Developing the Budget

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One of the more frequently misunderstood aspects of proposal writing is the preparation of the budget. All too often the budget is left until the final stage of proposal preparation, and unfortunately thrown together in haste. The project budget will be scrutinized as heavily as the proposal itself, and throwing it together at the last minute can compromise the quality of the proposal.

Project Costs

According to Office of Management and Budget 2CFR 200, direct costs are those costs that can be identified specifically with a particular sponsored project, an institutional activity or that can be directly assigned to such activities relatively easily and with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances should be treated as direct costs of all activities of the institution. Itemized direct costs are line items specified in the grant or contract. They can include direct salaries of persons working on the grant, applicable fringe benefits, travel directly associated with the project, supplies specifically used on the project, contractual services and equipment. The PI or his/her designee must sign all vouchers used to process direct costs. A designee must possess technical knowledge of the research being performed.

In order for a cost to be charged as a direct cost, it must be allowable. To be considered allowable, the cost must meet all of the following federally assigned criteria:

It must be reasonable.
It must be allocable to sponsored agreements under the principles and methods provided herein.
It must be given consistent treatment through the application of generally accepted accounting principles appropriate to the circumstances.
It must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to the types or amounts of cost items.

Direct Cost Terminology

Relatively easily — assigning a cost relatively easily does not take a lot of time; most people can comprehend/relate to the allocation method; and the benefit to the project is evident.

High degree of accuracy — identifying a cost with a high degree of accuracy shows a one-to-one relationship of the cost to the project and there is a distinct and actual measurement.

Reasonable — A cost is reasonable if the nature and amount involved reflect the action that a prudent person would have taken.

Allocable — A cost is allocable if it is incurred solely to advance the work under the sponsored agreement; it benefits the sponsored agreement and other work of the institution; or it is necessary to the overall operation of the institution and is deemed to be assignable in part to sponsored projects (Grants and Contracts Administration website).

Format

The budget should be divided into periods of 12 months, that is, a fiscal or calendar year, not an academic year. A budget period should specify beginning and ending dates. If cost sharing is required, each budget period should include spreadsheets for both sponsor and cost share. A budget summary for each year of funding requested should be included.

The following budget categories are used for sponsored program proposals at Clemson University. All budget items, regardless of the sponsor must meet the criteria for allowability found in 2 CFR 200

Salary and Wages: Salaries and wages budgeted as direct costs are allowable, provided they are reasonable, necessary to the project, and are allocable. Salary calculations must be based on actual salary amounts; a PI may not increase his or her salary beyond what is normal and reasonably anticipated (i.e. cost of living increases in future years are allowable).This section should specify how many persons, percentage of effort, and what position they hold (faculty, graduate student, research associate, clerical staff, etc.). Names and/or position titles should be listed. If the project involves people from other departments, or institutions, there must be supporting documents agreeing to their involvement. Ensure that a faculty member working on more than one project does not exceed 100 percent of effort for all projects and university commitments. Summer salary for faculty with academic year appointments can be calculated on a maximum of 33% of a nine month academic salary. Some sponsors impose specific limitations on salaries. PLEASE REMEMBER: academic salaries must be calculated on "percentage of effort" and then converted to a dollar amount. If a graduate student is paid on a sponsored project for a research assistantship, tuition remission, or GAD, must also be included in the budget. The following link is for CUBS. Salary information can be found on the Human Resources: HRPRD site.

http://cubs.sites.clemson.edu/index.php

Institutional Base Salary: The purpose of the Clemson University Institutional Base Salary Policy is to establish definition of IBS, the basis for calculating compensation costs, and to facilitate compliance with the requirements of OMB Uniform Guidance 200.430 (h)(2).

IBS is defined as the annual compensation paid by Clemson University for the duties associated with an individual’s appointment(s) or position. IBS DOES NOT include summer salary for 9 month faculty, payment for work above and beyond the normal workload, one-time payments such as bonuses and awards, and payment for duties performed external o Clemson University. Please refer to the policy for a full overview. IBS for personnel can be found in the HR link under the employees compensation tab.

