Budget Management

Budget management

Research Financial Services (RFS) ensures that the university complies with all fiscal provisions of contracts, grants, and other agreements. Generally accepted accounting and reporting practices are followed in the management and administration of sponsored projects and programs. Consideration is also given to cost principles and standards promulgated by the Federal Office of Management and Budget (OMB) Bulletins and Circulars, including OMB Circulars A-21, A-110, A-133 (see information below) as well as to specific terms and conditions of each individual award which accompany the notice of award received by the PI/PD.

Budget regulations

There are sponsor, federal, state, local and university rules and regulations that govern expenditures made against sponsored awards. Described below are some areas of compliance. This list is in no way exhaustive. It simply outlines the more common areas of concern. You are encouraged to familiarize yourself with these areas and determine which apply to your award and adhere to them. If any guidance is required, your RFS Officer is available to advise you.

Federal guidelines are usually quite broad covering the majority of federal agencies, but each agency could have more restrictive requirements depending on the type of the award. Most federal awards will require compliance with OMB Circulars A-110, A-21, and A-133. These circulars are quite complex. OSP and RFS staff are well-versed in these regulations. Please consult your assigned OSP and RFS contacts if you have specific questions.

In addition to the sponsor and federal requirements, the State of Georgia and Georgia State University have their own regulations. Many of the regulations for the University System of Georgia are found in the Board of Regents Policy Manual. Procedures established by Georgia State Finance and Administration must be followed for sponsored projects and will ensure compliance with state regulations. Again, contact OSP and RFS staff for assistance with understanding these regulations.

In many instances, private sponsors will utilize the same federal regulation circulars in addition to any specific regulations they may have. Also, individual awards may have different requirements, even if they come from the same sponsor. Some sponsors, such as the American Heart Association, categorize awards with different regulations for each funding category. Project-specific regulations should be outlined in the award documentation. This documentation should be reviewed for each new award.

Cost-reimbursable and fixed price awards

In order to appropriately administer and closeout awards within the University’s financial system, projects are categorized into two distinct types: cost-reimbursable and fixed-price.

Cost-reimbursable – sponsored projects provide for payment of allowable incurred costs, to the extent prescribed in the agreement. In other words, the university obtains the funding after the charges have occurred. These agreements establish a budget of total cost for the purpose of obligating funds and establishing a ceiling that the sponsor will not normally exceed. Requests for reimbursement of costs are most likely accomplished through either drawing-down funds via letter of credit or invoicing. Most projects at Georgia State are categorized as cost-reimbursable. In rare cases, a sponsored project that is cost-reimbursable may provide payments in advance of costs being incurred. In these agreements, the sponsor requires a final or intermittent financial report reflecting all costs incurred and a refund of unused funds upon termination/closeout of the award.

Most federal projects are cost-reimbursable and are paid via letter of credit. Costs are incurred and then “drawn down” through a reporting process where expenditures are reported on a quarterly basis. Federal projects are almost never funded in advance of expenditures, hence when a project is over, there are no actual funds that remain or need to be returned. Although some non-federal projects also are funded through invoicing or letters of credit, many state, foundation, and private cost-reimbursable sponsored projects may be funded in advance (prior to incurring expenses).

For cost-reimbursable awards, as part of the monthly review process, RFS requests funds from sponsors to reimburse GSURF for each month’s expenditures. Invoices for state, local, and private sponsored projects are system-generated through our financial accounting system on a monthly basis. The RFS staff accountants generate quarterly invoices. Non-federal sponsors are invoiced either monthly or quarterly, depending on the terms of the award.

Fixed price – Sponsored projects that are fixed price operate under an established price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the agreement. In other words, prices are determined in advance for services to be delivered. Payments are made on a set schedule or based on completion of some part of the agreed upon work (deliverables schedule). If there is a deliverables schedule, the PI must notify RFS when a deliverable has been accomplished. This type of project places maximum risk and full responsibility for all costs and resulting profit or loss on the contractor. In these cases, the contractor is motivated to control costs, insure efficiency, and minimize the administrative burden on the contracting parties.

