Section 3. Preparing a Budget
Overview
Budgets are cost estimates applied to future research needs. They should be
prepared with great care and provide a detailed breakdown of each proposed cost
category. Even if the agency does not require a detailed budget submission, this
preparation of a cost estimate will provide an accurate approximation of the
cost elements to ensure the amount requested from the agency is sufficient to
cover the proposed research. Investigators should group costs according to
sponsor requirements.
Budgets should be prepared for the entire project
period (i.e., for all years of the proposed research) and provide a
breakdown of costs for each budget period/year. Both direct costs and
Facilities and Administrative (F&A, previously indirect) costs should be
identified in the budget. Direct costs are typically broken out into
categories while F&A costs are a percentage of the appropriate base
expressed as a lump sum. There is a Microsoft Excel template that should be used to prepare a
budget to support the proposal. Research and Sponsored Programs (RSP) grants specialists will be available to
assist in development of the budget as needed. Appointments should be scheduled
at least a week in advance of proposal deadline to insure availability of RSP
staff. Call (850) 474-2825 for Carol Rafalski or (850) 474-2827 for
Theresa Byrd for appointments. Budgets requiring approval of
department, college, RSP matching fund requests or reduced F&A requests
should be submitted no later than 10 working days prior to due date in order to
allow sufficient time for review and processing.
Projects
may be budgeted in two primary ways: (1) cost-reimbursable or (2)
fixed price (rate or unit). For a cost-reimbursable project, a
line item or category budget is prepared to cover the estimated costs.
These line item budgets will follow the guidelines below for budgeting
according to Cost Accounting Standards. Funds are expended for
authorized purposes and reimbursement is provided by electronic
transmission of funds (draw downs) or as payment for an invoice for
expenses incurred. Fixed price (rate or unit) applies when a
project is bid on a not-to-exceed basis for specific deliverables or
performance. In fixed price budgets, the sponsor is not usually
provided with a line or category line budget and pays for completion of
performance. However, fixed price quotations should be based on a
reasonable estimate of the costs to be incurred to complete the
performance or deliverables. The PI is expected to use the project
funds in the performance of the project. Refer to Section 2
Contracts/Grants/Cooperative Agreements for more information on
contracting and Section 12 Closing Out a Project for additional
information.
Direct costs are the costs specifically identified with a particular project.
When budgeting for future years, estimating direct costs should be based on past
experience as well as present costs with an added inflation factor for each
year. Direct costs should meet the OMB Circular requirements for “reasonable,
allocable, allowable, and must be consistently applied” across the institution.
For additional information, see Section 4. Cost Accounting Standards.
F&A costs are the costs that cannot be tied specifically to a
project, such as libraries, janitorial services, utilities, maintenance and
depreciation of facilities, and general administrative costs such as accounting
services, human resource functions, etc. F&A rates are developed on common cost
pools for expenses normally included in a project’s budget. The cost pools are
reflected in the standard federal budget categories (SF424A
Budget Form). The cost pools included in
the institution’s federally negotiated rates are based on two groups of costs:
(1) Facilities Group (including building use allowance/depreciation, equipment
use allowance/ depreciation, interest, operations and maintenance, library) and
(2) Administrative Group (including all support services offered for the
management of sponsored research programs). An F&A rate is established by an
entity’s cognizant federal agency based on an application which includes a
detailed cost study of these items. The University’s cognizant agency is the
U.
S. Department of Health and Human Services (DHHS). Click
here for current F&A Cost rates or contact
Research & Sponsored Programs at (850) 474-2825 for
Carol Rafalski or (850) 474-2827 for
Theresa Byrd.
When preparing your budget, all of the direct cost items are listed first. Then
the appropriate F&A cost percentage rate is assessed against the total of the
allowable direct costs. F&A rates are applied on a category of project activity
(instruction, research, or other sponsored activity). For each category, a
location code is established as on-campus (at least 50% of activities--including administration--is performed in facilities owned or provided by the
institution) or off-campus (at least 50% of activities performed in facilities
not owned by the institution and to which rent is directly allocated to the project(s)). Only one rate may apply to any individual project.
