• Grants Office
  • Preparing Budgets for Grants at LaGuardia

     

     At the start, it is best to admit that preparing a grant budget is often a difficult task. For some people, math skills may be rusty (or non-existent). Do not hesitate to call on the Grants Development Office for assistance. Staff members in the Grants Office deal with budgets every day. It is best to consult with the Grants Office early in the process.

    A. Research Foundation vs. LaGuardia Community College Foundation


    LaGuardia Community College grant budgets are managed by either the CUNY Research Foundation (RF) or the LaGuardia Community College Foundation.

    Public grants – that is, grants or contracts funded by the federal government, state government, or city government – are always managed by the Research Foundation.

    Private grants – that is, grants or contracts funded by a private foundation or a corporation – are often managed by the LaGuardia Community College Foundation. However, in instances where private grants have full-time employees who receive employment benefits, these monies are managed by the Research Foundation as the LaGuardia Community College Foundation provides meager benefits.

    B. Direct Costs

    Direct costs are those specific costs that can be identified with a particular sponsored project, or that can be directly assigned to such activity with a high degree of accuracy.

    1. Allowable Direct Costs

    In order to determine whether it would be appropriate to budget (or charge) a certain direct cost on a government-sponsored project, one should be familiar with the criteria used to define "allowable direct costs." They are:

     

    a. The cost must be reasonable (i.e., the cost is generally recognized as necessary for the performance of the project and is one that a prudent person would consider reasonable given the same set of circumstances).
    b. It must be allocable to the sponsored project (i.e., the cost is incurred for the benefit of only one project or the item can be viewed as benefiting multiple projects). A specific project may only be charged that portion of the cost which represents the direct benefit to that project.
    c. The cost must be treated consistently with comparable costs incurred in similar circumstances at the College.
    d. The cost must conform to any limitations or exclusions stated by generally-accepted accounting principles or by the sponsored agreement (i.e., the cost must be "allowable" and not specifically designated as unallowable by regulation or specific grant/contract award provisions).
    Source: Vanderbilt University 

     

     2. Release-Time

    Individuals are either hired specifically to work on a grant-funded project or they already work for the College and, thus, need to be “released” from some portion of their regular responsibilities in order to work on the project.

    Faculty released to work on a grant are budgeted according to the number of contact-hours of teaching that will be devoted to a grant. One contact-hour of release-time is calculated at $1,345. Thus, 3 credits, or hours, of release-time would be $4,035 (3 X $1,345).

    For administrators or staff, the individual is released from a proportion of their time; the same proportion of the individual’s salary is charged to the grant.

    3. Fringe Benefits

    Individuals hired under an RF-administered grant, or contract, are considered employees of the Research Foundation. The Research Foundation provides various packages of fringe benefits, depending on the type of position (e.g., part-time versus full-time). The RF also maintains a list of approved job titles and salary ranges, available online. In budgeting and hiring individuals from the outside to work on a grant or contract, one needs to select an appropriate job title, set the salary, and follow Research Foundation guidelines in determining the cost of fringe benefits.

    For RF employees, the following fringe benefit rates are in effect (as of February 2014):

     

     

    Full time and Part time A  Full time Employees scheduled to work 70 or more hours per bi-weekly pay period and paid on an annual basis. Part time employees scheduled to work more than 38 hours and less than 70 hours per bi-weekly pay period and paid on an hourly basis.   38% Currently 
    Part-time B & Sabbatical   Part time employees scheduled to work no more than 38 hours per bi-weekly pay period and paid on an hourly basis. CUNY Faculty who are on Sabbatical Leave.    9.5% Currently 
    Release Time Faculty  CUNY Faculty released to work on a grant or contract.  38% Currently 
    *(Effective July 1,2014-41.6%)  
    Summer Salary  CUNY Faculty who are receiving Summer Salary payments.  28.9% Currently 
    MTA Tax     $.0034 
    For the LaGuardia Community College Education Fund Grants  
    Part time employees scheduled to work no more than 38 hours per bi-weekly pay period and paid on an hourly basis.
    Only Part-time employees can work on an Education Fund administered grant.
     
    12% Currently 

     

     Thus, the amount for fringe benefits that must be budgeted for one hour of FT faculty release-time during Fall I, Fall II, or Spring I would be $511 ($1,345 X 38%) For three hours during the same semesters, the budgeted amount would need to be $1,533 (3 X $511). During Spring II (i.e., summer), the budgeted amounts would need to be the summer salary (generally calculated at 1/9 of a faculty member's annual salary) multiplied by 28.9%. Note that a faculty member cannot earn summer salary in any month during which a faculty member teaches.  

     

     4. MTA Tax

    In order to eliminate the Metropolitan Transportation Authority’s $1.2B deficit, the State of New York has imposed a new payroll tax on companies with employees working in the Metropolitan Commuter Transportation District (MCTD). The tax amounts to 34 cents per $100 of gross wages/salaries for those working in the Five Boroughs of New York City (Brooklyn, Bronx, Manhattan, Queens, and Staten Island) and the suburban counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester.