When the fixed price total exceeds the total costs incurred, the remaining funds are considered residual balances or fixed-price residuals. The treatment of these balances varies depending on whether the sponsored project is funded through the Georgia State University Research Foundation or Georgia State. The vast majority of the university’s sponsored projects are funded through the Research Foundation where residual balances are transferred to departmental residual projects (i.e., ALR##, BLR##). Once all project deliverables are completed and all funds are received, the original project is closed out within 90 days of the project end date and all residual funds are transferred.

Some fixed-price awards or private awards that provide funds in advance are set up in interest-bearing accounts to earn interest. Typically the interest earned does not need to be returned to the granting agency and is distributed at the end of the award if the interest is over a set amount. Contact your RFS representative for more details.

Allowable and unallowable costs

The majority of awards received by Georgia State University require compliance with the cost principles addressed in OMB Circular A-21 and in GSU’s Direct Cost Charging Policy. PIs should refer to the Direct Cost Charging Procedures document for instructions about determining allowed costs and treatment of various costs on sponsored awards.

Award budget categories

Award budgets in Spectrum+ are divided into budget categories based on the budget information in the proposal and including any budget modifications completed in the award negotiations. The budget categories are those used by Georgia State and are not necessarily the same as those required by the sponsored agency.

All awarded budgets are divided into the following budget categories (determined by the university’s financial system Spectrum+): faculty academic year salary, faculty summer salary, 12 month faculty and staff salary, graduate assistants, part-time instructors, other salaries, fringe benefits (totaled to personnel costs). Travel, operational supplies (includes supplies, P-cards, human respondent fees etc), consultants (including fee and expenses), subcontracts (listed separately for each subcontract and split between first $25,000 and rest of subcontract), participant costs/stipends, equipment.

Purchasing from grants and contracts

Purchases from a sponsored award or contract must be allowable, allocable and reasonable, according to the Direct Cost Charging Policy. All charges must be allowable for the project. Although charges should follow as closely as possible the detailed budget in the award/contract, how much flexibility is allowed by the sponsor is determined by the terms and conditions of the award (see rebudgeting section). Information below should help determine whether expenses related to a sponsored project or contract are allowable or unallowable and, for some items, under what circumstances allowability might change. In the event that there is any question about the allowability of an expense, the PI/PD should contact their RFS representative for clarification. Also, as a state institution, Georgia State must follow all State of Georgia policies regarding purchasing (see http://www.usg.edu/business_procedures_manual/section3/), including policies regarding the use of minority suppliers/vendors for certain purchases.

Faculty extra compensation

Extra compensation may be granted when work is done outside normal business hours and above whatever the normal full time Full Time Equivalent (FTE) is for the individual and only on these two conditions 1. approved by the sponsor agency, 2. if it adheres to the Board of Regents Policy on Extra Compensation, Section 8.3.12. With government regulations becoming more stringent, it is imperative that the university community understand and comply with the existing guidelines concerning the payment of extra compensation on sponsored projects.

The most appropriate way to request extra compensation as an allowable cost on a sponsored project is to specify this cost in the proposal (subject to the criteria above) in the personnel area, but NOT as a consultant cost. This cost includes associated fringe benefits of seven percent (current FICA allocation rate which is subject to change).

In order for extra compensation to be approved, it must be included in the proposal and the awarded budget or approved by the awarding agency in writing after the receipt of the award and a letter from the dean’s office must ensure that all four conditions of the BOR Policy above are met. These requests are approved only in cases where the above requirements are met. Please note that federal funding agencies and some state agencies do not allow extra compensation during the academic year.

Even if extra compensation has been approved as an allowable cost, certain federal criteria are applied in that the “consulting” must be across departmental lines or the work involved is at a separate or remote location. In addition, extra compensation may not be paid from state funds, nor can a Georgia State employee get extra compensation as a consultant on a sponsored project awarded to Georgia State.

