FY 2015 FMCSA Budget Narrative Sample 2014.11.17.docx

Fiscal Year 2015 Federal Motor Carrier Safety Administration Sample Budget Narrative

What is a Budget Narrative?

The budget narrative explains the “what, “how” and “why” of a line item cost in carrying out grant project goals and objectives. Use these instructions to develop your application budget narrative.

What does a Budget Narrative do?

A budget narrative is a narrative explanation of each budget component which supports the costs of the proposed work. The budget narrative should focus on how each budget item is required to achieve the proposed project goals and objectives. It should also justify how budget costs were calculated. The budget narrative should be clear, specific, detailed, mathematically correct and correspond to the SF-424A line items.

The budget narrative is one of the first places FMCSA reviews to confirm the allowability, allocability, necessity, reasonableness and consistent treatment of an item. A well-developed budget narrative is an effective management tool; a budget that doesn’t represent a project’s needs makes it difficult to recommend for funding and assess financial performance over the life of the project. The budget narrative serves a number of critical functions:

· Describes your need for or necessity of an expense;

· Documents how reasonable the request is, conveys your judgment as well as the feasibility of the project in context of available and proposed resources.

· Helps FMCSA review high-risk cost items to decide funding.

What different types of costs do I need to put in my budget narrative?

1. Personnel: Personnel costs are your employee salaries working directly on a project. Include the number and type of personnel, the percentage of time dedicated to the project, hourly wage, and total cost. Please note:

· This category is limited to persons employed by your organization ONLY.

· Only include compensation paid for employees engaged in grant activities

· Those costs should be consistent with that paid for similar types of work within the organization.

· Those note employed by your agency shall be classified as subgrants or contractors. These individuals should be listed under the “Contractual” object class.

2. Fringe Benefits: Fringe costs are benefits paid to your employees, including the cost of employer’s share of FICA, health insurance, workers’ compensation, and vacation. Include how the fringe benefit amount is calculated (i.e., actual fringe benefits, rate approved by the Health and Human Services State Wide Cost Allocation Plan or cognizant agency). Include a description of specific benefits are charged to a project and the benefit percentage. Please note:

· Always understand the difference between a fringe benefit and an employee benefit. A fringe benefit is applied as a percentage or dollar contribution toward the base wage (retirement, health insurance, FICA, etc) and an employee benefit is what we colloquially call a “goodie” for working for the employer (holidays, vacation, other leave).

· Note that that the personnel/salaries, should have corresponding fringe...and visa versa. Therefore, FMCSA cannot pay a fringe for a position that is not listed, and visa versa. If a position will be charged to grant activities, the level of participation (Full Time or Part Time) must correspond to the fringe charged. This way, we ensure that the correct fringe is attributed to the correct grant.

· You can document this fringe rate if it comes from state approved levels or other supportable sources.

· It is important to explain what is included in the benefit package and at what percentage.

· Fringe benefits are for the personnel and only for the percentage of time devoted to the project.

· The applicant should not combine the fringe benefit costs with direct salaries and wages in the personnel category.

3. Travel: Travel costs are funds for field work or for travel to professional meetings. Provide the purpose, method of travel, number of persons traveling, number of days, and estimated cost for each trip. If details of each trip are not known at the time of application submission, provide the basis for determining the amount requested. Please note:

· Explain the reason for travel expenses for project personnel (e.g., staff to training, field interviews, advisory group meeting, etc.) and, if known, identify the location/destination of travel.

· It is acceptable to enter unforeseen travel such as possible FMCSA required meetings, with estimated costs for attendance.

· Provide information used in estimating the cost.

· List travel and meals separately in the budget narrative.

4. Equipment: Equipment costs only includes those items which are tangible, nonexpendable, personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. Include a description, quantity and unit price for all equipment. If the expense is under the usual threshold of $5,000 per item, it belongs under “Supplies”. However, if your equipment threshold is below $5,000, provide an explanation why so FMCSA understands why lower costs items are included in this line. Please note:

· Purchases of less than $5,000 may be listed under “Supplies” or "Other." However, common purchases like a computer system (for example, a keyboard, monitor and hard drive) is considered a unit, when purchased as a package and does not have to be listed separately but are to be placed under equipment when such package exceeds the threshold; however, if these same items are purchased individually (and not as a package), and each unit is below the threshold, they will be listed under supplies.

