NSF: Preparing Budgets for National Science Foundation Proposals

Preparing Budgets for National Science Foundation Proposals 

 
I'd like to welcome you to today's presentation, where we'll be covering how to prepare budgets for inclusion in your proposal to the National Science Foundation. 

 
The National Science Foundation is one of MSU's top sponsors.We have a long history working with NSF and have high-impact projects going on with them now. As an example, MSU is currently leading a project to understand the behavioral and social impact of prescribed fires by developing new technologies for real-time monitoring and advancing collaborative relationships between researchers and educators across the state. 

 
There's another online module that is a prerequisite to this course called “How to Get Started Developing a Research Proposal”.You'll want to complete that module before this one because it provides general budget guidance as a precursor to this one, which is specific and more in the weeds related to NSF. 

 
Carefully review the program requirements you'd like to respond to.I will apologize in advance for using acronyms. 

• FOA is Funding Opportunity Announcement. 
• BAA is Broad Agency Announcement. 
• RFP is Request for Proposal  

…and these are basically mechanisms that federal agencies utilize to solicit proposal responses to help them solve problems, including basic science. 

 
The National Science Foundation is MSU's third largest sponsor of extramural funding and MSU Office of Sponsor Programs is very familiar with this agency.In my opinion, the NSF is one of the easiest and most straightforward federal agencies to work with. That said, it is still important to carefully follow all instructions laid out by the specific NSF directorate or division that you're wanting to submit a proposal to.  

 

Also, it is OK to contact an NSF program officer if you have specific programmatic questions for him or her, but please try to work with the MSU’s ORD or OSP before asking basic budgeting questions.We understand you want to have a relationship with your program officer, but we don't want them to think that the MSU OSP doesn't understand federal grant management rules. 

Before we leave this slide, a quick reminder here to please submit your proposal to the OSP three business days in advance of the due date.That's MSU's authorized representative is Sandy's Sward or her designee, and that it will likely be useful to utilize a simple budget format on the OSP website. 

 
These are the things that are most likely to trip you up: 

 
The National Science Foundation adheres to the federal cost guidelines as prescribed in a document called the Uniform Guidance, UD for short, and that's where MSU personnel go to when determining whether a specific expense can be paid for with federal funds.Within this document are the overarching rules of allowability, allocability, reasonableness, and consistent treatment of costs. 

 
The bottom line here is, would a reasonable person agree that this cost is necessary to accomplish what is outlined in the proposal?And does the cost expense benefit the award? 

 
These are the standards that MSU will be bound to when audits are performed on our campus. That said, there are a few budget categories that we would like to draw to your attention so that we can all avoid issues and concerns with your budgets now and in the future. And we will be covering travel, subcontracts, contracted services, personnel costs and cost sharing budget categories in today's session. 

 

The most important one, which we'll dive into more later in this presentation, is participant support.NSF is very strict about this category, more than any other agency.We have learned this the hard way over the years in a more recent audit.More on that to come. 

 
Your budget is a financial expression of your proposed project and the initial budget stage is an opportunity to think about all the possible costs of conducting your project.We recommend starting with MSU Single Department Budget template that can assist with the brainstorming stage of this process and remind you of costs as you move into specific budget details.As noted earlier, we have a specific training module on how to get started with budgeting that takes you through this form. 

 
Once you have your budget developed, you'll need to transfer this information to the NSF form.NSF requires the use of Form 1030, which is located on their homepage and proposals are submitted to the NSF via research.gov. If you're collaborating with another institution or institutions, each institution will be constructing and submitting their own budgets in nsfresearch.gov. MSU's portion of the budget can only contain MSU's costs unless you plan to issue a subaward or subawards that include a separate entity, and we will cover the details later in this presentation. 

 
4:46 
Over the next few slides we'll go through some specific information.Yes, I know, into the weeds about how to fill out this form as it is intended. 

This section covers Senior personnel.Note that putting individuals in the Senior Personnel section requires less information than putting information in about a Co-PI.So if you are considering where to put an individual, it's good to know that less is required by listing them as Senior personnel with no downside to the program.And remember that our viewers will want to know who will be involved in carrying out the intent of your project. 

 
Salaries and benefits are typically the largest budget category. 

