****For Miss Deana***

CHS 5400 TRANSLATIONAL RESEARCH IN

COMPLEX HEALTH SYSTEMS

Module 5 – Budgeting Research

CHS 5400 Translational Research in Complex Health Systems

What is a Budget? • Best estimate of financial resources needed to accomplish a project

• Includes a Budget Justification which provides an explanation of all included costs

Allowable means the costs are:

• Reasonable* • Allocable* • Consistently applied* • Agreeable with Sponsor specifications

Allowable Direct Costs + Allowable Indirect Costs (F&A)

= Total Project Costs

*These terms are taken from the Uniform Guidance Code of Federal Regulations 2

CHS 5400 Translational Research in Complex Health Systems

Allowable Costs  Reasonable

 Is it normal for this type and level of expense to be charged on such projects?

 Allocable  Is the cost incurred solely for the

advancement of this project?

 Can the expense be clearly identified with the project

 Consistently applied  Cost Accounting Standards

 Must be able to defend cost estimates

 Agreeable with Sponsor specifications  Office of Management and Budget (OMB)

Circular A-21 http://www.whitehouse.gov/omb/circulars/a021/a021.html

 In conformance with limitations/exclusions

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Assigning inappropriate expenses is FRAUD! Principal Investigator is the go-to-jail individual

CHS 5400 Translational Research in Complex Health Systems

Creating a Budget Review solicitation and guidelines from the Sponsor

Determine and compute the allowable direct costs

Calculate the allowable indirect costs

Develop and format the budget

Create a Budget Justification

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CHS 5400 Translational Research in Complex Health Systems

Review Solicitation and Guidelines

Review:

• Sponsor Guidelines

• The Solicitation

• Request for Proposal (RFP)

Look for:

• Min./Max. Duration of the project

• Floor/Ceiling for budget

• Budget limitations and restrictions

Specific Sponsor/application questions?

Get help from NSU Office of Sponsored Programs (OSP) at:

https://www.nova.edu/osp/index.html

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CHS 5400 Translational Research in Complex Health Systems

Review Solicitation and Guidelines

• You will need to create and submit any budget that is necessary for the Sponsor (formats/specifications vary from Sponsor to Sponsor)

• A budget justification will most likely need to be included with the budget.

• Check to see if the solicitation requires mandatory cost share; if not do not include cost sharing as part of the budget

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Keep in Mind:

An internal budget may also need to be prepared alongside the Sponsor budget

An internal budget provides an opportunity to include more details that a Sponsor budget may not require

Why?

CHS 5400 Translational Research in Complex Health Systems

• Determine and specify what direct expenses fit within the Sponsor guidelines and are necessary to complete the project

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Common Direct Costs • Salary/wages and fringe benefits for

all personnel (including students) • Travel costs (both domestic and

foreign) • Equipment ( ≥ $5,000) • Materials and supplies • Subawards (direct and indirect costs)

Other Direct Costs • Tuition • Participant support costs • Research Subject Compensation • Publication costs • Consultant services • Patient care costs • Computer service center charges

Direct Costs

This list is not all-inclusive

CHS 5400 Translational Research in Complex Health Systems

Direct Costs

• Seek assistance from your HR rep. in determining salary base

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Sponsors may impose a salary cap

Personnel Costs – Salary/Wage Expenses

• Salary is calculated using

3 basic salary/wage bases:

• Calendar Year (CY) – 12 months

• Academic Year (AY) – 9 months

• Summer Term – 1-3 months

CHS 5400 Translational Research in Complex Health Systems

Direct Costs – Examples

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Personnel Costs – Effort Calculations

(2) Principal Investigator (PI)

• CY appointment, Salary of $72,000

• Monthly salary of $6,000 (one- twelfth of total CY salary)

• 25% of the CY effort would equate to 3 CY months (12x.25=3)

• The budget figure for that effort would be $18,000 (6,000 multiplied by 3 CY months)

(1) Principal Investigator (PI)

• AY appointment, Salary of $63,000

• Monthly salary of $7,000 (one-ninth of the AY)

• 25% of the AY effort would equate to 2.25 AY person months (9x.25=2.25)

• The budget figure for that effort would be $15,750 (7,000 multiplied by 2.25 AY months)

CHS 5400 Translational Research in Complex Health Systems

Direct Costs Personnel Costs – Salary Cap

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• Specific Sponsors or awards may limit personnel salaries

• It is recommended that salaries be increased at a rate of 3% per year when making future year budget estimates

Example PI salary: $220,000/year Salary Cap =$199,300 (subject to change)

If the effort on the project is 25%, determine the amount of salary based on the Salary Cap, not the actual salary of the PI

$199,300 x 25% = $49,825

$220,000 x 25% = $55,000

→ The difference of $5,175 would need to be covered by the PI’s Department

NIH Salary Cap Information can be found here.