Please refer to the supplement codes below to determine which are includable as part of IBS when calculating budgets:

SUPP and SUPPNO - a supplement that does not increase with salary increases are includable
TMP and TMPNO are NOT included in IBS

Clemson Budget categories:

CLASS: Classified salaries. Administrative, clerical, and technical employees. Should be named, and justified as integral to the project

UCLASS: Nine month and twelve month faculty, some research administrators, and professional staff. Refer to the individual HR panel for confirmation.

GRAD: Graduate Salaries: These are graduate research assistants. As noted above, tuition remission (GAD) must accompany GRAD unless otherwise prohibited by the sponsor.

WAGES: Hourly Employees, post-docs, part time and temporary employees. Undergrad and hourly graduates fall under this category.

FRINGE: Fringe Benefits: The fringe benefit rates are federally negotiated along with F&A (sometimes referred to as indirect or overhead cost) rates, and are updated annually. The approved, negotiated fringe rates must be included for all salaries budgeted on a proposal. It is important to note that the actual fringe rates at the time of expenditure will be charged to the project, regardless of the percentage originally budgeted. This is mandated by the negotiated agreement. Specific fringe benefits charged to grant and contract accounts include Social Security, South Carolina retirement, health insurance, dental insurance, unemployment insurance, and worker's compensation insurance.

Sponsored Graduate Assist. Differential (SPNGAD) or Tuition Remission: Tuition Remission (GAD) should be included in the "Other" budget category on the sponsor's forms, and no indirect charges are applied to this category. Your college post-award office should have a spreadsheet with current GAD rates for easy access.

Travel: Mileage, airfare, ground transportation, registration, per diem and lodging are common travel charges. Current mileage and per diem rates must be used and may be found on the procurement website. Foreign travel must be in the proposed budget and a foreign travel request must be approved by Clemson University prior to travel. Travel should be very detailed. It is not recommended to include a line item that says only "travel: $10,000." This line should be very descriptive about who will be doing the travel, the destination, for what purpose, and the anticipated costs that will be incurred (lodging, meals, transportation, etc.).

Equipment: These items are defined as nonexpendable, tangible property, which have a useful life greater than one year costing $5,000 or more per item. Equipment should be itemized by descriptive name, estimated cost, and probable source; adequate justification for their purchase must be included in the budget justification section. Indirect costs (F&A) are not charged on equipment greater than $5,000. Items costing less than $5,000 normally should be included under the "Other" category.

Other: Items that fit the definitions of "OTHER" budget categories are as follows:

Materials and Supplies-This category includes freestanding equipment with a value less than $5,000 and consumable items such as chemicals, laboratory-ware and small component parts (if not part of an equipment fabrication).
Computing devices-Including laptop computers, desktop computers, tablets, I-Pads, and other similar devices, but does not include mobile phones. In the specific case of computing devices, charging as a direct cost is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award. The full policy can be found on the GCA website.
Office supplies are considered to be part of the indirect costs of conducting a project, and generally should not be charged as a direct cost to a federal award.
Publication Costs - Costs for publishing results of research are allowable.
Working Meals and Coffee Breaks - Meals/breaks that are an integral and necessary part of a conference (where business is transacted) are sometimes allowable. Such charges typically require approval from the sponsor in the budgeting phase. Please review the sponsor guidelines closely to determine if this is allowable prior to including on the budget.
Other Direct Costs - Photographic services, animal care, and shop charges are allowable in many cases. In order to charge copies made on department copiers, a metering system must be used and all users must be consistently charged at the same rate.

Consulting fees

Consultants are individuals or entities from outside the university who are contracted to provide a specific service needed to conduct the research project (e.g. sample analysis) and should not be confused with subrecipients, who perform substantive, programmatic work toward the project goals. Consultants should be identified by name, institution and/or specialty. A “consultant” or “vendor” is a dealer, distributor, merchant or other seller providing goods or services that are necessary for conducting a federal program. These goods or services may be for an organization’s own use or for the use of beneficiaries of the federal program.