· Software, unless its unit price exceeds the equipment threshold, is not considered Equipment and should not be listed here. It is more appropriately listed under “Supplies”.

· Each item of equipment must be identified with the corresponding cost. General-purpose equipment must be justified as to how it will be used on the project.

· Analyze the cost benefits of purchasing versus leasing equipment, particularly high-cost items and those subject to rapid technical advances. List rented or leased equipment costs in the "Contractual" or “Other” category, depending upon the procurement method.

5. Supplies: Supplies are tangible personal property other than equipment. Include the types of property in general terms. It is not necessary to document office supplies in great detail (reams of paper, boxes of paperclips, etc.). A good way to document office supplies is to indicate the approximate expenditure of the unit as a whole. Do include a quantity and unit cost for larger cost supply items such as computers and printers.

6. Contractual: Contractual costs are those services carried out by an individual or organization, other than the applicant, in the form of a procurement relationship. There are two ways to capture costs in this category: subgrants and contracts.

What is a subgrant?

A subgrant is an award provided by a pass-through entity (Prime Grantee Recipient) to a subrecipient. That subrecipient carries out part of a program for which the Prime Grantee Recipient received Federal support. A subgrant may be provided through any form of legal agreement, including an agreement that the Recipient calls a contract.

A subgrant/subgrantee has its performance measured in relation to whether objectives of a Federal program were met; has responsibility for programmatic decision making; is responsible for adherence to applicable Federal program requirements specified in the Federal award; and (in accordance with its agreement), uses the Federal funds to carry out a program for a public purpose specified in authorizing statute, as opposed to providing goods or services for the benefit of the pass-through entity.

What is a contract?

A contract is a legal instrument by which a Prime Grantee Recipient purchases property or services needed to carry out the project or program under an award.

A contract/contractor provides the goods and services within normal business operations; provides similar goods or services to many different purchasers; normally operates in a competitive environment; provides goods or services that are ancillary (necessary support to the primary activities) to the operation of the Federal program; and is not subject to compliance requirements of the Federal program as a result of the agreement, though similar requirements may apply for other reasons.

For all contractual costs, include the rationale for the amount of the costs and include the specific contract goods and/or services provided and the related expenses for those goods and services. Entering the statement “contractual services” shall not be considered as meeting the requirement for completing this section.

6. Other: Other direct costs do not fit any of the aforementioned categories, such as rent for buildings used to conduct project activities, utilities and/or leased equipment, employee training tuition, etc. The use of the terminology "miscellaneous expenses" or any similar term is unacceptable. You must itemize all “Other” direct costs. Please note:

· A cost, like a lease, is considered a “Contractual” cost when you directly engage, and form a contract with, a vendor.

· A lease would be considered an “Other” cost when you are using a Statewide contract. When you are not the prime on the contract; rather, you are partnering with a different agency in your state or using a shared utility, facility or other services purchased through the state for one or more agencies. That would be an “Other” cost.

7. Indirect Costs (if applicable): Indirect costs are incurred for common or joint objectives that benefit more than one project. Indirect costs may be both administrative and programmatic. Include a current and fully executed agreement in your application if you are claiming indirect costs. Make sure the rate is applied to the appropriate base in the approved agreement. If the rate will not be approved by the application due date, attach the letter of renewal or letter of request that you sent to your cognizant agency to your application.