    The MTA payroll tax is an additional cost of doing business imposed on the RF and CUNY by the State and debited from projects as a direct expense, beginning in May 2009. This expense will appear as “MTA Payroll Tax,” an additional expense category, on project reports.

    When submitting new proposals or renewals to sponsors, one must include in the proposed budget a separate line-item – “MTA Payroll Tax” - under fringe benefits on the total for all planned full-time and part-time employees. The new tax does not apply to any release-time salaries.

    To calculate the tax, add up all full-time and part-time employee salaries and then multiply the total by .0034. The result is the total MTA tax to be included in the grant budget and added into the total personnel costs.

    For example, if the personnel total comes to $100,000, the MTA Tax is $340 (.0034 X $100,000).

    Please direct any questions regarding the MTA tax to the Grants Office.

    5. The Cost of Space

    The use of College space – both classroom space and office space – can be assessed and calculated:

    1. For each classroom that will be used, calculate the total square footage. For example, suppose the grant required the use of one 20’ X 20’ classroom (20 X 20 = 400 square feet) and one 20’ X 40’ classroom (20 X 40 = 800 square feet).

    2. Multiply the number of square feet by $16 per square foot. In the example, 400 square feet X $16 = $6,400 and 800 square feet X $16 + $12,800. These numbers represent the total cost of the space.

    3. Finally, one calculates the percentage of time that each classroom will be used by the grant-funded project and multiplies that percentage by the total cost. Suppose that the first classroom were to be used for 5 hours per day Monday through Thursday and for one hour on Friday and that the larger classroom were to be used for 10 hours per day Monday through Thursday and for 2 hours on Friday. During the 168 hours of an entire week (7 days X 24 hours), then, the first classroom would be in use for 21 hours. 21/168 = 12.5%. Multiplying the total cost for the first classroom (i.e., $6,400) by 12.5%, one determines that the grant can be charged $800 for the first classroom. For the larger classroom, the use represents 42 hours of the 168 hours in a week. 42/168 = 25%. $12,800 X 25% = $3,200. Together, the total charge for use of the two rooms ($800 + $3,200) = $4,000.

    Office space is similarly calculated by determining the square footage and multiplying the square footage by $16 per square foot, and then multiplying that total by the percentage of total hours the office is being used for the grant-funded project. Note that, on average, campus offices are in use for 35 hours per week. For example, a 10’ X 15’ office represents 150 square feet. 150 square feet X $16 = $2,400. 35 hours/168 = 20.8%. $2,400 X 20.8% = $499.20 that can be charged to the grant.

    Buildings and Grounds maintains an inventory of rooms on campus that specifies the square footage of each space. Contact the Grants Development Office for assistance.

    6. The Cost of Other Items

    The Office of Administrative and Support Services has calculated the costs of other common services:

     

    Telephone  
    Monthly Cost Per Phone                              $28.13  
    Annual Cost Per Phone   $337.56 
    Cleaning                                                            
    Annual Cost Per Square Foot           $2.12  
    Printing
    Cost Per Page (B/W)                                  $.035  
    Color Copy   $.17 
    Postage/Mailing
    First-Class Postage (Each)   $.44  
    Bulk Rate (Each)   $.17  
    Hours of Processing @185 Pieces Per Hour   $33.00  

                                    

     

     C. Indirect Costs
    NOTE: Indirect costs are also referred to as Facilities and Administrative (F&A) Costs.

    1. Defining Indirect Cost

    Indirect Costs are those institutional costs that are not readily identifiable with a particular project or activity, but nevertheless are necessary to the general operation of the institution and thus the conduct of the project. The costs of operating and maintaining buildings, grounds and equipment, depreciation, general and departmental administrative salaries and expenses, and library costs are types of expenses usually classified as indirect costs. In theory, all such costs might be charged directly; practical difficulties, however, normally preclude such an approach. Therefore, a cost allocation formula is usually used to distribute (i.e., charge) these costs to each sponsored activity that benefits from these overhead expenditures.
    Source: U.S. Environmental Protection Agency

    A particular funding source may or may not allow for indirect costs. Many funding sources place a ceiling upon indirect costs allowed in a given situation or exclude certain items from the calculation of indirect costs.

    The Research Foundation of CUNY has negotiated a Federal Indirect Cost Rate for the College with the Department of Health and Human Services. The current Indirect Cost rate is 65% for on-campus activities and 35.9% for off-campus activities. Rarely will a funder allow indirect costs at these levels. Most government agencies will specify the indirect rate permitted for each particular program.

    However, it is important to note that, when a funder limits the indirect rate, the remainder of the cost (up to 65% for on-campus activities and 35.9% for off-campus activities) can be considered a College contribution or match. Thus, if the funder allows an 8% indirect cost rate, the College can claim 57% (65% - 8% = 57%) as College contribution or match for on-campus activities.