($199,300 in FY2021)**

CHS 5400 Translational Research in Complex Health Systems

Direct Costs Personnel Costs – Fringe Benefits

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Current/Projected Fringe Benefit Rates can be found here

Fringe benefits include:

• Social Security • University Retirement

Programs • Life Insurance • Health Insurance • Disability Insurance • Etc.

• Contact your HR representative for help with determining appropriate fringe “rate pools”

• Rates vary by category of personnel

CHS 5400 Translational Research in Complex Health Systems

Direct Costs

The budget should specify the:

• # of trips/days/people

• per diem rates for food and hotel

• transportation costs

• destination(s)

More information about specific costs, rates, etc. can be found directly from the Sponsor or at

https://www.nova.edu/accounts- payable/index.html

Travel – Domestic and Foreign Keep in Mind:

• Allowances for air travel should not exceed round trip coach accommodations

• Only persons participating directly in the research may travel on grant funds

• Sponsors require adequate justification on requested travel expenses – foreign travel, especially

• Sponsor guidelines may establish rates for specific costs.

Note: Specifics may be unknown at time of proposal

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CHS 5400 Translational Research in Complex Health Systems

Direct Costs

Equipment costs include expenses for equipment items (useful year: 2 years) that individually cost $5,000 or more.

Only allowable if it will be dedicated solely to the project. (Not intended for general office equipment, copiers, office furniture, etc.)

Equipment – $5,000 or more

NSU policy prohibits the recovery of indirect costs (F&A) on

direct costs classified as equipment

Materials and Supplies

• The expendable equipment (equipment costing less than $5,000) and supplies required for the project should be indicated with estimated costs

• There should be a breakdown of these items by general classification

• Sponsor guidelines usually indicate what needs to be itemized and justified

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CHS 5400 Translational Research in Complex Health Systems

Direct Costs Subawards: A subaward is needed when the NSU Department or Principal Investigator would like to collaborate with a colleague at a different entity to complete the goals of the project

• See Sponsor Guidelines or policy for any restrictions on F&A

• NSU is allowed to recover indirect costs (F&A) on the first $25,000 of each individual subaward for new or competitive proposals

• Once the subaward’s total costs (which includes direct and indirect costs) reaches $25,000 the remaining subaward costs will be removed from the modified total direct costs bases (MTDC) in subsequent years

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Subaward Direct Costs + Subaward Indirect Costs = Total Subaward

The total subaward costs are included in the Direct Costs

Indirect costs recovered against first $25,000 of each new/competitive subaward

CHS 5400 Translational Research in Complex Health Systems

Direct Costs Subaward Example:

A subaward has the following amounts in the first 3 years of a Sponsored Project:

Year 1: $12,000

Year 2: $15,000

Year 3: $17,000

What amounts would be included in the MTDC?

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In year 1 the full $12,000 is included in the MTDC, but in year 2 only the first $13,000 is included in the MTDC, and none of year 3 subaward costs would be included in the MTDC

CHS 5400 Translational Research in Complex Health Systems

Consultants • Compensation for a Consultant on a project may or may not be budgeted

• If the Consultant is a NSU employee they will not receive any additional funding for this role.

• If payment is necessary, if the NSU employee is integral to the research, or if they would like publication recognition, then the employee should be included in the Personnel section where the appropriate salary and fringe rates apply.

• External consultants are allowable under most circumstances

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CHS 5400 Translational Research in Complex Health Systems

Direct Costs Participant Support Costs

• Includes costs for non-NSU participants to attend a sponsored training, symposium, meeting, or workshop

• Costs may include stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of the participants such as for a NSF Research Experiences for Undergraduates (REU) program

• Participant Support Costs are not to be included as part of the MTDC base for calculating F&A

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Participant support costs do not include patient care costs or research subject compensation

CHS 5400 Translational Research in Complex Health Systems

Direct Costs Patient Care Costs These are costs of routine and ancillary hospital services provided to individuals participating in research programs

•These are not costs of care that are specifically requested for the project (e.g. lab fees for special screenings)

•Patient Care Costs are not to be included as part of the MTDC base for calculating F&A

Note: Research scans performed at the MR Research Facility are not considered patient care costs and are subject to F&A. (Clinical scans are considered patient care costs)

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Patient care costs are separate from research subject compensation

CHS 5400 Translational Research in Complex Health Systems

Direct Costs Subject Compensation These are reimbursements given to human subjects for participating in a research project/study. Human Subjects are defined as living individuals about whom an Investigator conducting research obtains data or identifiable private information through an intervention or interaction with the individual.

 Payments may be made via check, cash, gift cards or any other item of value.

 Reimbursements for travel or other costs are not considered compensation and are not covered under the GAO policy for Subject Compensation.

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Note: these costs are included in the MTDC.