Here are a few specifics about this category. 

• Salaries are the institutional-based salary that is listed on MSU's employment contract. 
• No more than two months of institutional base salary is allowed by the NSF in a one year. 
• Summer salary is only allowed to be 2/9ths of the annual salary.This rule is specific to NSF and if you're requesting more than two ninths you will need specific approval from your NSF program officer. 
• Extra service pay is not allowed in most cases.Please check with the Office of Sponsored Programs to discuss further if you're considering this. 

 
6:01 
Salaries are subject to standards of documentation through MSU's Time and Effort reporting system, so please be realistic about the amount of time your project may take in terms of the salary you need to charge to accomplish your programmatic goals and milestones.This category is not where you would include consultants or other non employees. 

 
In a multi-year proposal, you can request a small cost of living increase, but typically not more than 3%. 

 
One final note, NSF may ask about personnel in your annual research performance progress report, the RPPR, even if you don't charge any of your salary to the award. 

 
Other personnel. Include employed postdocs, graduate students, lab assistants and technicians, and undergraduate students. In this section, take the time to understand the differences between all of the different personnel categories. If in doubt about how a person's role and responsibilities might be categorized at MSU, please reach out to HR personnel as different fringe benefit calculations and F&A IDC calculations may occur which would impact your budget in unexpected ways. 

 
Graduate research appointments are entered here with salary and are subject to F&A. 

 
Tuition and fees are not subject to F&A.They will be entered into other line, same as scholarships and fellowships. 

 
Stipends are not intended to be compensation for specific project or works and are not included here but rather in the Other section. 

 
Also note that the NSF Form 1030 contains a budget category for secretarial clerical, which is typically not an allowable cost unless your project is very large and or complex in nature.Please check with the MSU’s ORD or OSP if considering inclusion of this cost and when it may be allowed. 

 
As an additional tip, we've even had NSF auditors ask what students have accomplished on the projects.  

Equipment.Typically equipment is a fairly straightforward budget category, but if there are extenuating circumstances or details, use the budget narrative to explain. Equipment is defined as any item greater than $5000 and has a life expectancy greater than one year.Note that F&A is not calculated on equipment. 

 
As an interesting side note, MSU recently had an audit exception for a system that was more than $5000 and was being fabricated. The PI and the NSF program officer agreed that the budget category was correct as contracted services because the contractor was hired to build a plastic sheeting system to study the effects of drought and life expectancy at high elevations was unknown. Because the cost was greater than $5000, the auditor took exception to how MSU budgeted this and we were told it should have been budgeted as equipment and exempted from F&A and IDC charges.We are still working with the NSF to resolve this issue. 

8:55 
Please note it is considered minor equipment if the value is less than $5000 or if one piece of fabrication can function without others.If taken apart, then that piece is considered minor equipment and listed under Supplies Participant support costs. 

 
As noted earlier in the presentation, participant support is a category that the NSF is very strict about. If the expenses are even $1.00 more than the budget specifies, then a written approval must be obtained for the change.Guidance is to not overpopulate this category.Know that there will be great scrutiny on this category. 

 
9:32 
Let's start with the exact definition of participant support costs, because this seems to be a category that gets misinterpreted frequently. Participant support refers to the cost of transportation, per diem, stipends, and other related costs for participants or trainees, but not the employee of the grantee organization in association with NSF-sponsored conferences, meetings, symposia, training activities, and workshops. Funds provided for participant support may not be used by grantees for other categories of expense without the specific prior written approval of the NSF program officer. 

 
This is one of the budget categories that is not flexible in terms of moving between budget categories.It is critical to understand the difference between participants and employees as they are handled quite differently. Participant support is not a budget category that is used very frequently though.  

Travel.Travel is also one of the most highly scrutinized budget categories, and there are lots of specific details and rules that accompany it.Auditors and state legislators seem to hold an attitude that travel is some type of vacation for grant-funded personnel, and so it is really important to clearly map out and document travel costs. 

 
The bottom line here is that we must travel on the lowest-cost fare available, which is usually economy and the burden of proof falls to MSU. Key points here are one, seat upgrades on flights are not allowed unless there's a documented medical need, and two, state rates lay out lodging and meal per diem. 

