Budget Development and Indirect Costs

1
Budget Development andIndirect Costs

• A presentation by the
• Office of Research Services
• October 30, 2003

2
Steps in Budget Development

• Define the research or project activity
• Develop clear objectives
• Clearly delineate HOW objectives will be
  accomplished
• Understand individual and institutional capacity
• Identify needs
• Plot activities on timeline
• Secure departmental/school approval for proposed
  activities

3
Steps in Budget Development

• Identify costs associated with specific
  activities.
• Collect equipment/supply estimates (suppliers,
  other researchers, business managers).
• Collect actual salary information (business
  managers, departmental chairs).
• Estimate personnel time needed for each activity.
• Estimate costs of supplies, publication, long
  distance phone, etc.

4
Steps in Budget Development

• Identify institutional costs and rules.
• Fringe benefit percentages
• Facilities and Administrative costs (Indirect
  Costs)
• Capital equipment threshold (5,000)
• Identify and secure permission for institutional
  cost share or match, if required. Do this WELL
  in advance of submission deadline.

5
Steps in Budget Development

• Identify and understand funding agency budget
  rules.
• Allowability of costs
• Equipment
• Tuition
• Trainee costs
• Fringe Benefits Difference between Faculty and
  GA
• Subcontracts (25,000 limit for application of
  FA costs)
• Institutional Matching
• Salary (e.g. salary caps summer pay
  administrative pay annual increase allowability)
• Food/drink/entertainment
• Administrative assistance
• Facilities and Administrative Costs
• Budget Format (e.g. NIH Modular Application)

6
Steps in Budget Development

• List costs according to timeline of activities.
• Develop yearly budgets.
• Estimate realistic increases for future years.
• Ensure all institutional costs are included.
• If subcontracts/collaborations are involved, get
  the commitment and budget in writing, approved by
  that institutions authorized official.
• If collaborating with another department at SLU,
  that department chair dean must approve in
  writing.
• Have someone check your math!

7
Steps in Budget Development The Budget
Justification

• Should explain items in detail that appear on
  budget forms.
• Items should follow exactly the arrangement on
  the budget forms.
• Explain realistic increases for future years.
• Give as much detail as possible.
• Make it easy to read for reviewers.

8
The Next Step

• Submit draft budget to respective institutional
  research/finance office for review (can be faxed,
  e-mailed etc.) prior to completion of grant
  application forms.
• Include application guidelines for
  research/finance office review.

9
Help!

• Who can help interpret internal and external
  budget rules?
• Office of Research Services (977-2241)
• HSC Finance Office (577-8221)
• HSC Research Administration Office (577-8108)
• Office of Corporate and Foundation Relations
  (977-3724)
• Office of Sponsored Programs (977-2380)

10
FA Costs What the heck are they?

• Indirect Costs were renamed Facilities and
  Administrative Costs by Federal Government. Some
  agencies still use the old IDC designation.
• An institutions negotiated agreement with a
  cognizant federal agency for the institutions
  cost of doing research business.
• Includes heat, light, power, research space,
  operating expenses, secretarial support, etc.
• SLUs cognizant agency is DHHS.

11
FA Costs

• SLUs agreement with DHHS is based on a modified
  total direct cost calculation.
• MTDC excludes FA costs on tuition, equipment,
  patient care costs, and some other items. See
  indirect cost agreement 2/28/03.
• SLUs regular FA rate for research on-site is
  47. (Check the Grantwinner, page 2 each issue,
  or ORS website www.slu.edu/research)

12
FA Costs

• Extremely important to collect.
• Used by University to facilitate research.
• Portion of excess, if available, is returned to
  deans/departments at the end of each fiscal year.
• Cannot be used directly by the researcher as part
  of a specific grant.
• FA usually includes the cost of secretarial
  support, local phone, routine copying, office
  supplies (some exceptions). So these usually are
  not allowable expenses on grant budgets.

13
FA Costs

• Waiver of any FA costs must have prior
  permission from authorized institutional (SLU)
  official.
• Note Some agencies restrict amount of FA cost
  allowable. Check the program guidelines or RFP.
• Too many waivers or waivers to specific types of
  organizations can affect tax liability for
  institution and/or endanger future research/FA
  funding from feds.

14
NIH Modular Grant Applications

• Direct costs are requested in modules of
  25,000 up to ceiling amount of 250,000 per
  year. Not applicable to all applications
• A detailed itemized categorical budget IS NOT
  included in grant application but IS required in
  ORS. Check with HSCRA/Finance Office for their
  requirements.
• PHS 398 forms are used for application, but Form
  Page 4 and Form Page 5 are not included. Budget
  justification must address specific modular grant
  requirements.

15
NIH Modular Grant Applications

• Use the same number of modules for each year.
  Explain if different.
• Non-compliance with modular grant application
  rules will now result in NIHs refusal to
  consider the proposal.

16
Some Additional Hints for Success

• It is important to detail the budget to ensure
  that it is sufficient to accomplish research
  plans.
• Pay special attention to
• Salary computations and anticipated increases
• Fringe Benefits
• Tuition increases
• Supply increases
• Subcontract needs
• Change in budget needs over course of project

17
Special Concerns of Research Office/Sponsored
Programs

• Major financial audit responsibility all rules
  mentioned earlier apply.
• Internal audit
• External (accounting firm) audit
• Individual federal agency audit
• Ensure compliance with research spending as it
  relates to activities proposed.

18
Special Concerns of Research Office/Sponsored
Programs

• You must do what you say you are going to do with
  the money.
• Changes in spending patterns must be documented
  for audit purposes and may need prior agency
  approval.
• If internal commitments are proposed, these must
  be documented through the life of the award as
  well (e.g. matching funds, time and effort).
  These are auditable expenses. If you promise it,
  you have to do it. Check with ORS, HSCRA, HSCFO,
  CFR, or Sponsored Programs Office for procedures
  in accounting for matching funds.

19
Where to go for help?

• Office of Research Services
• 977-2241
• Health Sciences Center Research Administration
• 577-8108
• Health Sciences Center Finance Office
• 577-8221
• Office of Corporate and Foundation Relations
• 977-3724
• Office of Sponsored Programs
• 977-2390

20
A Budget Exercise

• Help Dr. B.R. Stein build a budget.
• Get out your calculators and lets get to work.