Rebudgeting

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 to another spending category that better reflects the project requirements. This process is called Rebudgeting or Budget Revision.

Many sponsors allow rebudgeting without prior approval while others require approval when rebudgeting into or out of a spending category exceeds a specified percentage of the award amount or if the rebudget includes a restricted category such as Participant support costs for NSF awards.  If prior approval is not required then formal rebudgeting is not necessary.  As a courtesy, a PI can notify their grant accountant of his/her intent to rebudget funds as a courtesy so that PI and Accounting budgets align (when no prior approval needed).

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

Procedure

To request rebudgeting of funds on a grant or contract:

Determine if the sponsor of the grant or contract allows rebudgeting and whether prior approval is required or not

(Note:  If the sponsor requires prior approval for rebudgeting that exceeds a certain percentage of the budget, care must be taken to ensure this limit is not exceeded when multiple rebudgeting 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.

If sponsor approval is required:

• Forward a copy of the budget revision request to the Award Administrator/OPAM for their review, concurrence and submission to the sponsor.
• Per the terms of the award, this request should be forwarded to OPAM via email, formal letter, or through the Sponsor’s online grants management system, such as NSF’s Fastlane.
• The revision should include a justification which clearly identifies what budget items are being adjusted, why funds are not needed in the line item being reduced, and why they are needed in the line item being increased.  The justification should include an overall statement as to how this revision will benefit or address the needs of the project.
• Your Award Administrator/OPAM will send the rebudgeting request to the sponsoring agency The Award Administrator will notify the PI and the grant accountant once approval is received.

If the sponsor does not require prior approval for rebudgeting: as a courtesy, a PI can notify their grant accountant of his/her intent to rebudget funds as a courtesy so that PI and Accounting budgets align

 OPAM responsibilities

• OPAM will review the rebudgeting request to determine if it is allowable, based on sponsor regulations or contractual agreements in the award documents.
• If prior sponsor approval is required, OPAM will forward the request to the sponsor.
• OPAM will notify the department about the status of the request and will intermediate between sponsor and the PI if sponsor has questions.

Effect of rebudgeting on F&A costs

When a sponsor allows rebudgeting between the direct costs and F&A costs it is necessary to provide for the increase/ (decrease) in F&A that may occur when rebudgeting.  (See UMass F&A Rate Information here)

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

Example: If the F&A rate on your grant is 50%, and you want to move $2,000 from a non-exempt direct cost category to an exempt direct cost category:

$2,000 / 1.5 = $1,333
$1,333 is the amount transferred as direct cost
$667 difference is the amount transferred as F&A cost

When rebudgeting from exempt direct cost to any non-exempt direct cost, provide for additional F&A costs (example #1):

 Example #1 - Addition to F&A Cost Budget

 Rebudgeting to exempt direct cost from non-exempt direct cost will result in a reduction to F&A costs that may be rebudgeted (example #2):

Example #2 - Reduction to Facilities & Administrative (F&A) Cost Budget