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Budget Development Guidelines
For those new to sponsored program activity, the development of proposal budgets is the most vexing task. The OSPR will help to guide you through the process and provide all the administrative support you need.
Early in the proposal development process, give thought to your budgetary needs throughout the life of the project. There is no need to put budget figures into a spreadsheet at the outset; simply contact us to discuss your budget needs or send an e-mail containing the information. To alleviate the time you must spend on budget development, OSPR will do the calculations for salary, fringe, etc. and detailed travel projections for you, placing your input into an excel file for your review and use.
Before preparing the budget, the Project Director should read the sponsor guidelines or solicitation instructions very carefully to determine if there are limitations on cost categories, such as salary, tuition remission or equipment, etc. Many sponsors include budget forms as aprt of their application package.If the sponsor to which you are applying does not specify a format, or if you have questions regarding the prescribed forms, contact the OSPR for guidance.
A well-developed budget identifies and justifies all expenses and is consistent with the proposal narrative. The budget should be based on credible and realistic costs and should provide as many details as possible. The goal is to provide a best estimate of the anticipated expenses for the project while adhering to federal, state, sponsor, and University regulations and guidelines. A complete and well-planned budget increases credibility with sponsoring agencies during the proposal review process and is important to the successful implementation of an awarded project
|Direct Costs||Allowable Cost||Personnel||Graduate Student Fringe||Equipment||Other Direct Cost|
|Facilities and Administrative Cost||Unallowable Cost||Faculty Salaries||Fringe Benefits||Materials and Supplies||Travel|
Cost of Sponsored Program
When preparing their proposal budget, it is important for the Project Director to remember that two distinctly different types of cost comprise the total cost of any sponsored program: direct costs and facilities and administration (F&A) costs.
Direct Costs-Direct costs are costs that the University’s accounting system can easily and accurately identify and charge to specific project activities. Direct costs include salaries and wages, fringe benefits, supplies and materials, equipment, travel, and student stipends, and other costs directly attributable to the project activities.
Facilities and Administrative Costs (Indirect Costs)-F&A costs (formerly indirect), in contrast, are incurred while providing facilities and support services simultaneously to many or all of the University's sponsored programs. Indirect costs are resources that generally cannot be tracked directly to any one individual project or activity. Utility costs, general administrative support or expenses, or depreciation of equipment and facilities are common categories of indirect costs. F&A is usually applied as a percentage/rate against the actual expenditures or direct costs of a proposal budget.
Principles Relevant for All Sponsored Project Budgets
The allowability for including costs in your budget is dictated by federal and university policy. Some budget costs are included in the F&A (indirect) cost calculation and are not allowable when listed as direct costs in a proposal budget. Other costs are unallowable by federal policy.
Budget Cost Elements
The budget is a listing, by category and item, of the costs associated with the project activities. The allowability for including costs in your budget is dictated by federal and university policy. Some budget costs are included in the F&A (indirect) cost calculation and are not allowable when listed as direct costs in a proposal budget. Other costs are unallowable by federal policy.
In general, costs allowed by a grant are determined by the funding agency’s requirements and/or University policy. In addition to agency or program specific guidelines, allowable costs for federally funded projects are also described in the Office of Management and Budget2 CFR Parts 215 and 220 Cost Principles for Educational Institutions (formerly OMB A-21)http://www.whitehouse.gov/omb/circulars_a021_2004/.
This publication sets forth the principles for determining the allowability of costs applicable to research and development, training, and other sponsored activities performed by colleges and universities under grants, contracts, and other sponsored agreements with the Federal Government.
The rules of allowability for the reimbursement of costs under these principles are:
- They must be reasonable. Costs are considered reasonable if a prudent person would have taken the same action in similar circumstances.
- They must be allocable to the sponsored project to which they are being charged.
- They must be given consistent treatment through the use of generally accepted accounting principles.
Unallowable Costs-Costs considered "unallowable" in accordance with various authoritative documents and the individual Sponsors must be identified and accounted for separately. These costs may not be budgeted, charged or reported to a sponsor.
