Angie Templeton & Nicole Cobb
Grants & Contracts Administrators
Sponsored Programs Administration
OMB Circular A-21 General Principles
Direct vs Indirect Costs
Allowability of Costs
Mechanics of Building a Budget
Sample Problems
 Provides allowability principles for the reimbursement of
costs associated with federally sponsored projects
 Provides guidance for determining direct and indirect costs
 http://www.whitehouse.gov/omb/circulars_a021_2004
 *Note: Circular A-21 will be included in the OMB Uniform
Guidance that will take effect on December 26, 2014, so the
references at A-21 in this presentation will likely be
different when that begins.
DIRECT
INDIRECT
 OMB A-21 D.1.
 OMB A-21 E.1.
 Can be identified
 aka “F&A” or “Overhead”
specifically with a
particular project
 Can be directly assigned
to projects relatively
easily with a high degree
of accuracy
 Incurred for common or
joint objectives
 Cannot be identified
readily and specifically
with a particular project
Salaries
Fringe
Travel
Commodities/Supplies
Contractuals/Services/Subcontracts
Equipment
 Facilities
 Depreciation and Use




Allowances
Interest of Debt
associated with certain
buildings
Equipment and Capital
Improvements
Operation and
Maintenance Expenses
Library Expenses
 Administrative
 General Administration
and Expenses
 Departmental
Administration






President’s Office
General Counsel
Provost
Budget & Planning
Procurement
Compliance
 Sponsored Programs
Administration
 OMB A-21, C.2. (a.b.c.d.)
Reasonable
Allocable
Consistent
Allowable
REASONABLE
 “Prudent Person Test”
 Determining Reasonableness:
 Necessary to the project
 Complies with Federal and State Laws and
Regulations
 Did the individuals make good judgements?
 Were the actions taken consistent with
institutional policies and procedures?
ALLOCABLE
 Expenses are incurred solely for the project
OR
 Expenses benefit both the project and other work in a
proportion that can be approximated
 Split purchases are allowed, and are often the most
appropriate way to allocate expenses to projects
CONSISTENT
 Cost Accounting Standard (CAS) 502 requires consistent
allocation of costs
 Incurred for the same purpose, in like circumstances, and are
either only direct costs or only indirect costs
 REMEMBER:
 Cannot charge the same cost both directly and indirectly when it
is incurred for the same purpose and circumstance
ALLOWABLE
 Must follow requirements from:
 OMB Circulars (soon to be Uniform Guidance)
 Sponsor Guidelines
 Award Document
 Institutional Policies
 Applies to both direct and indirect costs
 Certain costs may only be allowable as indirect
 Example: Sponsored Programs expenses are not allowable as
a direct costs, but are allowable as indirect
 Costs must be treated consistently as either direct
costs or indirect costs, when in like circumstances
 “Like costs in like manner”
 Disclosure Statement (DS-2) also provides guidance:
 http://www.controller.msstate.edu/cas/cdst/
 Example:
 Travel costs incurred while performing the function of
general university activity such as travel by executive officers
meeting with the State Board of Trustees to discuss general
university business would be classified as indirect costs.
 Travel by a university employee related to carrying out the
functions of a specific contract or grant would be classified as
a direct charge to that contract or grant.
 Can I charge a computer to my project?
 IT DEPENDS!
 Yes, if being used in a programmatic way
 Computer needed to be connected to a scientific piece of
equipment for data collection
 Computer needed to run simulations, analyze data, etc
 No, if being used in a general way
 Check email, browse internet,
word processing, etc
 Can I charge office supplies to my project?
 Typically no, due to lack of allocability
 OMB A-21 F.6.b.(3).- normally treated as Indirect Costs
 Allowable in unlike circumstances
 Used in programmatic way (conference materials, pamphlets,
etc)
 Can I charge my administrative assistant to my
project?
 Typically no, due to lack of allocability
 OMB A-21 F.6.b.(2).- salaries of administrative and clerical
staff normally treated as Indirect Costs
 Appropriate on a “Major Project”
 OMB A-21 Exhibit C
 Anything necessary for the completion of the project
that is not paid for by the sponsor
 Source of funds is irrelevant:
 MSU- E&G (Educational and General) Funds
 MSU- Designated Funds
 Third Party Contribution
 Other
Committed
Uncommitted
 Must be tracked
 Doesn’t need to be tracked
 Required by sponsor
 Typically after the fact
 Not required, but
committed in proposal
 Not required, but
implied through
regulation
“volunteering” of MSU
resources
 As a PI, do I have to charge my time to the project?