The DHHS-approved
cost rate percentage for each project is applied against a standard base
for calculation called Modified Total Direct Costs (MTDC = Total Direct
Costs excluding certain items such as equipment, subcontracts over
$25,000, tuition, scholarships, construction, rent). If a reduced
F&A rate is requested in the proposal by the PI, and subsequently,
approved by the authorized University officials, the rate should be
charged against the Total Direct Cost (TDC) base, if allowed by agency.
Effective
12/16/2005,
§216.346
Florida Statutes titled
Contracts Between State Agencies: Restriction on Overhead or Other
Indirect Costs was amended.
This amendment removed the previous 5% limitation and substituted the
language "a reasonable percentage." Until there is
clarification regarding the "reasonable cost" from the State of Florida
Chief Financial Officer, the Florida State University System
participants have agreed unanimously to adopt the administrative portion
of the institution's F&A rate as the "reasonable
cost" rate for state, local government, and associated
entities. For UWF as of 4/12/06, this rate is 24%. For information on
current proposals pending or awards in process, contact the RSP office
grants specialist assigned to the project.
Any deviation from this rate will require the
Principal Investigator proposing the project to submit a Request for Waiver/Reduction of the
Applicable F&A Rate as outlined below. Requests must be submitted
and approved by the authorized University officers BEFORE being offered
or quoted to the potential sponsor or the offer/quotation may not be
honored as part of the final proposal.
It is expected that the full
DHHS-Approved F&A rate for the category and location
of the project will be applied to all proposals to federal sponsors, unless the
RFP/RA or agency guidelines specifically limits the maximum allowed rate in
written policy or guidelines. Similar proposals to state and local government entities or
corporate/foundation sponsors will include the maximum allowed rate.
Documentation of a limitation on the applicable rate must be submitted with the
University Internal Routing Form for Approval of Proposals for Sponsored
Research (IRF). Any deviation from these approved rates requires the
approval of the University Associate Vice President for Research. See Appendix F. Forms and References
in this manual for
the form to request approval for a reduced rate or contact RSP staff for
assistance. Budgets requesting a reduction in the F&A rate should be submitted
no less than 10 working days prior to the proposal deadline to allow for the
necessary routing and approval. If a reduction is approved, it is
conditional on the agreement of the Principal Investigator, Department/Center
chair/director, and College/Division dean/vice president that no distributions of F&A collected from the award
will be made to Seed funds as part of the usual distribution process.
Federal agencies use a version of a Standard Form (SF) for budget requests and
amendments. The usual form is a
SF
424A (Budget Information–Non-Construction
Programs). Some agencies (including
USDA,
ED, and
NIH programs) use an modified
format of this form but the major cost categories remain the same. RSP has
developed a Research Project Budget Model (Excel template) that may be used to
prepare a proposal budget. The cost categories for a budget in the
SF
424A and
Research Project Budget Model are:
- Personnel
- Fringe Benefits
- Travel (domestic and foreign)
- Equipment
- Supplies (educational, laboratory, equipment
maintenance – not office or general)
- Contractual (subcontracts, subawards, or major
contracts for services)
- Construction (modification or acquisition of
space for the project)
- Other (all other expenses such as telephone,
postage, duplicating, printing, tuition, scholarships, stipends, participant
costs, library resources, etc.)
- Total Direct Charges (sum of a-h above)
- Indirect (F&A) Charges
- Total (sum of i-j)
Since this will be the form of the federal agency expenditure reports and
technical reports on specific budget status, the University’s RSP staff have
collaborated with the Banner and ITS staff to develop the
Grant Inception to Date (GITD) report to reflect these elements. To
access this report, log on to
ARGUS and
through the ERP Channel, select Banner Reports, Sponsored Research. In order to provide for this
modification to the roll up format for expenditures and categories, a separate SRT set of expenditure account codes (G-codes) has been developed expressly for
use in grant funds. Training and assistance in the use of the G-codes and in
reading the GITD reports is available on the
Banner
KnowledgeBase.
