultation•Equipment – what equipment must be Equipment – what equipment must be procured for this projectprocured for this project•Travel – what funds are needed to support the Travel – what funds are needed to support the travel associated with the projecttravel associated with the project

Constructing a BudgetConstructing a Budget

• Subawards and Consortiums – will a Subawards and Consortiums – will a portion of the work be awarded to a portion of the work be awarded to a collaborator at a different institution or collaborator at a different institution or entity entity

• Other – materials, supplies, publications, Other – materials, supplies, publications, animals and related costs, tuition for animals and related costs, tuition for supported graduate students, use of supported graduate students, use of institutional cores or service centersinstitutional cores or service centers

• And, lastly, the Facilities and And, lastly, the Facilities and Administrative (indirect) costs Administrative (indirect) costs

The Personnel SectionThe Personnel Section• Salary should be calculated according to Salary should be calculated according to

proposed effort of the individual over the proposed effort of the individual over the course of the budget period. course of the budget period.

• If there are If there are significantsignificant fluctuations throughout fluctuations throughout the budget period, they can be identifiedthe budget period, they can be identified

• Otherwise, it is best to budget the effort based Otherwise, it is best to budget the effort based on the entire budget period, normally a year. on the entire budget period, normally a year.

• For nine-month employees, summer salary For nine-month employees, summer salary can be requested for the can be requested for the effort planned for the effort planned for the summer period. summer period.

Personnel SectionPersonnel Section

Include in the salary information: Include in the salary information: • the individual's name and project role; the individual's name and project role; TBN’s are allowable for non-key personnelTBN’s are allowable for non-key personnel• percentage of time that will be spent on the percentage of time that will be spent on the project,project,• present WSU base salary; for summer pay present WSU base salary; for summer pay of 9-month staff, use 1/3 of academic salary, of 9-month staff, use 1/3 of academic salary, andand• the amount to be charged to the grant. (a the amount to be charged to the grant. (a calculation of bullets 2 and 3)calculation of bullets 2 and 3)

Personnel SectionPersonnel Section• Fringe benefits are applied for all staffFringe benefits are applied for all staff• WSU uses a “composite rate” based on WSU uses a “composite rate” based on

employee classemployee class• Rates are calculated and approved by DCA Rates are calculated and approved by DCA

annuallyannually• There are currently 6-7 different rates, There are currently 6-7 different rates,

most sponsored programs use 3-4 unique most sponsored programs use 3-4 unique rates rates

• Rates can be found on the SPA website as Rates can be found on the SPA website as well as applied in ePropwell as applied in eProp

EquipmentEquipment• First question – does what I want to buy fit First question – does what I want to buy fit

the classification of equipment?the classification of equipment?• A cost greater than $5,000 and a usable life A cost greater than $5,000 and a usable life

greater than two yearsgreater than two years• The budget should list the specific equipment The budget should list the specific equipment

items and their estimated purchase items and their estimated purchase • Shipping and installation should be budgeted. Shipping and installation should be budgeted.

If installation involves substantial structural If installation involves substantial structural changes, these costs should be budgeted as changes, these costs should be budgeted as renovations and alterations. renovations and alterations.

EquipmentEquipmentThere are two types of equipment: There are two types of equipment: •General purpose equipmentGeneral purpose equipment refers to items refers to items not limited to scientific or other technical not limited to scientific or other technical use such as office equipment, office use such as office equipment, office furnishings, computers, etc. furnishings, computers, etc. •Specialized equipmentSpecialized equipment can be used only for can be used only for specialized scientific or technical purposes specialized scientific or technical purposes and is allowable if it is needed to conduct and is allowable if it is needed to conduct the project. The need should be fully the project. The need should be fully explained in the budget justification.explained in the budget justification.

EquipmentEquipment

• General purpose equipment typically is General purpose equipment typically is used for multiple activities so it is used for multiple activities so it is inappropriate to charge its entire cost to inappropriate to charge its entire cost to a single project. If it is determined this a single project. If it is determined this type of equipment is required, the need type of equipment is required, the need should be fully explained in the budget should be fully explained in the budget justification.justification.

• Equipment usage fees are considered Equipment usage fees are considered “Other Expenses” and should be “Other Expenses” and should be captured in that section of the budgetcaptured in that section of the budget

TravelTravel• Travel is allowed if it directly benefits the Travel is allowed if it directly benefits the

project. Travel to research sites, sponsor project. Travel to research sites, sponsor meetings, or conferences. meetings, or conferences.

• When budgeting for travel, you should list When budgeting for travel, you should list the trip purpose, destination, and number of the trip purpose, destination, and number of travelers as well as airfare, transportation, travelers as well as airfare, transportation, meals, lodging, and registration fees. meals, lodging, and registration fees.

• If your plan includes foreign travel, include If your plan includes foreign travel, include countries to be visited along with countries to be visited along with considerableconsiderable justification of the trip. justification of the trip.