The elements of costs generally accepted in the submission of proposal budgets are listed below. Please contact OSPR for assistance in preparing budgets.
Personnel -Personnel costs include salaries and wages for faculty, staff, and student workers who are employees of Longwood University.
- Payments for work performed on sponsored agreements are based on the person’s regular rate of compensation, also known as base pay.
Faculty Salaries-Faculty salary rates are based on 9-month or 12-month contracted salary rates.
Salaries should be expressed in terms of an "effort" percentage, i.e., the salary requested should be calculated by multiplying the individual’s institutional base salary by the percentage of effort on the specific project.
9 month appointment example:
monthly salary rate X % of effort X # of months
$5,000 50% 9 months = $22,500
For salaries budgeted after the current year, increase salary rate by 3% each year.
Most administrative appointments (e.g., department chairs, deans, associate deans) and some special faculty appointments are given 12-month contracts. For 12-month faculty, the monthly rate is their contract amount divided by 12.
- During the summer months, nine-month faculty may earn extra-service pay on grants and contracts, provided that the total income earned, including pay for summer teaching and/or administration, does not exceed 33 1/3 percent of the individual’s base salary
- The university will not spread the summer salary over the entire academic year or over the entire twelve months of salary payments. Stipends or summer salary received by faculty through sponsored research will be paid during the period in which the work is done. For example, if a faculty member receives an NSF grant that includes a salary supplement for work done during July and August, the University will pay that salary supplement over the pay periods in July and August.
- Payments to non-LU employees are budgeted as consulting or subawards, not personnel costs. Contact the OSPR for additional salary information.
- Fringe benefit for faculty and staff should be charged to the grant in relationship to the salaries and percentage of effort committed to the grant using current fringe benefit rates. Fringe benefit rates vary depending on salary rate and health plan. Current benefit rates for Longwood employees for 2014-2015 [link]. To calculate the fringe benefits rate use the fringe benefits calculator [link].
- Fringe benefits include FICA, group life, retirement, health insurance, life insurance, worker’s compensation, and short-term and long-term disability.
Part-Time and 9-month Faculty Summer Benefits
- For part-time employees (faculty, administrators, and staff) and for full-time faculty receiving summer salary, the fringe rate is 7.65% of salary.
Graduate Student Fringe
- For graduate assistants the rate is 7.65% of salary.
Undergraduate and Work Study Fringe
- The university does not pay fringe benefits to student assistants or Federal or College Workstudy students who work during the school year, but does pay FICA taxes on student employees for summer work. You should calculate fringe benefits of 7.65% on summer student wages/stipends.
Materials & Supplies
Included in this category are two classes of tangible property:
a) Inventoried Supplies - items with an acquisition cost of $1,500 - $4,999.99 and a useful life expectancy of two or more years;
b) Supplies - items with an acquisition cost of less than $1,500 and a useful life of less than two years.
Supplies should be listed in the budget by type (i.e., chemicals, glassware, etc.) and estimated cost. Any supply item which is unusual in type or amount should be listed separately.
- Definitions of equipment vary by funder. Generally, items included under equipment are all items of tangible property having an acquisition cost of $5,000 or more and a useful life expectancy of two or more years.
- Each item of equipment should be identified in the proposed budget by type, manufacturer, model number, number of units to be purchased, estimated cost, and the basis for the estimate (vendor quotation or catalog price). The cost estimate should be supported by written documentation which should be retained by the Project Director in the event of a pre-award audit.
- The costs of travel for personnel to conduct research or attend conferences, presentations, or workshops in performance of the project are an important component of many budgets. Travel costs charged to grants and contracts are subject to specific limitations and restrictions, in accordance with terms set by the sponsor.
- Travel costs include expenses for transportation, lodging, subsistence, and related items. Such costs may be charged on an actual basis, or on a per diem or mileage basis in lieu of actual costs incurred subject to the maximum amounts specified in the current State Travel Regulations set by the Commonwealth of Virginia and within the University's Travel Policyand practices consistently applied to all institutional travel activities. Reimbursement of travel costs associated with sponsored research projects must comply with all provisions stipulated by the sponsoring agency, or with all provisions of the University's travel policy if more restrictive. For more information contact the Accounts Payable Office .
