UW Research

Managing the Award Budget

Understanding Shortfalls

Shortfalls in Tuition

One of the most common challenges associated with managing the budgets in NIH institutional training grants is handling shortfalls. A shortfall occurs because the level of tuition and benefits provided to the grant, and the actual rate of tuition and benefits at the University of Washington differ. These training grants easily run over-budget in the area of trainee costs because actual rates at the UW are greater (by a wide percentage) than that provided by the NIH. This is called a shortfall.

Since you know in advance that a shortfall is expected, you should have a plan in place with participating departments. Options include:

Option A

Calculate the total dollar amount in residual tuition per trainee that the individual PIs will owe at the end of the annual budget cycle. Ask all PIs to give you a budget number well ahead of time to which residual tuition fees can be charged. You can then perform an expense transfer in to the appropriate budgets at the end of the year. You will need to charge to a non-federal budget.

Advantages of this option:

  • It is simple and doesn’t require a lot of coordination between the training grant’s home department and that of the trainee.
  • You have control over tuition getting paid every quarter, and can make sure it gets done.

Drawbacks of this option:

  • The budget is likely to run a deficit.
  • Budget numbers given by the trainee department at the beginning of the appointment may not still be active at the end of the budget period. This is not common, but it is a good idea to check the budget period on the budget number given by the trainee department.

Option B

Request participating departments pay residual tuition in the Student Database (SDB)during the quarter it is due. Some of the tuition will be paid by the training grant and the rest paid by the department. The training grant and the trainee department can do this however it works for them. For example, they may each pay a portion each quarter, or the training grant may pay all of the tuition until the tuition funds are maxed-out and then ask the department to cover the remainder for the rest of the year. This approach is best because the shortfall gets covered “real time.”

Advantages of this option:

  • The shortfall gets covered “real time.”
  • The budget does not necessarily have to run a deficit.

Potential challenges with this option:

  • Some departments may not remember that they are responsible for only a portion of the tuition and will authorize payment for the entire amount which means more tracking for you. To correct this, you may have to request that the trainee department do an expense transfer, or arrange with them for the training grant to pay more the next quarter.
  • Some departments might simply forget to pay the tuition. Tuition for trainees has to be paid manually-it is not automated like it is for the RAs. If no one goes into the SDB and manually pays the trainee’s tuition, you are likely to be contacted by panicking trainees wondering why their tuition hasn’t been paid.

 TIPS

  • Check student records in the SDB to ensure that all tuition balances have been paid.This requires access to the SDB. Acquiring access will be important to track your students and ensure that all balances are paid before due dates. The steps to acquiring access are described thoroughly in the above section on Paying Tuition.

Shortfalls in Benefits

The funds awarded by NIH are typically not sufficient to cover benefits charges on the entire stipend amount. Some units allow departments to split appointments so that benefits costs are only charged on a portion of the stipend (typically the minimum stipend amount required for a benefits-bearing appointment). If you are not able to make two appointments for a trainee in order to reduce your benefits costs, then you will need to ask the trainee’s home department to cover those benefits. In this case, ask the department contacts for a non-federal budget number to cover the benefits shortfall before the appointment begins. There are a couple of different ways to manage this process.

Option A

Pay all benefit costs upfront on the training grant budget creating a deficit, and transfer the excess benefit charges at the end of the budget year. Since benefits are not transferable separately from payroll in MyFD, you cannot transfer them “as-is” – you will need to work with GCA.

  • Note that GCA’s preference is to carry the deficit to the renewal budget. At that time they put the deficit into the object code 05-99. You can then “bill out” the deficit to the non-federal budget provided for each trainee through the expense transfer process in MyFD.

Advantages of this option:

  • The process is relatively simple, for you and for GCA.

Drawbacks of this option:

  • What were originally benefits costs are now simply categorized as 05-99 miscellaneous costs. This has the potential for causing confusion or accounting problems for the trainees’ departments.