Federal Direct Cost Categories
The following is a list of typical direct costs,
broken out by federally-accepted cost categories as shown above. Investigators should group
costs according to sponsor requirements. State of Florida agencies may require
budget categories that pool differently from federal sponsors. So when an award
is accepted, the sponsor-approved categories will need to be "adjusted" into the
University's cost categories for reporting. Also most State agencies have a
provision which allows F&A to be calculated against Total Direct Costs (if state
agency rate limitation applies). Before funds can be expended or obligated, the
Principal Investigator should review the budget with a grants specialist to
prepare a Award Summary and Budget Form
for assignment of account codes for cost elements
in the proposed budget. Contact your departmental fiscal staff or RSP
Pre-award staff for assistance.
For federally-funded projects, please refer to
Section 4. Cost Accounting Standards in this manual to determine which charges are
appropriate. All direct charges must comply with these standards.
Salaries and Wages
The salaries and wages of faculty and staff who are directly associated with the University constitute appropriate direct costs in proportion to the time each expects to spend on a project. Grant funds may not be used to augment the total salary or rate of pay of UWF faculty or staff; they are replacement funds, releasing a percent of time and work assignment of the regular employee for work on the project.
The University of West Florida has two broad employment categories:
1) salaries and 2) Other Personal Services (OPS).
- Salaried appointments are used for
long-term staffing needs and must be classified in one of three UWF pay
plans: General Faculty, University Work Force (A&P and staff), or the
University Support Personnel System (USPS). This category may also
include persons in visiting appointments. Administrative (support or
clerical) staff costs are not usually allowed as direct cost
items as those services constitute part of the institution’s F&A cost
rate.
- OPS appointments are used for
temporary or short-term staffing needs, including faculty.
Among the various budget components, the
salaries and wages category is one of the most crucial. Individuals who
are mentioned by name in an agency budget are defined as key personnel
(those individuals who are involved in the development and preparation
of a proposal, who have skills, expertise, or knowledge that is an
integral part of the work and whose assignment could not be easily
duplicated or replaced). Agency staff may want to know the title of each
key personnel position, the name and employment level of the person
filling the position, possibly even a job description if the position is
to be advertised or if special skills or experience are required. The
reviewers also request the salary base per annum or period of
assignment, the type of appointment (e.g., 9 months and/or summer or 12
months), and the level of effort to be spent on the project by each
participant. Effort may be expressed either as a percentage or in terms
of person months for salaried faculty, University Work Force
appointments, and in terms of hours for OPS employees. Details such as
this are usually required only for key personnel. This would not be
appropriate for technical or support service staff.
Salaries and wages should reflect the current
compensation level of employees. However, in view of the length of
the federal review process and duration of the project, it is
appropriate to build anticipated salary increases into the budget,
if the anticipated start date is outside of the current fiscal year. Investigators appointed on an academic
year base are reminded that summer salaries should be projected at the
rate of one-ninth of their academic year salary for each month. Note
that some agencies have restrictions on summer salaries, please refer to
the sponsor guidelines for specifics.
It is also common for some agencies to
request copies of either HR appointment records or employment contracts
to verify that the rate being quoted is consistent with the base rate of
the person’s University salary level. It is the University’s policy to
require that grant-funded positions be treated consistently with
University work force employees in regard to annual salary rate
increases or other compensation. Therefore, it is necessary for the
budget to take into account any potential increases over the life of the
project. Otherwise, other areas of the budget may need to be reduced to
accommodate the appropriate increases to staff salaries. Many federal
agencies have a cap on the maximum allowed salary rate of an individual
which may be charged against a project. The agency guidelines should be
reviewed to determine if such a limitation applies to a proposed budget.
No faculty or staff member, regardless of base
of appointment may be reimbursed for more than 100% effort in any
given time period. Effort is expressed as a percentage of an
individual’s 1.0 FTE assignment. Extra state compensation is a
policy whereby faculty and staff may be compensated for work over
and above their base salary rate for responsibilities which are
assumed in addition to the normal work assignment. The total annual
extra state compensation for an individual should not exceed 25% of
a full time twelve month annual salary excluding any administrative
supplement. Approval must be obtained from the Provost’s Office as
explained on the
Extra State Compensation Academic Affairs Web page.
