BUDGET DEVELOPMENT
Why is the budget important?
The budget and budget justification present a financial picture of your project to the reviewer and helps the reviewer understand your project. It can also help you more accurately determine the scope of your project. Funding caps and indirect costs often result in more narrowly focused projects to meet smaller funding opportunities. It is important that the scope of the project align with the needed support.
How do I develop my budget?
First, consider your project’s resource needs. Read the sponsor’s guidelines and note any limitations. Use the online resources to generate a draft budget and budget justification. Also, watch for professional development opportunities. Finally, your grant administrator or sponsored development manager can assist with specific questions, as needed.
Do I have to use the templates to develop my budget for the internal approval process?
No, you do not have to use the internal budget templates. You should use the template that makes the most sense for your final submission; however, the templates have embedded calculations that will allow you to more accurately generate a draft budget.
Why do I need a budget justification?
The budget justification allows the PI to fully explain the need/alignment for specific expenditures within the scope of the project and demonstrate how total amounts were determined. Transparent, well-aligned budgets and budget justifications indicate the ability to manage a project and are less likely to result in significant cuts at the award stage. Note: The budget justification should align with the budget categories in the budget.
How do I accurately budget salaries?
Budgeting for salary and benefits takes careful planning so that your account will not run out of funds. Because we do not know from year to year what the state will allocate for raises, your budget is really a “best estimate.” The university does not charge the grant account more than the actual salary and fringe benefits expenses. Your grant administrator or sponsored development manager can assist you with needed base salary information; the budget templates have embedded calculations for fringe benefits and annual estimated raises.
I understand that the University has a federally approved Facilities and Administrative (F&A) or Indirect Cost Rate. How is that applied in my budget?
The university’s approved on-campus F&A rate (also known as Indirect Cost Rate) is 64% of a modified total direct cost basis. Additional information on the F&A rate is available here. Budget templates will automatically calculate the F&A rate, excluding any appropriate categories.
F&A costs are charged to all sponsored programs (grants and contracts) under the requirements of the U.S. Office of Management and Budget and consistent with the University’s federally-negotiated rate determined by the Department of Health and Human Services.
If you believe that you will have a different indirect cost or F&A rate (e.g. funding opportunity limits indirect costs), share that information with your grant coordinator as soon as possible so that appropriate approvals can be secured. Obviously, the F&A rate will significantly impact your overall budget and the feasible scope of work, so you want to ensure that you are generating a draft budget using the correct percentage.
If I want to ask for one course reassigned time in both the spring and fall semesters to work on my project, how do I calculate the cost of the reassigned time?
Know your current salary. If you are requesting a starting date for your project after the new fiscal year begins, you need to add 3% inflation to the current figure, as well as in subsequent years (it is understood that this will be an estimate). A course release is calculated as a percentage of your salary. Ask your grant administrator or sponsored development manager for assistance to calculate the correct amount.
If I need to work on the project in the summer, how do I calculate the salary for that period?
A simple way to calculate: If you plan to work one month on the project, use 11.11% of your academic salary. Using $60,000 as a salary estimate, you would request $6,666 in summer salary; fringe benefits would also be added to the budget. At a maximum, faculty on 9-month appointments can secure up to 33.33% of their academic year salary.
How do I figure fringe benefits on academic year and summer salaries?
There are two methods to calculate fringe benefits: (1) see the Fringe Benefits section for rate tables and (2) use the budget templates with built-in calculations based on employee categories.
The funding agency requires matching funds from the University. What does this mean?
A funding agency may require that the University contribute a specific percentage of the total project costs. For example, some agencies require a 1-to-1 match (if your total project sponsors budget is $50,000, the university will be asked to contribute $50,000 as a match). Any cost-sharing or matching arrangement requires prior institutional approval; see Cost Sharing.
What is considered equipment (rather than supplies)?
Equipment is defined by the federal government and the university as tangible, nonexpendable property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit (including tax, shipping and installation). However, when the terms of an award set a lower dollar threshold for equipment – $1,000 for example – the department must track it as if it falls under the university’s definition of equipment.
Are there special considerations for purchasing equipment on a sponsored project?
Yes, there are some special considerations.
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Equipment purchased on a sponsored project should be directly linked to the needs of the project. General-purpose equipment is unallowable as a direct cost, except with the prior written approval of the sponsor.
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If a piece of purchased equipment will benefit more than one sponsored agreement or activity, the cost should be distributed to all benefiting activities using a reasonable and documented method of allocation.
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Maintenance and repair costs to keep project-specific equipment – whether existing or purchased with project funds – in operating condition may be allowable within the time frame of the project performance period. If the maintenance agreement or repair cost benefits more than one sponsored agreement or activity, the cost must be allocated to the various projects and activities proportionately based on the benefit directly received by each.
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Budgeted equipment is generally purchased in the beginning of a project unless the scope of work is such that the equipment is essential during a later period of performance.