A consultant is an expert advisor who is paid for his/her time at a fixed rate of compensation (hourly or daily and includes travel, expenses and overhead) specified in the consultant agreement. A consultant can be an individual or a company. They must use their own equipment and materials. Be mindful of individuals who work full time and consult on the side; they cannot use the equipment or facilities at their full time employer for consulting purposes.

Clemson must enter into a formal agreement with the consultant prior to the initiation of effort. Please have supporting documentation when the proposal is submitted for signatures. If consultants are proposed but not named and documented in the proposal, then services must be procured through the competitive bid process.

An organization is considered a vendor/contractor under 2 CFR 200 when it:

1. provides goods and services within normal business operations;

2. provides similar goods and services to many different purchasers;

3. operates in a competitive environment;

4. provides goods or services that are ancillary (contribute) to the operation of the program; and

5. is not subject to compliance requirements of the program.

More information can be found on the OSP website.

Subawards: These costs are proposed when another university or organization is doing a substantial amount of the proposed work. A formal proposal including a statement of work, a detailed budget, period of performance and a list of personnel should be included along with a Letter of Intent to Establish a Consortium. Subcontracts are entered in the overall proposal budget as a single line item.

Process for determining the appropriate document for the subaward follows.

Federal Demonstration Pilot – Expanded Clearinghouse

Phase 2 Cohort

Background

Uniform Guidance requires substantial information to be collected from subrecipients at time of proposal submission, resulting in the proliferation of lengthy “subrecipient commitment forms” that collect both static, entity-specific information and project-specific information. FDP considers these requirements unnecessarily burdensome when the preponderance of subaward activity is among universities with low-risk. The pilot tests a more simplified approach with entity specific information maintained in the Expanded Clearinghouse. Only project-specific information and university approvals collected at proposal submission stage.

FDP Participants & Timeline

Cohort 1 began in February 2016 and included 40 colleges and universities. Cohort 2 begins August 15, 2016 and includes an additional 50 institutions. Third cohort expected to join in November 2016, with all 154 FDP institutions joining pilot in January 2017. Pilot ends June 30, 2017.

Process

When issuing or receiving a subaward from an FDP Pilot Institution, the only document we require, or that can be required of us, is the simplified project-specific information form.

For outgoing subawards that Clemson will issue to another institution
1. Determine if the institution is a “Piloteer”

i. List of institutions on OSP website

ii. Check Sponsor Database in InfoEd (FDP will be appended to name)

If yes, require only project-specific Letter of Intent to Establish Consortium (our original form) – signed by that institution’s AOR
If no, continue to send the Subrecipient Commitment Form

For incoming subawards, determine if sponsor is “Piloteer” (same as above)
1. If yes, complete only our Project-Specific Letter of Intent to Establish Consortium
2. If we are asked to complete anything beyond this, reference FDP “push back language”.
3. If no, complete subrecipient information required by sponsor

Participant Support

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance, 2 CFR 200.75) defines participant support costs as direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects.

Participant Support costs are made in connection with conferences or training projects and are exempt from F&A. Sponsor guidelines typically dictate when participant support should be included in the project budget.

Human subjects are not considered trainees, although they may sometimes be referred to as

participants. Research incentives paid to human subjects are not exempt from F&A. This would go in

the other category. See your College Post Award Contact (CPAC) with any questions.

A participant is NOT:

• A Clemson University employee

• A student or project staff member receiving compensation directly or indirectly from the

F&A Waiver Policy

No voluntary waivers or reductions of F&A costs will be allowed without approval of the Vice President for Research and shall only be approved in exceptional circumstances. Requests for waiver/reduction of F&A on PSA proposals require the approval of the Vice President of Public Service Activities in addition to and prior to the approval of the Vice President for Research.