- Special rules often apply to foreign travel so contact the Office for help with budgeting for foreign travel.
Itemize the expenses for each person who will travel in conjunction with the responsibilities of the proposal. Each trip should be listed separately and include the (a) destination, duration and purpose of the trip; (b) persons traveling; (c) round trip coach airfare; (d) surface transportation charges; (e) per diem or actual hotel and meal costs as allowed by sponsor or the University; and (f) any other related expenses such as conference registration costs.
- Domestic and foreign travel should be grouped separately. Most sponsors are reluctant to fund foreign travel and some have special approval procedures for foreign travel even if it is included in an awarded budget. Foreign travel must, therefore, be very well justified.
Other Direct Costs-Included in this budget category are all direct costs that do not fit into the previous categories. Some costs commonly included as Other Direct are:
Participant Costs – Participants are not Longwood University employees and are not part of the project implementation team. They are beneficiaries of the program. Participant costs may include transportation, per diem, stipends, and other expenses for participants or trainees to attend conferences, meetings, training, workshops, etc.
Publication, Documentation, and Dissemination Costs – The costs of documenting, preparing, publishing or otherwise disseminating the findings of the research or project are included in this item. Examples of dissemination expenses are page charges, illustrations, indexing of data, and archiving sample collections.
Independent Contractors/Consultants –Independent contractors are engaged to provide essential services to a sponsored program which cannot be provided by an employee. Generally, the services are to be provided either during a short period of time or intermittently throughout the project. However, whatever the exact nature or timing of the services provided by an independent contractor, such services are always provided without direct, day-to-day supervision by the Project Director. Tax and labor laws make it essential that employees not be classified and compensated as independent contractors or vice versa. Contact OSPR for additional guidance.
Computer Services– Computer services include the cost of leasing computer equipment or considerable data analysis. Operating systems and other computer programs which must be loaded in a computer's memory before any application or task can be performed are classified as "equipment." Applications software is classified as "supplies."
Note: Proposals that involve the purchase of large scale information technology products, especially those with potential to impact the information technology infrastructure or other systems, must be reviewed by Information Technology Services
Space Rental – In some cases a University department, school, or center may require rental space to house a sponsored project. If off-campus space is required, the OSPR should be contacted early in the proposal stage to assure that University and State regulations are followed.
- A consortium arrangement exists when two or more organizations agree to participate in a collaborative project. One participant will be designated as the lead institution at the time of proposal submission and accepts full funding and responsibility from the sponsor. Subawards are then used to transfer part of the work and appropriate funds to the other participant. A subrecipient must adhere to applicable Federal program compliance requirements.
Many sponsors encourage collaboration and for some projects it may be necessary to partner with another university or organization to obtain specialized services or to delegate some portion of the of the scope of work. When a proposed project involves investigators from another institution/organization, a collaborative proposal will be prepared to submit to the funding agency.
When a collaborative project is contemplated, submission of the proposal to the funding agency must be coordinated by the entity designated as the lead institution. The process for submitting a collaborative proposal is for the lead institution to prepare one proposal that includes the collaborating organization as a subcontractor or subgrantee. If an award results from the proposal, a single grant or contract is awarded to the lead organization, and the lead organization in turn, issues a subaward agreement to the collaborator. The subaward agreement will contain terms and conditions required by the lead institution as well as relevant terms and conditions of the funding agency.
When submitting a proposal with subcontracts, the collaborating institution is required to submit to OSPR the following items for inclusion in the proposal:
- A Subrecipient Agreement Form signed by the authorized organizational representative from the collaborating institution. Collection of this document is important because it indicates that the appropriate officials of the collaborator have reviewed the proposal and have committed the organization to participating in the project.
- A budget (preferably on the funding agency’s budget form) for each project year and a cumulative, including the collaborator’s indirect costs.
- A scope of work describing the role and tasks to be conducted by the collaborator.