Budget Basics NIH Regional Seminar on Program Funding

Budget Basics NIH Regional Seminar on Program Funding & Grants Administration Ryan C. Lombardi, MS Deputy Grants Management Officer Office of Grants Management National Heart Lung and Blood Institute (NHLBI) 1

Budget Basics Types of Competing Application Forms Types of Budgets Budget Components Federal Requirements Pre-Award Policy Issues Other Considerations 2

Types of Competing Application Forms Ø SF 424 Research and Research Related (R&R) (for Research, Career Development, Training and SBIR/STTR awards; submit via Grants. gov) Ø PHS 398 Public Health Service Grant (for Cooperative Agreements and Complex Mechanisms) To compare SF 424 R&R with the PHS 398, see: http: //era. nih. gov/Electronic. Receipt/files/Mapping_398_Data_to_SF 424. pdf 3

Types of Budgets Ø Modular vs. Categorical/Itemized Ø Multi-Project/Consortium Ø SBIR/STTR Ø Clinical Trials Ø Fellowships Ø Institutional Training Grants Ø Research Career Development Awards 4

Application Guide Ø PHS SF 424 Research & Related Budget – 4. 7 R&R Budget Component • 4. 7. 1 Section A and B • 4. 7. 2 Sections C through E • 4. 7. 3 Sections F through K • 4. 7. 4 Cumulative Budget – 5. 4 Modular Component • 5. 4. 1 Periods 1 through 4 • 5. 4. 2 Period 5 and Cumulative 5

R&R Budget Sections A & B

R&R Budget Sections C - E

R&R Budget Sections F - K

R&R Budget Components Ø 4. 7. 1 A. Senior/Key Person – All Persons who are involved on the project at applicant institution who meet the senior/key person definition • The PD/PI and other individuals who contribute to the scientific development or execution of the project in a substantive, measurable way, whether or not salaries or compensation are requested under the grant. – Faculty (calendar vs. academic/summer; person months, Institutional Base Salary; Legislative Cap) – Collaborating Investigators – Postdoctoral Associates – Other Professionals 9

4. 5 Senior/Key Person Profile (Expanded) Component 10

PHS 398 Modular Budget

R&R Budget Components Modular Applications 5. 4 Modular Component Ø No categorical budget accepted at time of application Ø No categorical budget required at time of award Ø No difference in allowable costs Ø No difference in post-award financial management requirements 12

Creating a Modular Budget 1. Start with an itemized budget (R&R budget component 4. 7. 1) 2. Create out-year budgets 3. Divide total of all years by # of years 4. Request same number of modules each year (there is an exception for equipment) 5. Consortia costs may be rounded to nearest $1, 000 13

More on Modulars Ø List all personnel at applicant organization, including names, number of months devoted to project and roles on the project Ø Consortia total costs are calculated separately and rounded to nearest $1, 000. List personnel, number of months devoted to project and roles on the project Ø NIH may request detailed budget to address specific issues Ø Modular budgets are applicable only to R 01, R 03, R 15, R 21 and R 34 applications For additional information on modulars see: http: //grants. nih. gov/grants/funding/modular. htm 14

Legislative Mandates 1. Dissemination of False or Misleading Scientific Information (Section 517 b) 2. Continued Salary Limitation (Section 203) 3. Anti-Lobbying (Section 503) 4. Restriction on Distribution of Sterile Needles (Section 505) 5. Acknowledgement of Federal Funding (Section 506) 6. Restriction on Abortions (Section 507) 7. Exception to Restrictions on Abortions (Section 508) 8. Ban on funding Human Embryo Research (Section 509) 9. Limitation on Use of Funds for Promotion of Legalization of Controlled Substances (Section 510) 10. Certification of Filing and Payment of Taxes (Section 527) NIH Guide Notice dated January 20, 2012 http: //grants. nih. gov/grants/guide/notice-files/NOT-OD-12 -034. html

Salary Cap Ø Executive Level II of the Federal Executive Pay scale. The Executive Level II salary is $179, 700 Ø Effective on or after December 23, 2011 $199, 700 $179, 700 $196, 700 NIH Guide Notice dated January 20, 2012 http: //grants. nih. gov/grants/guide/notice-files/NOT-OD-12 -035. html 16

Handling Salary Cap in Competing Budget request Ø Nonmodular/itemized - COMPETING grant applications and contract proposals that include a categorical breakdown in the budget figures/business proposal should continue to reflect the actual institutional base salary of all individuals for whom reimbursement is requested. Ø Modular - Since the modules should be a reasonable estimate of costs allowable, allocable, and appropriate for the proposed project, you must use the current legislatively imposed salary limitation when estimating the number of modules. 17

Pre-Award Policy Issues 18

Pre-award Costs At grantee’s own risk and expense Ø Up to 90 days prior to the start date of a competing award if costs: – Are necessary to conduct the project, and – Would be allowable under a potential award without prior approval Ø Greater than 90 days requires prior approval Ø No time limit for noncompeting awards. Costs need to be allowable and carefully managed

Cost Sharing Ø Not required as a condition of applying for/receiving unsolicited NIH awards Ø Few NIH-solicited programs require it Ø Nonetheless, mandatory cost sharing for salary in excess of current salary cap Ø Be sure you intend to commit to cost sharing when you propose an item at no cost to the government.