FY 2015 FMCSA Sample Page 5 of 8 August 2014 Budget Narrative Fiscal Year 2015 Federal Motor Carrier Safety Administration Sample Budget Narrative

Personnel Budget Narrative (SF-424A, Line 6a)

The Supervisor supervises activities of the project. She/he spends 100% time implementing this project, supervising staff, and conducting activities to meet the objectives of this project. Activities include: supervising daily operation of projects and staff, providing staff training/technical assistance, coordinating staff work schedule/assignments, ensuring data entry, tracking and following-up on procedures to meet quality assurance, and tracking policy to ensure compliance. There are 11 Troopers (1 FT, 10 PT). These officers conduct roadside inspections to fulfill reporting requirements. Each officer is paid an hourly wage of $19 and the part-time officers will average 50% on activities. The FT Trooper wages equate to $39,520 annually, with the PT (10) Troopers averaging 1,040 hours or 50% on activities @ $19,760 per year and a cumulative total (for all 10 PT Troopers) of $197,600.

Fringe Benefits Budget Narrative (SF-424A, Line 6b)

Fringe benefits include cost of health insurance, retirement, workers’ compensation and unemployment benefit plans. It is calculated at the average fringe rate of 16.72 as recognized by the cognizant agency. This fringe rate is applied to the average hourly rate of $19 per trooper, with a projected annual hours worked at 2,080 hours. The full-time trooper would have an annual wages of $39,520 x 16.72% or $6,608 total fringe cost for the one full-time trooper. The 10 part-time troopers average 50% per Trooper working on the program or an average of 1,040 hours or $19,760 per year, and an average (per part-time Trooper) fringe cost of $3,304 (Totaling $33,040 fringe costs for the 10 part-time Troopers).

Travel Cost Budget Narrative (SF-424A, Line 6c)

Costs represent necessary travel funds for law enforcement officers to provide adequate coverage within the state. Travel is necessary to perform compliance reviews, patrols, and team operations in high crash corridors within the State. Reimbursement is based upon the current state per diem rates and rules. The per diem rate for each day is $46.00.

Certification Training in San Diego for 15 officers with an average cost (per officer) of $600 – Airfare or $9,000; $204 Per State Approved Diem or $3,060; $290 – Hotel Accommodations or $4,350; and $800 – Registration Fees or $12,000 for a total of $28,410.

Equipment Cost Budget Narrative (SF-424A, Line 6d)

The state requests 12 new vehicles to complete motor carrier safety inspections that will replace vehicles that have reached their useful life by the state’s vehicle replacement policy. These vehicles will only be used for grant eligible purposes and are needed to fulfill activities proposed in the application. The cost for purchasing the vehicles is approximately $36,000 each based on the state’s procurement contract.

Supplies Cost Budget Narrative (SF-424A, Line 6e)

General office supplies include paper, printer ink, etc. for 26 officers in the program. These 26 officers require supplies that are estimated at $39 for 12 months. Ten part-time troopers require laptop computers and these computer shall be utilized only to fulfill planned activities. Mobile printers are also needed for 5 new full-time officers. The total number of officers is 26, including the 5 new officers and 10 part-time troopers. The extra 2 mobile printers and 2 laptops are requested for replacement purposes. These officers conduct roadside inspections to fulfill reporting requirements.

Contractual Cost Budget Narrative (SF-424A, Line 6f)

Subgrant costs include $15,000 in travel costs for 12 officers to conduct grant activities. Costs represent necessary travel funds for officers to provide adequate coverage within the state. Travel is necessary to perform inspections, patrols, and team operations in high crash corridors within the State. Reimbursement is based upon the current state per diem rates and rules. The per diem rate for each day is $46.00.

Contract services for crash timeliness include an assessment of the timeliness and quality of our data systems and the contractor oversees the development of plans to implement improvements to the system that support the state’s highway safety programs. The contractor will conduct analyses of crash, ticket, and inspection data used in the planning and development of the CVSP, evaluating program and legislative initiatives, and monitoring the performance of the program.

Other Cost Budget Narrative (SF-424A, Line 6h)

The rental of the copy machine is shared with the administration. The machine is used on a daily basis to print inspection reports. A code is punched in whenever it is used for grant purposes. Based on the average usage of the machine for grant activities: $50.00 per month times 12 months

FY 2015 FMCSA Sample Page 7 of 8 August 2014 Budget Narrative