 
11:07 
Now for some additional specifics. We must break down the travel between foreign and domestic, and all foreign travel must be approved by the NSF.You may not know the specific future costs for airfare and hotel and conference registration, so a reasonable estimate will do.Ask OSP if you're looking for some guidance here.Federal regulations default to the State of Montana Travel Rules, even though the funding is federal, the federal rules and rates do not apply.We are subject to State of Montana rules and regulations.  

 
The current per diem rates, mileage reimbursement, and lodging can be found on the MSU University Business Services website under Travel Rates. 

 
We are required to comply with the Fly America Act, which means travelers need to fly on US flight carriers when possible. 

I realize we're talking about the budgeting on your NSF proposal, but I want to let you know that anything listed in your proposal is subject to audit.The MSU authorized organizational representative agrees to allow auditors to review grant expenditures and compliance matters at any time. 

 
Every other year, the State of Montana Legislative Audit Division personnel comes to the Office of Sponsored Programs and pulls a random sampling of expenditures.Auditors look at both policies and procedures for all state and federal rules and regulations. But I'm happy to report that the OSP and Research Office have rarely had any audit findings, with the exception of about four audit cycles ago, we had what I consider kind of the silliest audit finding ever. They determined that a $14.99 purchase of a box of boxes of Kleenex was not a lab expense, that it was indeed an office expense, which they determined was unallowable.And so we had to account for that audit finding and explain it to everyone for two years.It was sort of ridiculous. 

 
Other direct costs. This budget category is sort of a catch-all for expenses not called out directly in the previous budget categories. 

Examples of these costs are IT services, lab fees, repair and maintenance.Tuition and fees, laptops, iPads, etcetera are typically in this budget category as a supply since their purchase is less than $5000, but must show benefit to the project and not just general use in nature. 

Note that any project-related maintenance costs cannot extend past the award end date and publication costs must occur before the grant closeout, which is 120 days past the end date. 

 
You cannot include general office supplies, books, furniture, general purpose items, entertainment or promotional giveaways.They will not be allowed. 

 

Of note, short-term visa costs will be allowable, but review the program announcement carefully and check with OSP if you still have questions. 

 
14:06 
Subawards. This is one of the more confusing budget categories to differentiate, but is critical to do so at the proposal budget stage. 

Let's start with the definitions. 

 
Subaward / subcontract. 

These are awards provided by a pass-through entity such as MSU to a sub-recipient to carry out a portion of the federal award.They have programmatic responsibilities and must adhere to the same federal regulations as MSU. 

 
A contractor is an entity that receives a contract by which a non-federal entity such as MSU purchases property or services to carry out the program project.These vendors do not have programmatic aspects of the project. 

 
Now why is it so important that we differentiate these at the proposal budget stage?Primarily two reasons. 

 
1) Reviewers of your proposals will want to see who and what other institutions are involved in the project and  

2) NASIDCS are applied very differently depending on which category is appropriate for the expense. 

 
15:09 
Let's review some of the guidelines for managing your subawardees. 

 
MSU OSP has a sub-award team available to assist you with establishing and managing your sub-awards, but it can also answer questions at the proposal stage, as well as your OSP fiscal Officer. 

MSU is responsible for monitoring the programmatic, financial and compliance aspects of all sub-awards.This responsibility is shared between the PIs and the Office of Sponsored Programs. 

PIs should approve all technical work and invoices coming from sub-awardees. OSP will handle the processing of approvals of these invoices, sub awards and sub recipients, i.e., not MSU, are allowed to charge and collect their federally negotiated FNAIDC rate since they are also incurring these types of costs at their respective campuses.We include these costs in our budget proposal, unless they are submitting them directly to the NSF. F&A applies only to the first $25,000 of the subaward total. 

 
We have different account codes we use for costs before and after the $25,000 threshold.Multiple subawards can be issued to the same institution, but each subaward requires its own statement of work, budget and associated F&A. 

If you are working with an entity that doesn't have a negotiated rate with the federal government, the federal government does allow for a de minimis rate that can be applied. 

 
And finally, NSF requires specific written approval to re-budget in this category.  