Award Restrictions Ø Only applied to a particular grant for cause Ø Shown on the No. A in Section IV Ø Restricted funds must be tracked by grantee to ensure compliance Ø Examples: – restrict equipment funds pending receipt of current price quote; – prohibit human subjects research pending IRB review

Read the Notice of Award Ø Special Terms and Conditions Ø Other Terms of Award – Program regulations 42 CFR Part 52 - Grants for Research Projects – Program and appropriation legislation – 45 CFR Part 74 or 92 - HHS rules and requirements that govern the administration of grants – NIH Grants Policy Statement - compendium of several regulatory requirements applicable to grants and cooperative agreements

Who is Responsible for Financial Management? Ø The Institution Ø The Principal Investigator Ø The Departmental Administrator Ø The Department Chair

Other Considerations Ø Consistent with grantee institutional policies and practice Ø Request reasonable amounts based on current conditions and need Ø Don’t request contingencies or uncommitted promotions Ø Keep it reasonable & necessary Ø Justify the unusual and large ticket items Ø Ideally the science drives the budget and justification 24

Preparing a realistic budget: One perspective

How is the budget used by Reviewers and Program Officials? Ø The budget reveals the applicant’s understanding of what it takes to accomplish the proposed research Ø However, the budget is not used to assess scientific merit and is reviewed after the scientific merit is assessed RULE 1: Develop a Realistic Budget! RULE 2: Justify Needs! 26

Sections A&B: Personnel Ø Determine the amount of time (effort) that the PI will spend on this project. – Calendar vs. Academic/Summer months Ø Determine the number, qualifications and amount of time needed for other personnel – – Technicians Postdoctoral Fellows Graduate Students Undergraduate Students 27

Personnel (continued) Ø There are no magic numbers regarding the qualifications and/or number of individuals needed for each aim. Ø Be realistic about what each individual can accomplish and the time necessary to complete the work. Ø If effort levels and/or staffing levels fluctuate in outyears, explain. 28

Section C: Is new equipment needed? Ø If additional equipment is needed, this is the time to consider requesting it. Ø Equipment should be project specific – be sure to include a written justification. Ø Most equipment is requested during the first year of the grant. Ø If using a modular budget format, extra module(s) may be requested to cover equipment. 29

Section D: Travel funds Ø This amount is usually small: – $800 - $1, 600 per scientific meeting per individual per year Ø Generally supports travel to one meeting per year for 2 -3 individuals 30

Section E: Participant/Trainee Support Costs Ø Unless stated in the FOA, this section should be left blank for NIH applications – Include tuition remission under Section F: Other Direct Costs 31

Section F: Other Direct Costs Estimate the materials and supplies needed for the personnel involved. An estimated supply budget of ~$12, 000– 15, 000/year for each FTE may be reasonable. Ø This number will vary depending on the nature of the research proposed. – Animal intensive studies and studies involving human subjects tend to be more costly. – In silico studies tend to be less costly for supplies. Ø Consider stage of career of personnel involved. 32

Section F: Other Direct Costs Ø This category also includes funds needed for items such as: – – Publication costs Equipment maintenance Consortium/subcontracts Tuition remission Ø Estimate these expenses realistically 33

Add it all Up – Year 1 Cal Mon Req. Salary A. Senior/Key Person PI 2 15, 333 B. Other Personnel Postdoc Assoc 12 38, 976 Grad Student 12 20, 772 C. Equipment – Microscope D. Travel - (2 meetings) E. Participant/Trainee F. Other Direct Costs Materials/Supplies Publication Costs Subaward/Consortium/Contractual costs Tuition Remission G. Total Direct Costs Fringe Benefits. Req. Funds 4, 293 19, 626 10, 913 5, 454 49, 889 26, 226 19, 000 4, 000 usually left blank 25, 533 1, 500 none 7, 000 179, 000 34