Other Direct Costs • Materials and supplies encompass all Materials and supplies encompass all

consumable or disposable items. Included consumable or disposable items. Included in this category are lab supplies, in this category are lab supplies, chemicals, etc. chemicals, etc.

• Printing and publications costs associated Printing and publications costs associated with the dissemination of project results with the dissemination of project results should be budgeted. Tuition for graduate should be budgeted. Tuition for graduate students can be budgeted for when students can be budgeted for when students are employed by the project. students are employed by the project.

• For laboratory animal purchases, list the For laboratory animal purchases, list the animal species and number required. animal species and number required. Costs of caring for the animals should also Costs of caring for the animals should also be listed. be listed.

Facilities & Administrative Costs

• The F&A costs are expressed as a The F&A costs are expressed as a percentage of the direct costs of the percentage of the direct costs of the project. project.

• The appropriate rate and basis to be used The appropriate rate and basis to be used is driven by two characteristics of the is driven by two characteristics of the program. program.

• First Characteristic - Is the project is First Characteristic - Is the project is conducted “on-campus” or “off-campus”? conducted “on-campus” or “off-campus”? The driving factor here is where is the The driving factor here is where is the majority of the WSU costs incurred. majority of the WSU costs incurred.

• Second Characteristic – Is the activity to Second Characteristic – Is the activity to be undertaken: 1) Instruction, 2) be undertaken: 1) Instruction, 2) Research, or, 3) Other Sponsored Activity Research, or, 3) Other Sponsored Activity

Applying Constraints and Restrictions

• Does the program have a “cap” on the direct costs? Revisit costs to get under the cap or, perhaps “right size the work”

• Does the program have a cap on indirect costs? Apply the programs indirect cost rate.

• Perhaps, we need to use cost sharing …

Cost Sharing Cost Sharing • Cost sharing (C/S) are real costs of the project Cost sharing (C/S) are real costs of the project

for which WSU will not be reimbursedfor which WSU will not be reimbursed• Some programs require cost sharing or a Some programs require cost sharing or a

“match” “match” • The most common type of C/S is the effort of The most common type of C/S is the effort of

the PI or other key personnelthe PI or other key personnel• Second most common – the institution shares Second most common – the institution shares

in the acquisition of a piece of equipmentin the acquisition of a piece of equipment• If C/S is associated with a project, SPA will If C/S is associated with a project, SPA will

establish a second index to capture the costs establish a second index to capture the costs

Cost Sharing MythsCost Sharing Myths

• Does it really help your proposal?Does it really help your proposal?• If cost sharing is a requirement (mandatory), If cost sharing is a requirement (mandatory),

you must in order to be eligibleyou must in order to be eligible• When it is “encouraged” (voluntary), be When it is “encouraged” (voluntary), be

reasonable. Remember, it is a cost to the reasonable. Remember, it is a cost to the University and must be paid one way or University and must be paid one way or another.another.

• Any commitment made in the proposal for Any commitment made in the proposal for which reimbursement is not expected is cost which reimbursement is not expected is cost sharing sharing

Who Makes the RulesWho Makes the Rules

• For Federal projects, OMB Circulars A-21 For Federal projects, OMB Circulars A-21 and A-110 are the driving costing principlesand A-110 are the driving costing principles– All Federal agencies prescribe/abide to these All Federal agencies prescribe/abide to these

circulars … with their own nuancecirculars … with their own nuance– Example – NSF salary policyExample – NSF salary policy

• Circular A-21 does rely on institutional Circular A-21 does rely on institutional policy to establish specific guidelinespolicy to establish specific guidelines

• As part of WSU’s stewardship role, we As part of WSU’s stewardship role, we interpret the principles to meet our specific interpret the principles to meet our specific rules rules

The NIH Modular BudgetThe NIH Modular Budget• In the 90’s, NIH introduced the modular In the 90’s, NIH introduced the modular

budget; it broke budgets into $25K modulesbudget; it broke budgets into $25K modules• Along with “expanded authorities”, it said that Along with “expanded authorities”, it said that

they trust us to “do the right thing”they trust us to “do the right thing”• To develop a modular budget, you must define To develop a modular budget, you must define

in the budget justification key personnel and in the budget justification key personnel and their level of effort; any equipment you wish their level of effort; any equipment you wish to purchase, and any subawardees you plan to purchase, and any subawardees you plan to useto use

• It did not remove budget rules; at award time It did not remove budget rules; at award time you must develop a category budget you must develop a category budget

WSU’s ePropWSU’s eProp

• eProp was implemented during the last eProp was implemented during the last year to process proposal across campusyear to process proposal across campus

• One feature is a budget building toolOne feature is a budget building tool• The application calculates fringe and The application calculates fringe and

indirect cost using institutional or indirect cost using institutional or program ratesprogram rates

• Upon completion, proposal is routed to Upon completion, proposal is routed to designated approvers for processingdesignated approvers for processing

• On to a demo … On to a demo …