CHS 5400 Translational Research in Complex Health Systems

NSU policy prohibits the recovery of indirect costs (F&A)

on tuition-

Direct Costs

• Tuition costs for most Sponsors can be charged to a funding source up to 100% of the full amount of graduate tuition (this includes both grants and contracts)

• For Graduate Students, NSU departments are required to budget at least the minimum levels for stipend and tuition costs established by departments.

• Tuition costs are excluded from the MTDC

Tuition

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CHS 5400 Translational Research in Complex Health Systems

Indirect Costs • Indirect costs are those costs that cannot be directly traced to a part of the

project. These costs are also known as Facilities & Administrative (F&A) costs or overhead

• F&A or Indirect costs are REAL costs that NSU incurs in order to operate

Allowable Direct Costs + Allowable Indirect Costs (F&A)

= Total Project Costs

Indirect Costs = Modified Total Direct Costs (MTDC) x Appropriate F&A Rate

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CHS 5400 Translational Research in Complex Health Systems

Indirect Costs

• The first step in calculating total indirect costs (F&A) is to determine the Modified Total Direct Cost base (MTDC)

Determining the MTDC

MTDC = Total Direct Costs - Exclusions

Indirect Costs = Modified Total Direct Costs (MTDC) x Appropriate F&A Rate

Exclusions x • Equipment ( ≥ 5,000) • Student tuition remission • Subcontract costs above $25,000 • Participant support costs • Scholarships and fellowships • Patient care costs • Rental costs of off-site facilities • Capital expenditures

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CHS 5400 Translational Research in Complex Health Systems

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Indirect Costs MTDC Example

Personnel $37,000 Travel $3,000 Equipment $10,000 Research Subject

Compensation $750 Materials/Supplies $5,000 Tuition $8,500

$45,750

Answer: a) $64,250 b) $45,750 c) $54,250 d) $55,750

Remember: tuition, equipment, participant support costs, patient care costs, and subawards greater than $25,000 of each subaward are excluded from MTDC, subject compensation is included.

A budget is broken down as follows for a one-year project. What is the MTDC (Modified Total Direct Cost) base?

CHS 5400 Translational Research in Complex Health Systems

Indirect Costs

• Facilities and Administrative (F&A) rates are established for reimbursing institutional overhead and other expenses associated with Sponsored Projects

F&A Rates

Indirect Costs = Modified Total Direct Costs (MTDC) x Appropriate F&A Rate

Check to see if the Sponsor limits or restricts indirect costs from

anything other than the NSU Federally negotiated rates

You can fill out a F&A reduction request form, but there is no guarantee it will be accepted. https://www.nova.edu/osp/forms/waiver_of_fa.pdf

PROJECT CATEGORY F&A RATE BASIS

Organized Research* 54% MTDC

Instruction 48% MTDC

Other Sponsored Activities 30% MTDC

Off-Campus – All Programs 26% MTDC

Federally Negotiated F&A Rates As of July 1, 2021

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CHS 5400 Translational Research in Complex Health Systems

Format the Budget • Different Sponsors require different formats for budgets

• See NSU Budget Template

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Internal Budget Remember: • Apply correct fringe and F&A rates to

both the Sponsor and internal budgets

• The internal budget must match Sponsor budget categories

• An internal budget should also be prepared if the Sponsor’s budget is not detailed

• The internal budget is extremely helpful for DSP and Grant Accounting in their review/post-award management

CHS 5400 Translational Research in Complex Health Systems

Budget Justification

See Budget Justification example on

Canvas

Budget Justification writing tips:

• Follow the Sponsor proposal instructions closely

• Organize and align budget items for ease of review

• Provide adequate detail for items on the budget

• Explain why every cost/cost category on the budget

is needed to accomplish the proposed project

• Make it clear that all budget requests are reasonable

and consistent with Sponsor and University guidelines

Budgets usually require justification that is a narrative explanation designed to help the Sponsor evaluate the expenses proposed for the project

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CHS 5400 Translational Research in Complex Health Systems

Getting Started  Sponsor

 Federal, Non-federal (what rates and rules apply)

 Special Rules or Instructions (caps, F&A)

 Project Dates

 Subcontracts or Multi- departmental Budgets

 Special Approvals (animals, human subjects)

 Who will work on this project?

 What will this person contribute?

 Where will this person work?

 What is this person’s status? Employee, graduate student, consultant???

 Type of Appointment

 How much effort is required?

 Are there security issues?

Personnel

RECAP

CHS 5400 Translational Research in Complex Health Systems

Equipment  What do you need?

 What is the importance of this item to the research?

 Does it qualify as capital equipment?

 Is it general purpose equipment?

 Is it available elsewhere? Borrow or share

 Cost analysis Lease vs. Purchase

 How does this trip enhance the goals of the proposed research?

 Who will travel?

 Where?

 Why?

Travel

CHS 5400 Translational Research in Complex Health Systems

Summary NSU Office of Sponsored Programs: https://www.nova.edu/osp/index.html