Contractors. Now on to contractors which are managed through procurement services. For contractors and consultants, the entire cost will be charged MSU's full F&A IDC rate.MSU doesn't have responsibility or liability for the contractor or consultants products or deliverables.It is one of the key things that differentiates it from the subaward process. 

 
Before we leave this direct cost budget category, a couple other items to note: 

 
1) There is no budget category for contingencies, so it is important to budget as accurately as possible at the proposal stage. 
2) Human subjects, though rare, are not participants. They get budgeted under supplies.  

 

17:23 

Indirect costs/Facilities and Administrative. We have been referring in this presentation to both indirect costs and facilities and administrative.These terms are used interchangeably by most people in the industry.It was IDC for most years until the federal government decided that F&A was more descriptive, but the term never really caught on. This is an expense reflected as a percentage of direct cost. 

That is a cost recovery mechanism for MSU. MSU undergoes a process with one federal agency, the Department of Health and Human Services, on a regular basis to negotiate the applicable rate for each program type, research, public service, or other institutional activities and instruction.  

Because the fees periodically change, there's a reference sheet on the OSP website with the latest F&A rates. These rates are based on a specific fiscal year of MSU's actual expenditures, and that's why each institution has a different rate and why the rates change over time. 

MSU's rates, including research, are fairly low.Interestingly, the highest research rate I could find is 89% and the lowest rate I could find was 41%. 

The PI determines which program and resulting rate is most appropriate for the project, but typically the research rate is utilized. 

 
Some budget categories are exempt from F&As and IDC’s, including equipment sub-awards greater than $25,000, tuition fees, rental costs, participant support costs, and scholarships and fellowships.This is called the Modified Total Direct Cost Base, which most institutions of higher education must adhere to. 

 
Equipment grants like major research instrumentation awards may not have any F&A and IDCs, since this budget category is exempted from this calculation. 

 
There is also an off-campus rate that could be utilized as appropriate.  

19:16 

Cost sharing. NSF is our friend, as NSF no longer allows voluntary committed cost sharing unless specifically required by the program solicitation. MSU’s policy is that cost sharing is not permitted unless the eligibility criteria require it. 

 
So don't offer up any additional resources in your proposal, because MSU will be required to provide and document this as well as being audited on these expenditures. 

 
As you complete your NSF budget and budget justification, please keep in mind that there are potential sensitive budget and expense areas and that the uniform guidance, remember that's our rule book for federal cost reimbursement, lists more than 50 expense items that are specifically called out as either allowable or unallowable for federal cost reimbursement. Please contact your OSP staff if you have any questions regarding whether a cost is allowable or not. 

 
We showed this slide earlier to alert you to areas where we have seen more scrutiny from sponsors or categories that simply have more rules to follow. As discussed, participant support is particularly scrutinized by the NSF. 

 
Other sensitive areas have been covered in this training, but if you have questions about what's allowable, please feel free to refer back to this training, some of the resources we've provided, or simply contact OSP staff if you have a question regarding whether a cost is allowable or not.This is our area of expertise and we're very happy to help. 

 
20:42 
And lastly, we wanted to provide you with a slide of additional resources. 

The Form 1030 is the actual form you'll use to submit your proposal budget. 

There's also a webinar that NSF has put together on AISL budgets that's very informative. 

We've also provided you with the NSF definition of participant support costs, which we recommend if you are going to include participant support because it's such a scrutinized category and the Fly America Act, which guides you in how to ensure that you're complying with air travel requirements.  

MSU has created an incentive program to reward your research efforts. 

 
The IPR program provides incentives for faculty to secure externally funded research grants and contracts and is in addition to and complements existing academic year and fiscal year faculty salaries.Faculty members may be paid up to 25% of their institutional based salary. 

Participation in the program requires eligible faculty to charge a portion of his or her institutional based salary and fringe benefits to a grant or contract award.The faculty member will draw a salary from the grant or contract proportionate to his or her effort devoted to the project, creating funds for this incentive program due to the salary savings on the instructional budget side. 

Check on the IPR Policy and Procedures website for details of this program if you're interested in participating. 

 
22:05 
And in closing, we wanted to let you know that the MSU Office of Research Development and Office of Sponsored Programs are ready and happy to assist you with the preparation of your budget, so please don't hesitate to reach out to our offices. It's our job to help.