Option B

If the departments involved prefer to see benefit overages transferred to their budgets directly as benefits rather than the 05-99 category at the end of the year, GCA can do this (it is not their preference). To accomplish this, send a memo to GCA via Grant Tracker with a list of trainee names and the benefits code. Sample request will include the following items: $400 of Benefits for [NAME] to [BUDGET #]. The funds transferred will show up in MyFD as benefits, with a “TX” in the Description column to mark them as transfers.

Advantages of this option:

  • The transfers will show up in MyFD as benefits rather than in the 05-99 category. Your trainee department may prefer this.
  • The trainee department’s portion of benefits costs is covered in real time.

Drawbacks of this option:

  • This is more work for GCA than the first option.
  • It can be difficult to predict the exact benefits shortfall at the start of the budget period, even with a budget tracker.  A number of factors can affect the shortfall amount including changes in benefits rates, early terminations, or unexpended travel funds (which can be used to cover benefits).If the predicted benefit shortfall is greater than the overall budget’s deficit, or no deficit exists at all, some or all of these transfers are being done unnecessarily.

Re-budgeting

Re-budgeting occurs when funds are moved within and between budget categories, usually when there are unanticipated requirements or programmatic changes. Re-budgeting is not allowed in all budget categories:

  • Trainee Funds. Amounts awarded as Stipends and Trainee tuition/fees may be shifted within these two categories and, unless otherwise restricted, funds from other cost categories may be re-budgeted into these categories. Tuition funds may be distributed as needed between trainees (if trainees have varying tuition needs). However, stipend and tuition/fees cannot be re-budgeted to other categories except under unusual circumstances and only with NIH prior approval.
  • Travel funds may be re-budgeted into a different budget category without prior NIH approval. Travel funds are not limited to each trainee but may be used by any trainee, i.e., one trainee may not use any travel funds while another trainee may use twice the amount allotted per trainee.
  • Training Related Expenses. Funds awarded as Training Expenses may be re-budgeted into any category without prior approval from NIH. Departments that do not use all their Training Expenses funds on benefits typically apply the extra to shortfalls elsewhere, such as tuition.

In the event of a negative balance in the “Trainee” cost categories at the end of the budget period, GCA will automatically re-budget any funds remaining in the “Other” categories to the “Trainee” cost categories. This re-budget is part of the reconciliation and will not be visible in MyFD. GCA will NOT perform this function when there is an overall deficit in the “Other” category; this will remain as a deficit or shortfall.

For more information, see the NIH Grants Policy Statement.

Budget Tracking

Create a Training Grant Budget Tracker that includes:

  • A breakdown of the budget as awarded by NIH.Include total direct and indirect costs, any obligated funds carried forward from the previous budget, and any restricted funds.
  • The training grant commitments to each trainee for stipend, benefits, tuition/fees, and/or travel:
    • The stipend commitment to each trainee can be found on the trainee’s Statement of Appointment form in xTrain.
    • Current benefit rates: It is useful to include the full cost of benefits associated with the trainee stipend appointment, even if the training grant will not be able to cover all of it.
    • Some expense categories like travel may not be immediately committed to individual trainees—these can be budgeted as a lump sum.
  • Actual expenditures.For those items budgeted as a lump sum, you may wish to track them as such, or you can break it down as funds are allocated to individual trainees. Tracking actual expenditures makes it easier to see errors (like incorrect stipend payments), so they can be corrected immediately.
  • Remaining encumbrance for this budget year (stipend and benefits, etc.).The formula for a trainee’s stipend encumbrance is: [(monthly stipend) x (number of months the trainee is appointed for this budget year)] – (actual expenses to date).
  • Obligation for next budget year AKA Unliquidated Obligation (stipend and benefits, tuition).These are trainee costs that have been committed to the trainee, but not expended by the end of the budget period. Unless all appointments start on the first day of the budget period, most programs will have an unliquidated obligation. The formula for a trainee’s stipend obligation is (monthly stipend) x (number of months for this appointment that fall in the next budget year). At the end of the budget period GCA may ask the department for its unliquidated obligation information via an Outstanding Trainee Obligations report. See Federal Financial Report below for more information.
  • Unobligated balance.This is any funds that have not been spent, encumbered, or obligated to the next budget period. A formula for this would be [(total budget for the given line item) – (expenditures + remaining encumbrances + obligations)]. (See detail in the section Unobligated Balances below).