 No- BUT your time will be considered cost share, and
some portion of it must be committed and tracked
 Doing so will require division approval on the IAS in the Cost
Share portion
 OMB Memo 01-06
 http://www.whitehouse.gov/omb/memoranda_m01-06/
 All projects must have some committed effort, and therefore
must be tracked
 Note: we do not encourage cost sharing if it is not
required by the sponsor
 To be allowable as a cost share expense, it must be
allowable as a direct cost
 Must be incurred during project period
 Can only be used as cost share once
 Cannot be already charged to the feds (F&A costs)
 The sponsor does not allow me to charge F&A on the
project. Can I use this unrecovered F&A to meet my
cost share requirement?
 Only if you have prior approval of the Federal awarding agency
(see OMB A-110 C.23.(b).)
 If I have two related federal projects, can I use my NSF
funds as cost share for my USDA project?
 No- unless authorized by federal statute to be used as
cost share (very rare to happen)- OMB A-110 C.23.(a).(5).
**Cannot cost share Federal funds with Federal funds.**
 I bought a piece of equipment a few years ago that I
plan to use on this project. Can I use that as cost share?
1- Was it purchased with Federal funds?
2- Are the feds already paying for this (as F&A)? Is it in the
F&A pool?
3- Is it fully depreciated?
 If you answer “no” to all of these, then you could use
the depreciation value as cost share.
 Basic Principles
 All costs must follow the
principles we’ve discussed:
 Reasonable, Allocable,
Allowable, and Consistent
 Properly budgeted as
Direct or Indirect Costs
 All costs should be viewed
in relation to the project’s
needs
 Specific RFP’s may
prohibit or require certain
classes of expenses- be
sure to read carefully!
Personnel
 PI, Project Team, Students
 Establish this section first
to help determine
expenses for other
categories
 Calculations:
 % effort or person months
 Person Months
recommended
 9 mo. Vs 12 mo. employees
 Use current salariesescalations allowed for
future budget periods
 Sometimes sponsors (particularly industries) will ask for an
hourly rate.
 Hourly Rate for 12 month: Salary / 2,080
 Hourly Rate for 9 month: Salary / 1,560
 Because MSU uses level of effort percentage instead, hourly
rates are not auditable.
 We can provide these rates if required, but we need to add
a disclaimer. SPA can work with the PI on what verbiage to
use.
Fringe Benefits
 Treated as a Direct Cost
 Effective August 31, 2014
 Calculations
 Rates are applied to
budgeted salaries
Faculty/Staff
(based on
$40,000 average
salary)
Enrolled
Students
Retirees
Other
Intermittent
Employees and
Non-Enrolled
Students
36.09%
0.73%
24.23%
8.48%
 Graduate Student Tuition
 Calculation is based on student’s budgeted effort
 Note: Effective Fall 2015 (FY16), all GRA’s will have the
100% rate charged in budgets. GTA’s and GSA’s will
remain at 71%. (Kevin Edelblute)
Travel
 Project related
conferences, meetings,
data collection, etc
 For budgeted personnel
 Per Diem
 http://www.travel.msst
ate.edu/hcma/plhcma.
php
 $41/day (min)
 $46/day (max)
 Mileage
 http://www.travel.msst
ate.edu/mileage/mileag
e.pdf
 $.56/mile if State owned
vehicle not available
 $.235/mile if State owned
vehicle available
Equipment
 Non-expendable
 Tangible
 Useful life of more than
one year
 Acquisition cost of $5,000
or more per unit
 Note: just because it can
be inventoried, does not
necessarily make it
equipment for budgeting
purposes
Commodities/Materials
and Supplies
Contractuals/Subcontracts
 Services to be
 Items to be used for the
project
 Examples: Molecular
Biology Supplies
(enzymes, tubes, etc) to
be used for DNA
sequencing
performed by another
entity to complete the
project
 Example: Third-party
vendor will perform
DNA sequencing
samples
Participant Costs
 Broad definition:
 Support provided when a sponsor funds a project or activity
in connection with formal meetings, conferences, or training
programs
 Specific definition:
 Costs paid to (or on behalf of) participants in such events
 Treatment of participant costs vary from sponsor to
sponsor- check the RFP and sponsor requirements!
Facilities and Administrative Costs (F&A)
 Research
 45.5% MTDC On Campus
 26% MTDC Off Campus
 Instruction
 50% MTDC On Campus
 26% MTDC Off Campus
 Public Service/Other
 27.2% MTDC On Campus
 22.8% MTDC Off Campus
*Current Federallynegotiated rates,
effective:
July 1, 2014June 30, 2017
 (MTDC = Modified Total Direct Costs)
Total Direct
Costs
Exclusions
Modified
Total Direct
Costs
 Exclusions:
 Tuition
 Sponsor may further
 Equipment
restrict the F&A Rate
 The maximum that can be
charged is our federally
negotiated rate
 Patient Care
 Off-site Rentals
 Scholarships/Fellowships
 All Subaward Costs
Exceeding $25,000
Angie Templeton: 5-2346
atempleton@spa.msstate.edu
Nicole Cobb: 5-4775
ncobb@spa.msstate.edu
Sponsored Programs Administration
133 Etheredge Hall
325-7404