Equipment

Capital equipment is defined as any unit item with a life expectancy of a least one year and having an acquisition cost of $5,000 or more. Shipping, taxes, in-transit insurance and installation charges should be included under this category for new purchases, provided these costs are included on the original purchase order.

When ordering capital equipment, which is inventoried and decaled, you must follow Georgia State’s policy and procedures on procurement of equipment using Purchase Requsitions.

Fabricated equipment is defined as special purpose equipment that is to be assembled or fabricated that will result in an article of nonexpendable tangible property having a useful life of at least one year, and total acquisition cost of $5,000 or more. The fabricated unit consists of items or assemblies of parts that are interconnected and interdependent so as to become a new functional entity for a special purpose. Please contact Menetha Alston (404-413-3027) in Georgia State’s Office of Accounting Services for the correct procedures for charging fabricated equipment so it gets charged as equipment, not supplies.

F&A is not charged on capital or fabricated equipment.

Purchase of equipment that does not fit the definition of either capital or fabricated equipment are considered supplies.

University charge cards and P-cards

Purchases for a sponsored project can be charged with a Georgia State charge card, called a green card, for miscellaneous items such as paper, folders, binders, printing, university parking charges, etc., from Georgia State service providers such as the university bookstore, supply room, Office of Auxiliary Services, etc. Requests for a green card should be made directly to your RFS representative who will get the necessary information from you when you contact them.

The Georgia State Procurement Card or P-card is a valuable tool for quickly and efficiently purchasing and paying for goods from vendors outside of the university. For more information on obtaining and using P-cards see the P-card Manual.

Be aware that items purchased with the green card or P-card, and charged to a sponsored project must be in accordance with university, state and federal regulations.

Re-budgeting

Re-budgeting within awarded budget line items is usually possible, however, the sponsoring agencies have different restrictions on deviations from the approved budget. It is important to know the terms and conditions of your award. For some, you need sponsor approval only when you rebudget more than 25% of the total project budget; for others you need approval when you rebudget 10% of a budget category. You can consult your OSP officer if you do not know the conditions of your award. When re-budgeting requires approval by the sponsoring agencies, a formal written request with accompanying justification and a completed IPAS Form (re-budgeting section) must be made and processed through OSP. Many awards allow some changes to occur at the discretion of the PI (under expanded authorities). In these cases, the re-budgeting section of the IPAS Form must be completed and sent to the assigned RFS staff if rebudgeting.

Cost transfers

Cost transfers between accounts are typically used to correct charges inadvertently made to the wrong account. However, it is important to note that cost transfers are red flags to auditors. As a result, Georgia State has a Cost Transfer Policy that provides specific regulations about the use of cost transfers in order to minimize auditing issues that may arise.

When a cost transfer is needed to correct an account problem, a Cost Transfer Form must be completed (including explanation for transfer) and sent to RFS for approval.

The following scenarios are red flags that are usually picked up by auditors (try to avoid these!):

  1. Cost transfers within 90 days of a project’s end date.
  2. Cost transfers without a detailed explanation or with an unacceptable explanation (to spend remaining money, etc.)
  3. Large number of cost transfers.
  4. Cost transfers near the end of a project or several cost transfers onto a sponsored project.
  5. Cost transfers among closely related projects.

Expenditure review and drilldown reports

These reports can be obtained at any time through Spectrum+ and provide an itemized review of expenses charged to a sponsored award for any specified period of time. You can obtain reports for both sponsored projects and cost share companion accounts. These drilldown reports are frequently given to PIs by their business managers in order for them to perform the required expenditure review.

The university is required to develop and submit financial statements annually called Year-End Closeout Reports for sponsored awards. Although sponsored awards have varying end dates, they are subject to certain year-end requirements in order for the university to produce accurate and timely financial statements. Therefore, everyone is encouraged to review accounting results monthly and submit adjustments and corrections in a timely manner. Although this review should be ongoing, it is especially imperative to do so before the end of Georgia State’s fiscal year each June 30. Regarding these reports, it is important to keep in mind that Georgia State’s fiscal year is typically not the same as the budget period for a sponsored award.