In the cases of sponsored research
projects, this extra compensation over an employee’s base rate is
allowable only if approved in the project’s agency accepted budget and
specifically states that the compensation may exceed the normal base
rate. In most cases, this will not be acceptable to a federal agency or
a project funded through federal flow through monies. Compensation for
additional assignment over the 100% of base salary rate effort may be
made from other than sponsored research sources. Such arrangements
should be specified and agreed to by the faculty member’s chair/director
and/or dean at the time of the preparation of the proposed project or
upon receipt of a funded award. Normally, these payments will not
be allowed from a federally-funded project.
Salaries charged against grant funds must
follow a scale that is consistent with the policy and regular practices
of the University of West Florida. To obtain guidance on pay levels, job
categories or employment policy contact the
Office of Human Resources (OHR)
at
(850) 474-2694 or contact Research & Sponsored Programs at (850) 474-2825
for Carol Rafalski or (850) 474-2827 for
Theresa Byrd.
Fringe Benefits
The budgeted fringe benefits rate is based on a
percentage of salaries and wages and a fixed amount for health insurance
(family or individual). For salaried employees, the total benefit package
provided by UWF includes health insurance and
these five items expressed as a composite percentage rate:
- Workers' Compensation,
- Unemployment Compensation,
- Social Security Benefits (FICA),
- State or Optional Retirement Program (ORP), and
- Terminal Leave.
OPS employees (non-student) do not receive
health insurance and have a separate composite percentage rate based on
Workers' Compensation, Unemployment Compensation and Medicare. Students
enrolled in less than six (6) semester hours will be assessed this OPS
employee rate. Students enrolled in more than six (6) semester hours in any
given term may be assessed a minimal rate for student employees to cover
only Workers' Compensation.
Grant budgets should include reimbursement for
fringe benefits according to the percent of effort which the employee will
spend on the project. Both the salary base and the respective fringe
benefits rate should be stated in the budget or in the budget explanation.
Click
here for current fringe benefits and health insurance rates.
The latest rate analysis is also included as a worksheet in the
Research Project Budget Model (Excel template) or contact
contact Research & Sponsored Programs at (850) 474-2825 for
Carol Rafalski or (850) 474-2827 for
Theresa Byrd.
Travel
Travel charges may include airfare, lodging,
meals, registration for conferences/seminars, taxis, visas, passports, entry
or exit taxes, and rental cars. Most agencies require (in the budget
justification section), the purpose, destination and time span for each
trip, and the number of individuals for whom funds are requested. This must
be fully explained, noting the relationship of the trip to the project. Post
September 11, 2001, many federal agencies now require a detailed travel schedule as well
as a certification that the travel is necessary and required for the
completion of the project. Sponsored research funds are subject to both
funding agency and State of Florida rules and regulations. Domestic and
foreign travel regulations have some differences:
Domestic Travel
Domestic travel reimbursements are subject
to the state's travel regulations and payment rates. Out-of-state travel
should be requested on the basis of actual expenses for lodging and
round trip economy airfare. Meals for State of Florida employees are
reimbursed using the State per diem rate. In addition, some agencies may
have set fixed maximum per diem limits. State of Florida agencies
frequently have restrictions on out-of-state travel and funds may need
to be estimated as in-state or out-of-state as separate line items.
Foreign Travel
Foreign travel requests must specify the
destination and the U.S. Department of State's foreign per diem and
hotel plus meal payment rates should be used. In today's funding
environment, it may not be possible for a funding agency to cover travel
for conference attendance unless there is active involvement of the
faculty in the program to be presented, and/or unless the meeting has
direct relevance to the research project. Typically, for international
travel, only American flag carriers may be used. RSP approval for
foreign travel or travel estimated over $1,000 is required as part of
the
UWF
Division of Academic Affairs Signature Policies.
For assistance, please contact the travel
office:
- University Travel Services, Financial Services,
Linda Armstrong at (850) 474-3049.
-
Travel Information is also available
online and in Section 10 of this manual.
Equipment
Permanent equipment is defined as
non-expendable property having an acquisition cost of $1,000 or more and a
useful life expectancy in excess of two years. Equipment must be listed in
the budget with a justification. Some agencies require price reference and
detailed descriptions such as a cost quotation, especially for contractual
agreements.
Government agencies will normally not approve
purchase of general office equipment or furnishings (e.g., calculators,
typewriters, desks, chairs, copy machines, and air conditioners). Many
agencies will make approval of specialized equipment for scientific purposes
dependent on whether it is or is not readily available at the institution.
