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Re-Budgeting

Definition/background

The budget plan is the financial expression of the project or program as approved during the award process. After a grant or contract has been awarded, the PI may determine that the approved budget allocations are not consistent with actual project needs. S/he may request the formal reallocation of funds from one spending category, or account code, to another account code category that better reflects the project requirements. This process is called Re-budgeting or Budget Revision.

Informal re-budgeting occurs when actual expenditures exceed or fall short of the allocated amount budgeted in an account code or when actual expenditures occur in an account code that has no budget allocation.  Many sponsors allow re-budgeting without prior approval while others require approval when re-budgeting into or out of a spending category exceeds a specified percentage of the award amount. If prior approval is not required then formal re-budgeting is not necessary, but may be requested to assist in budget management.  Principal investigators need to be aware of the specific requirements for their awards and to request prior approval for budget changes when necessary. 

Note: Re-budgeting to include animal care costs or human subject costs is not permitted without prior IRB and or IACUC approval.

When budget revisions are made in direct cost categories, there may also be an impact on the F&A costs to be charged to the project.  As an example, if funds budgeted for equipment, that were not included in the MTDC base for calculating the F&A cost, are expended for materials and supplies, then F&A costs will be assessed against those expenditures.

Note: Re-budgeting may have an effect on Facilities and Administrative (F&A) Costs

Re-budgeting Procedure

To request re-budgeting of funds on a grant or contract:

Determine if the sponsor of the grant or contract allows re-budgeting and whether prior approval is required.   (Note:  If the sponsor requires prior approval for re-budgeting that exceeds a certain percentage of the budget, care must be taken to ensure this limit is not exceeded when multiple re-budgeting events occur in a single budget period. For example: on NIH non-modular budgeted awards, sponsor concurrence is required when a single direct cost budget category deviates (increase or decrease) from the categorical commitment level established for the budget period by more than 25 percent of the total costs awarded.)

In all cases the justification to request a re-budget should, at a minimum, include the following explanation:

  • Is the re-budget moving budget to an allowable budget line, (e.g. student, aid, equipment, etc.)
  • Will the scope of the project change?
  • Include a technical justification provided for each line item change.
  • Confirm that there is budget in the account code being re-budgeted from.
  • Will F&A be impacted?  Does the re-budget request accurately calculate any changes to F&A? 

If sponsor approval is required:

Federal Sponsors with systems in place to request administrative changes, i.e. FastLane, NIH Commons, NOAA Grants Online:

  • Initiate the budget revision request in the appropriate online system and route for approval.  The SPA Office will review the online request and authorize the request to the sponsor.

Sponsors without online systems to request post award administrative changes:

  • Forward the letter form signed by the PI to request a re-budget to the Sponsored Projects Administration Office (SPA) for review and submission to the sponsor. SPA will request re-budgeting from the sponsoring agency.  Once approval from the sponsor is received it is sent to the Office of Grants and Contracts Accounting (OGCA) for processing in Banner.

If the sponsor does not require prior approval for rebudgeting:

Complete the Rebudgeting Form and appropriate justification request and submit to the responsible OGCA Grants and Contracts Analyst. Provide a justification/explanation for each budget line item impacted by the request. OGCA will review the re-budgeting request to determine if it is allowable, based on sponsor regulations or contractual agreements in the award documents.  If OGCA determines that prior sponsor approval is required, OGCA will forward the request to SPA.  The PI will then need to provide a letter to SPA, signed by the PI for SPA to submit to the Agency.  Re-budgeting requests that do not require sponsor approval will be completed within a week of receipt of your request.

OGCA will notify the college/department about the status of the request.

Impact of re-budgeting on F&A costs

When a sponsor allows re-budgeting between the direct costs and F&A costs, F&A costs must be also be re-budgeted for the increase/ (decrease) in F&A that may occur.  See examples:  Rebudget Example 1 and Rebudget Example 2

Occasionally after an award is received the planned site where the project is to take place changes from on-campus to off-campus or vice versa. A change in location may have an impact on the F&A rate to be applied. Such a move will require formal re-budgeting.

When re-budgeting from direct cost categories that are exempt or excluded from F&A costs to categories not exempt from F&A cost, the amount being re-budgeted is reduced proportionately by the associated F&A cost of the non-exempt category.

No cost extension

The principal investigator must plan and direct the project work so that it will be completed within the time and funds authorized.  It is often necessary and appropriate to initiate a request for additional time with or without additional funds.  Requests for such changes should be initiated by the principal investigator, countersigned by SPA, and forwarded to the sponsor by SPA well in advance (at least 60 days) of the project expiration date.

All requests should contain a written justification that explains the following:

Federal Sponsors

Most federal sponsors allow the University to grant a one-time extension of a grant without additional funds up to one year.  We must still notify the federal sponsor of our intent to initiate this first extension.  Any further extensions of time require the prior approval of the sponsor.

Federal Sponsors with systems in place to request administrative changes, i.e. FastLane, NIH Commons, NOAA Grants Online, initiate the no cost extension request in the appropriate online system and route for approval.  The SPA Office will review the online request and authorize the request to the sponsor.

Non-Federal Sponsors

Non-Federal sponsors may require the formal execution of an amendment to the contract to effectuate changes or extensions of the terms and conditions of an award.

Documentation must be in the form of a letter (or official e-mail or other correspondence) from an authorized official of the sponsor approving the extension and/or modifying the active agreement.

Note that ANY charges incurred after the end date of the project and before the Sponsor's final approval is received are the responsibility of the PI and the Department.

Please click to see why a rebudgeting process is needed.

 

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