Add it all up Ø Calculate the direct costs for the first year. – (for example, Year 1 budget = $179, 000) Ø Calculate the direct costs for subsequent years taking into account salary increases and changes in funds requested for equipment. – Year 2 = $164, 800 – Year 3 = $169, 744 – Year 4 = $174, 836 – Year 5 = $180, 081 35

Do I need to submit a modular budget? Ø Calculate the total direct costs for all years – Total direct costs for 5 years = $868, 461 Ø Divide total by the number of years requested – Average direct costs = $173, 692/yr Ø Investigator-initiated R 01 s up to $250, 000/yr must use modular format, except applications from foreign (non-U. S. ) institutions 36

Convert Your Average Direct Costs to the Modular Format Ø Round up to the next module (number divisible by $25, 000) – In the example, $173, 692/yr rounds up to $175, 000/yr Ø No yearly increases for inflation Ø First year may include additional modules for one -time expenses like equipment – In the example, add one additional module to year 1 = $200, 000 37

Reminder for R 01 Budget All budget requests to NIH for R 01 applications use: – the modular format when requesting direct costs of $250, 000 or less each year – the non-modular format when requesting direct costs greater than $250, 000 in any year or if application is submitted from foreign (non-U. S. ) institution Ø Consortium F&A costs are not factored into the modular direct cost limit 38

R 01 Budget with Consortium Costs Prepare an itemized budget for the parent award Prepare an itemized budget for consortium/subcontract costs, including: Ø Personnel – salary and benefits Ø Travel – professional or investigator meeting Ø Other Direct Costs – Materials and Supplies Total Direct Costs = $38, 300 39

Total Consortium Costs Ø Consortium Direct Costs = $38, 300 Ø Consortium F&A – consortium institution (at 50%) = $19, 150 Consortium Total Costs = $57, 450 Remember you may round to the nearest $1, 000 40

Add it all up Should you request a modular budget? 41

R 01 Grant with Consortium Budget Submit as a modular budget when requesting Direct Costs at or below $250, 000 per year… … excluding Consortium F&A costs. 42

Modular Grant with Consortium Budget In our example, Year 1 – Itemized Total DC = $256, 124 minus Consortium F&A = $ 19, 150 Year 1 – Itemized DC excluding F&A = $236, 974 Year 2 – Itemized DC excluding F&A Year 3 – Itemized DC excluding F&A Year 4 – Itemized DC excluding F&A Year 5 – Itemized DC excluding F&A = $224, 513 = $231, 249 = $238, 186 = $245, 332 Avg Direct Cost per yr (excluding F&A) = $235, 251 Round up to the next module = $250, 000 43

Record Modular Budget with Consortium: PHS 398 Modular Budget, Period 1 A. Direct Costs Funds Requested ($) *Direct Cost less Consortium F&A 250, 000 Consortium F&A 19, 150 *Total Direct Costs$269, 150 The total direct costs requested are allowed to exceed the modular maximum ($250, 000) by the amount of F&A associated with the subcontract. 44

Money…money… and more money? Ø Applications requesting > $500, 000 DC in any single year – applicant must seek permission to submit from Institute staff at least six weeks prior to submission. Ø Multiple Principal Investigator R 01 is intended for projects that clearly require a “team science” approach. The Multiple PI option should not be used as a means to justify a large budget request. Ø Well-funded investigators should consult with Institute staff regarding policies for support of new research in well-funded laboratories. 45

But I asked for what I needed? Ø Study section may recommend reductions – May provide information to funding institute to reconsider IRG-recommended reductions Ø Funding institute may reduce budget further and cut years – Not appealable – Discuss with Program Officer if causes hardship 46

Based on the AWARDED budget… Ø Build a budget for the dollars and years that are indicated on the Notice of Award. Ø For modular grants remember to build in any increases in spending over duration of grant Ø Prioritize research work and get going 47

Final thoughts on $$ Ø Most taxpayers think a $1 -2 M award is a lot of money. Spend it wisely. Ø Start-up and staffing delays? Don’t rush to spend it. It is OK to carry unspent funds forward for good cause, if justified. Ø We expect recipients to make highest and best use of grant funds. Ø Budget problems? Consult NIH Program and Grants Officers. They often have solutions. 48

Where to get help Ø SF 424 R&R guides and FAQs – http: //grants. nih. gov/grants/funding/424/index. htm#inst – http: //grants. nih. gov/grants/Electronic. Receipt/faq_full. htm PHS 398 instructions – http: //grants. nih. gov/grants/funding/phs 398. html Ø For additional information on modular budgets see: – http: //grants. nih. gov/grants/funding/modular. htm Ø The grantee institution’s Sponsored Programs Office Ø NIH Program and Grants Management staff Ø Other experienced personnel at your institution 49

Questions? 50