    For a glossary of terms and acronyms pertaining to indirect costs, see:
    http://www.washington.edu/research/maa/fa/glossary.html 

     

     2. Calculating Indirect Cost

    In order to calculate the indirect costs (based on the allowable percentage) for a sponsored project, one must first determine the Modified Total Direct Cost. After determining the Total Direct Cost, one calculates the Modified Total Direct Cost by excluding (a) any equipment item costing more than $5,000, (b) fellowships or scholarships, (c) stipends and honoraria, and (d) the rental/maintenance of off-site locations. Additionally, one excludes subcontract amounts above $25,000.
    Source: Duke University

    Example: If the Total Direct Cost for a $250,000 project that allows 10% Indirect Cost includes $15,000 for a piece of equipment and $20,000 for stipends, the Modified Total Direct Cost is $215,000 ($250,000 Direct Cost - $15,000 equipment and $20,000 stipends). The Indirect Cost would then be $21,500 ($215,000 X 10% Indirect Rate).

    Normally one simply uses the percentage that the funder allows for indirect costs. But, there are occasions when the funder asks for specific calculations rather than a fixed percentage or when it is advantageous to calculate some or all overhead expenses as direct costs to the grant. The Grants Development Office can help determine how to proceed.

    3. A Useful Calculation for Staying Below the Budget Cap

    The previous calculation assumed complete freedom to set the total budget. Thus, if the budget required for the project to run successfully was $250,000 and the allowable indirect rate was 10%, the total budget would be $275,000 ($250,000 + $25,000). However, suppose – as is often the case – that an RFP capped the maximum amount that one could request at $250,000. One needs to determine, then, the amount less than $250,000 to which 10% can be added in order to arrive at $250,000 as the grand total.

    For a $250,000 grant that allows a 10% rate for indirect costs, begin by dividing the maximum amount of the grant (e.g., $250,000) by 100% plus the indirect rate (e.g., 110%). Thus, $250,000 / 110% (or 1.1) = $227,272. To identify the maximum indirect cost allowed, subtract that result from the total amount of the grant. $250,000 - $227,272 = $22,728. So, with a cap of $250,000 and a 10% indirect rate, one can budget $227,272 for the project and $22,728 as indirect cost.

    D. Recovery Requirements

    1. Recovery (Under Normal Circumstances)


    Grants allow faculty and staff to pursue research and build new programs. But grants must produce discretionary income – termed “recovery” - that provides a revenue stream to further support the College’s mission. When preparing a budget for a grant application or contract, the author must include a sufficient amount for recovery.

    The percentage of recovery depends on who will manage the grant, either the CUNY Research Foundation (RF) or LaGuardia itself through its own foundation. For a grant or contract managed through the Research Foundation, recovery must equal 15.5% of the total award or 16% if the source is funding from the American Recovery and Reinvestment Act of 2009 (i.e., stimulus money). For a grant administered through the LaGuardia Community College Foundation, the recovery must equal 10% of the total award.

    For example, a grant of $250,000 managed by the RF would need to calculate a recovery of $38,750 (15.5% X $250,000) or $40,000 if funded by ARRA money (16% X $250,000). The same size grant managed by the LaGuardia Community College Foundation would need to include a recovery of $25,000 (10% X $250,000).

    A number of different line items can be counted toward the required recovery:

    Release-Time + Fringe Benefits on Release-Time + Indirect Costs

    If you are unable to achieve sufficient recovery though faculty and staff release-time + fringe benefits on release-time + indirect costs, there are instances where postage, printing, supplies, space, telephone, and cleaning costs may be counted toward recovery. Contact the Grants Office for assistance.

    2. Recovery (In Cases of a Fringe Benefit Shortfall)


    As stated previously, recovery – normally allowable indirect costs + release-time + fringe benefits on release-time – is set at 15.5% for grants and contracts administered by the RF. However, in a few cases, the funding agency makes life a bit more difficult by only allowing a fringe benefit rate set below the rate that RF must charge. For example, if the funding agency only allows 30% fringe on a $100,000 salary at a time when the RF rate charged to the campus is 36.5%, there would be a $6,500 shortfall in fringe benefits::

    30% allowed by funder x $100,000 = $30,000
    41.6% required by RF x $100,000 = $41,600
    $41,600 - $30,000 = $11,600 shortfall

    When an agency cap on the fringe rate produces a shortfall, an RF-administered grant must provide for normal recovery (i.e., 15.5%), plus recover the shortfall (i.e., in the example, an additional $11,600).

     


     Additional information on rules governing budgeting for federal grants and contracts can be found at:

    Office of Management and Budget (Circular A-21: Cost Principles for Educational Institutions)

    Office of Management and Budget (Circular A-110: Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations)

    Hill Air Force Base (Federal Acquisition Regulations)

    The University of New Mexico (Accounting for Federally-Defined Allowable and Unallowable Costs) 

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