This is also an area in which it is common to require the institution match
the amount funded by the agency in a formula such as 1:1, 1:0.5, etc. Please
see the discussion below on cost sharing or matching commitments.
If freight and installation charges are to be
billed on the same invoice as the piece of equipment, these charges should
be included in the acquisition cost. Service contracts should be listed in
the "other" direct cost category as they are expense items and not part of
the equipment costs.
Supplies
Direct charging of general office supplies should
be restricted to projects with a high demand for these items and must be in
compliance with the
Circular A-21 Cost Principles for Educational Institutions.
All such
charges must be project-specific and justified in the budget. Even though
supplies are estimations, it is advisable to have a breakdown of these items by
general classification as substantial amounts are usually challenged by agency
reviewers.
In federal program budgets, the category of
Supplies is usually restricted to specialized needs such as laboratory supplies,
educational materials and supplies, maintenance or construction supplies, if
applicable, and computer or technology related supplies. Refer to the individual
agency guidelines for any items which may be restricted or not allowable in this
category.
Contractual
Consultant Services
Consultant or lecturer charges for travel,
lodging, per diem and professional fees may be included as a single direct
cost item. Federal employees may not be paid from grant funds, nor can
University of West Florida faculty receive extra state compensation in this
way. If a faculty member is needed as a consultant on a research project, it
is necessary to appoint that individual to the project account, or request
that the services be provided as professional courtesy in the form of cost
sharing. OMB and some federal agencies may limit reimbursement for consultants.
The use of paid consultants must be justified
and the budget explanation should state the time period of the consultant's
service. Investigators are advised to explain in the narrative that the
specific expertise either does not exist on campus or is not readily
available.
Paid consultants are not considered
employees of UWF and will be paid under rules for consultant
services for independent contractors (previously Professional
Services Contracts now Consultant and Professional Services
Worksheet). Refer to
instructions and forms
for Professional Services from Procurement and Contracts.
Contractual or Third Party Costs
When subcontracts are planned, the total
required dollar amount must include the direct costs as well as F&A costs of
the subrecipient (party to whom the subcontract is to be issued) at their
cognizant agency’s approved rate. These will appear as a direct cost in the
University of West Florida's budget and are subject to the assessment of
UWF’s F&A cost rate to the extent allowable. F&A cost is assessed only on
the first $25,000 of each subcontract. Usually, all individual line items of
the subcontract must be detailed on a separate budget page or outlined as
unit deliverables, if estimated as a fixed price rate or unit for
performance-based deliverables.
The need for subcontracting part of the
proposed research must be justified in the narrative. In addition,
subcontractors should indicate in writing their intent to provide services.
Please refer to
Section 4
and
Section 7
for further
details on subcontracts. Prior to inclusion of a subcontractor, the
investigator should contact the appropriate RSP Grants Specialist to request a
review of the subrecipient’s eligibility to be awarded a portion of the
budget. Documentation of a subrecipient’s eligibility must be established
before their participation may be included as part of a proposed budget.
Construction
Alterations and Renovations
Any alteration or renovation project (e.g., repairs, painting, removal or
installation of partitions, shielding, air conditioning) must have formal
approval from the sponsor before funds can be obligated. Also, the University
must have prior approval of the Facilities Planning
& Construction Division's Architecture and
Engineering office at (850) 474-2938.
Details of the anticipated need should be identified on the IRF and a full
description of the space assignment or renovation supplied as a request for
estimate through the space request forms on this site (See
Appendix B. UWF Proposal Routing and
Forms Process/Documents).
Actual facility or building construction is requested via a specialized version
of the
SF
424 designed specifically for major construction projects. Contact RSP staff for further information, if required.
Other Direct Costs
Human Research Participant Costs
Human Research Participant costs are those charges that are
usual and customary for a particular process or procedure. Indicate in detail
the basis for estimating costs in this category.
Tuition Payments for Graduate Students
For any proposals which include salary for a graduate student, it is expected
that the appropriate tuition be included in the budget, if the agency allows it.