Any adjustments needed on your project(s) should be processed without delay as soon as they are identified. All payroll charges must be reviewed monthly to ensure proper distribution to the correct departmental or project budgets. Requests for payroll adjustments should be forwarded to your designated college human resources officer or directly to payroll, if you do not have a designee.

Personnel effort reporting

The federal government’s Office of Management and Budget (OMB) Circular A-21 regulations (Section J.10) requires that each institution maintain an acceptable effort reporting system. Georgia State requires certification for effort expended on any sponsored project. For financial reporting purposes, the university also requires employees to estimate the proportion of their University-funded effort that is expended on research and instruction. Changes in effort of the key personnel of more than 25% frequently must be approved by the sponsoring agency. Georgia State has established a Personnel Effort Reporting System in order to comply with these requirements. Instructions about reporting and reviewing personnel effort can be found in the Personnel Effort Reporting Policy and Procedures.

Service centers (recharge centers)

Service or recharge centers are internal service operations where goods and services are sold predominantly to other users within the university. These can include departmental stockrooms, machine or instrumentation shops, core facilities, etc. Prices of services are set with the goal of breaking even. So, prices to internal (Georgia State) users are set to recover the costs of operation and supplies. Sales and service accounts are set up for each service center to receive funds from other Georgia State accounts, such as sponsored award accounts when services are used for work on a sponsored project. More information about the regulations and use of Service Centers can be found in the university’s Service Center Charge Policy and Procedures.

Sponsored program income and its distribution

Program income may be generated as a result of research, training, and public service-related activities and, in some cases, must be reported to the sponsor. Federal sponsors have documented in OMB Circular A-110 and the applicable Code of Federal Regulations (CFR) explicit processes to be used to identify, record, report, and monitor income that is generated during the project period. To be consistent in managing program income, Georgia State extends the requirements to non-federal sponsors as outlined in the university’s Program Income Policy. The nature of this income must be appropriately documented and the resulting revenue properly recorded. This income must also be deposited into an appropriate account. This policy and its procedures address the definition, management, reporting, and monitoring of program income, in accordance with federal and university requirements. Instructions about how to treat sponsored program income can be found in Program Income Procedures document.

Excluded from program income reporting requirements are:

  • revenue generated through programs funded by sources other than sponsored projects, royalty income resulting from copyrights unless addressed in the award terms, and royalties or license fees for unpatented, but potentially patentable discoveries.
  • income received on non-federal awards that are silent on program income.

Some sponsoring agencies require that income generated by work on an award be deducted from the total budget (indirectly returned to the agency) while other agencies allow revenue to be used as additional funding for that project. There are also situations where revenue can be kept in a separate account until after the project is over when any remaining revenue funds can be distributed for other use. Contact your RFS representative for more details.

Sponsor-required reports

These reports are considered deliverables that must be completed and submitted in a timely manner to ensure continued funding of an award. With few exceptions, every sponsored project will require a number of reports during the life of the project and most certainly at its conclusion.

Agencies may require annual progress reports. Contact your RFS officer to obtain information about expenditures and/or budgets. Progress reports requiring institutional approval should be sent to OSP who will review and forward for institutional approval.

Every PI/PD should be prepared to submit a final technical report at the very least. The importance of the submission of such a report on a timely basis cannot be overstated. In a grant or contract arrangement, unlike a gift, the sponsor expects and deserves to be informed of results. Negligence by the PI/PD may substantially impact his/her (and the university’s) ability to receive other support from the sponsor; it may also result in a loss of payment for costs already incurred.

In addition to technical report(s), other reports may be required relating to inventions, equipment accountability, and fiscal data and voucher submissions. The latter two are the responsibility of the RFS, while the PI must prepare the first two. The PI should send to OSP a copy of their final programmatic report—(if not required, a note from the PI/PD so stating) and a report of inventions, patents, and copyright materials produced with the aid of sponsored funds.