 TIPS

  • By including all award funds and trainee obligations, the Training Grant Budget Tracker can be used as a projection tool to predict shortfalls that trainee departments need to cover. Use the tracker as a communication tool to share information with affiliated departments.
  • For pre-doctoral trainees (in most cases), trainee departments must contribute to the cost of tuition. The tuition award generally remains fixed for the five-year award period, so as tuition rises, the amount that departments will have to contribute rises as well.
  • The NIH allowance for “training-related expenses” is a flat rate that does not take into account actual benefit rates or increases in response to benefit rate increases. As a result, depending on how your trainees are appointed, there may also be a shortfall in benefits costs that departments will have to make up.  See sections Shortfall in Tuition and Shortfall in Benefits for more information.

Unobligated Balances

The nature of these awards can sometimes make it difficult to spend the entire award. Careful budget tracking can help to maximize spending, but there may be circumstances beyond your control that can lead to unobligated balances. Unobligated balances can occur when:

  • Benefit rates decrease
  • Not all travel funds are used
  • Less is spent on stipends than predicted (due to fewer appointments than projected, early terminations, or stipend amounts for postdocs being less than what was awarded)
  • Less is spent on tuition than projected

Track your budget to make sure you stay on top of benefit rates and expenditures. An unobligated balance in one budget category can almost always be re-budgeted to fill a need in another category (see section on Re-budgeting above). The Budget Tracker template mentioned above includes an end-of-year reconciliation spreadsheet that will help you to predict whether you will have any unobligated balance.

Carry over of unexpended balances on training grants typically requires prior approval from the sponsor and depends on the terms of the award.  Contact your OSP reviewer for help with prior approval requests.

Tracking Deficits

Since stipends, tuition, and related benefits and indirect cost are considered accrued once the trainee is appointed, and these are underfunded, there is not much spending flexibility. Using the Budget Tracker and budget reconciliation tools will help you project how much is available to spend. Excluding restricted funds, any overage in trainee spending must have that amount of funding leftover in non-trainee funding, or there will be a deficit.

  • Customize your Training Grant Budget Tracker as needed.
  • Project your budget carefully and track your expenditures closely so that you do not have extra funds left in the budget at the end of the annual cycle.

Deficit Calculation

  1. Calculate the ending balance in MyFD (Total budget – total expenditures)
  2. Calculate trainee obligations for current appointments continuing past budget end-date: Number of months x monthly stipend x (1+benefit rate) x 1.08 + tuition estimate.
  3. Subtract B from A. This equals budget balance subtotal.
  4. For stipends and tuition, calculate (awarded stipends/tuition + prior stipends/tuition obligations) minus (spent stipends/tuition + stipends/tuition obligation to renewal). If this is less than $0, use $0.
  5. C must be greater than D (plus restricted funds (object code 37) from the prior period); or the difference is the deficit.

Deficits and Unobligated Balances within a Competing Segment

  • GCA automatically transfers deficits to the continuation budget number in expenditure code 05-99-00.
  • GCA automatically transfers unobligated balances to the continuation as restricted funding (budget code 37-99-00) that requires sponsor approval to access.
  • Deficits need to be cleared to a non-sponsored funding source at the end of a competing segment. Deficits will not be carried forward to a competing renewal year.
  • If there are questions on a particular institutional training grant budget number please email gcahelp@uw.edu or send a question using GrantTracker.