No waiver/reduction is allowed for federally funded instructional or public service proposals with requested funding in excess of $200,000 per year.

If a Grantor Agency has an established, written policy that calls for an F&A rate lower than the University’s negotiated rate, the lower rate will be applied with no penalty. Likewise, if a Grantor Agency has an established policy that disallows F&A costs, no F&A will be applied, and there will be no penalty. The Grantor Agency’s policy must be applied equally to all applicants submitting proposals to the agency from any University in the United States. For the purposes of this administrative policy, “Grantor Agency” includes all sponsors other than private industry sponsors. Any voluntary waivers or reductions of F&A costs for proposals submitted to private industry sponsors, either directly or through a pass-through entity, will be allowed only with approval of the Vice President for Research and shall only be approved in exceptional circumstances. This approval must be secured before beginning the preparation of the proposal to the sponsor.

The full policy can be found on the OSP website

Typical unallowable costs

The federal government provides guidance on items that are considered unallowable costs. The list below includes examples of some but not all unallowable costs.

Advertising and public relations (except costs incurred for recruiting personnel required as part of a sponsored project)

Alcoholic beverages
Alumni activities
Bad debt (including collection costs and related legal costs)
Donations and contributions
Entertainment costs (including food)
Fines and penalties
Fundraising
Goods or services for personal use
Interest expenses (including interest incurred on borrowed capital, temporary use of endowment funds, or the use of the University’s own funds)
Lobbying
Membership to civic or community organizations
Proposal costs (e.g. time and effort, printing and postage, etc.)

The purpose of these federal guidelines is to confirm that all expenses charged to a research project have a "direct benefit" and should be charged as "direct costs" to the project.

Clemson University is responsible for ensuring that costs charged to a sponsored project are allowable, allocable, and reasonable under these cost principles.

Budget Justification/Narrative

The budget justification is a narrative document that defines how the requested and cost-shared amounts were calculated and explains how each cost is related to the project’s goals and objectives. The contents of the budget justification should include any information elements required by the sponsor.

Cost Share

Only mandatory cost sharing or cost sharing specifically committed in the project budget must be included in the organized research base for computing the indirect (F&A) cost rate or reflected in any allocation of indirect costs.

In order for the cost sharing to be included in the organized research base, the cost sharing expenditures must be documented in Clemson University’s financial system (General Ledger) and identified as cost sharing for a specific purpose/project.

Cost-Share: The portion of total project costs that are covered by Clemson University, to include all direct costs and any unrecovered Facilities and Administrative costs.

Mandatory Cost-Share: Cost-share that is required by the sponsor and specified in the official application guidelines.

Voluntary Cost-Share: Cost-share that is not required by the sponsor. Clemson University discourages voluntary cost-sharing. When cost-sharing is voluntary, departments may not use faculty release time

Other links that will assist in budget preparation care below.

Chart of Accounts: https://coa.app.clemson.edu/

List of all accounts at Clemson broken down by type (Fund, Program, Account, Department, etc.)

Cost Accounting Standards information on the Grants and Contracts website

. College Support Centers’ websites

- CAFLS: http://www.clemson.edu/public/gss/

- CAAC: http://www.clemson.edu/caac/research/proposal-development/index.html

- CBSHS and COE: http://www.clemson.edu/cbshs/research/crca/index.html

- CoBusiness: http://www.clemson.edu/business/academics/research/grantsoffice/index.html

- CECAS: http://www.clemson.edu/cecas/research/proposal-development/index.html

Standard Information for Proposal Applications: https://www.clemson.edu/research/sponsored-programs/documents/Standard-Information-Proposal.pdf

InfoEd User Manual: https://www.clemson.edu/research/sponsored-programs/documents/InfoEd_User_Manual_16.pdf

InfoEd Attachment Panel – File Naming Conventions: https://www.clemson.edu/research/sponsored-programs/documents/Naming_Conventions_CURRENT.pdf

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