The Research Project Budget Model provides for a line item to estimate this
based on in-state tuition rates for an average of 9 semester hours per student
per term.
Training Costs (Training Grants Only)
This category may include fees, tuition, trainee travel costs and stipends.
While the budget cost category reflects the total required cost, investigators
should still provide individualized breakdown of costs for each trainee on a
separate page to allow agency reviewers an independent assessment of the level,
scope and need for the training activity. Agencies may have specific rules and
regulations for training costs.
Other Miscellaneous Costs
Other direct costs could include long distance telephone charges; field trips;
participant travel to and from institute or conference; equipment maintenance
and repair; facilities rental; some types of data processing; postage; freight;
computer services; conference registration fees; participant payments; statistical
or technology service center fees. According to the
Office of Management and Budgeting
(OMB)'s
Circular A-21 Cost Principles for Educational Institutions, direct
charging of certain costs such as telephone charges, postage, and data
processing, must be project-specific, justified in the budget, and restricted to
projects with a high demand for these items. The usual test for such
expenditures is the requirement that all expenditures related to a project be
“reasonable, allowable, allocable, and consistently applied according to
University policy.”
Investigators may budget the anticipated costs of publishing the results of
research, the cost for reprints, page charges, editorial assistance and
illustration costs, if necessary. However, on federal grants, this budget
category may not include charges for publication of books, monographs or
pamphlets which will need special agency approval.
Cost Sharing or Cost Matching
Cost sharing or matching describes any situation where a granting agency does
not fully reimburse the University for all allowable costs associated with a
specific project and the University or a third party assumes such costs in some
manner. Cost sharing or matching is limited to those costs required by the
RFP/RA for the particular project and should not be volunteered as part of the
proposal (See
Section 4. Cost Sharing and Cost Matching Policy).
Payments to Foreign Nationals
Payments to foreign nationals (e.g., salary, travel) are subject to numerous
federal laws and may, in certain instances, be subject to 30% withholding or
other percents as required by international tax treaties. Note that many
countries have tax treaties with the United States, exempting the non-resident
alien from such withholding. For information and assistance, please contact
Financial Services, Payroll (850) 474-3051.
Performance-Based Budgeting
Many sponsors are moving to a model of performance-based contracting and
budgeting. This requires that the project outcomes be described in specific
deliverable terms with a cost estimate for completing each discrete outcome or
deliverable. This requires the investigator to budget separately for each
outcome or deliverable in order to be able to place a cost value on its
completion. For assistance in this area, review the guidelines for
performance-based project development and development in
Section 2. Proposal Development
or call (850) 474-2825 for
Carol Rafalski or (850) 474-2827 for
Theresa Byrd for assistance.
Summary
A budget is one means of ensuring to a potential sponsor that the costs of a
research or sponsored activity are reached according to a fair and equitable
basis. Budgets and budget narratives should be viewed as another means by which
the estimated costs and effort are related to the proposal's goals or objectives and
show an ability to manage a project award if received. As the budget and budget
narrative are usually not subject to page limitations, as is the technical or
description sections are, this is an excellent method to relate needs to the
outcomes expected. The budgeted line items should meet the
OMB Circular A-21
standards of “reasonable, allowable, allocable, and consistently applied” cost
estimation.
RSP standard for developing a budget is based on the federal
SF
424A (and
its modified versions) and is the basis for subsequent set up of a grant/fund in
the ERP Banner system to allow for expenditures and capture of those
expenditures in a report form. The
Research Project Budget Model and the
Grant-Inception-to-Date reports (log on to
ARGUS and
through the ERP Channel, select Banner Reports, Sponsored Research) have been developed to follow
this model.
Sponsor RFP/RA or guidelines are always the final authority in the preparation
of a proposed project budget and should be followed explicitly as published.
Redundant or apparently repetitive requests for information should be considered
a requirement and met with precision to insure the appropriate information is
available to the agency or its reviewers and staff members who may have
responsibility for a portion of the full proposal evaluation.
RSP Pre-award staff are available to review the budget, assist in its
preparation and completion of appropriate forms, and to advise about normal
University policy. For assistance refer to the RSP Web site for
staff contact information or call (850)
for Carol Rafalski or (850) 474-2827 for
Theresa Byrd.
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