700.00 Developing a Budget Proposal
The proposal budget should delineate the entire cost of the project and accurately reflect costs that are necessary to complete the work. The budget should reflect the methodology/approach described in the proposal narrative. Reviewers should be able to determine if sufficient funds are being requested to successfully complete the project and that those requests are reasonable given the scope of work proposed. Accuracy and detail are essential in budgeting and PI’s should follow a sponsor’s guidelines and provide information in the format specified. The departmental accountant and the OSP fiscal managers are available to assist PI’s in developing budgets that are consistent with University and agency policies and guidelines. These staff members have access to current information related to University costs such as fringe benefit rates, travel allowances, tuition, and fees.
710.00 Major Budget Categories
Sponsored project costs fall into two broad categories; direct costs and facilities and administration costs (F&A’s). F&A costs are also sometimes called “indirect costs,” “IDC’s,” or “overhead.” Updated language exists under Uniform Guidance, Section 200.453, “Materials and Supplies Costs, Including Costs of Computing Devices,” which stipulates that (c) materials and supplies used for the performance of a Federal award may be charged as direct costs. In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated to the performance of a Federal award and (d) where Federally-donated or furnished materials are used in performing the Federal award, such materials will be used without charge.
720.00 Salaries and Wages
- Faculty: Most if not all Federal agencies view research as an activity that is standard to an academic appointment at an Institution of Higher Education (IHE) and will compensate PI’s for their time and effort according to the time and effort allocated to the grant. No additional compensation may be paid from a sponsored project unless it is specifically identified as such in the budget proposal and specifically approved by the sponsor. For faculty salaries, current salary figures must be used. For multi-year proposals, an escalation factor of up to 7% per year. The National Science Foundation will pay only 2/9 of summer salary for tenure-track faculty.
- Professional and Administrative Staff: Use current salary figures unless the position is new or activity on the grant entails a major change in scope of duties, in which case, the PI will need to speak with Human Resources, to establish an approximate grade and salary or visit the Personnel Policy and Procedures Manual. For multi-year proposals, an escalation factor of up to 7% per year. Per Uniform Guidance, Section 200.413, the salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met:
- Administrative or clerical services are integral to a project or activity;
- Individuals involved can be specifically identified with the project or activity;
- Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency, and;
- The costs are not also recovered as indirect costs;
- Graduate Research Assistants: Contact the Graduate School to obtain current graduate stipend amounts. If paying graduate fees such as tuition and/or fees, they should be shown on a separate line item in the budget, often “other direct costs.” Facilities and administration costs (F&A’s) may not be charged on tuition and fees costs.
730.00 Fringe Benefits
There are different rates established for faculty, classified, full-time students and temporary staffing. These rates can be found in the OSP Information Sheet and by consulting directly with departmental accountants as they typically have specific rates for faculty that depend on a number of factors. Note that Montana Law, Section 2-18-703 MCA requires MSU to contribute a certain dollar amount towards the insurance group benefits costs for each MSU employee. That contribution is required regardless of whether the employee has elected insurance coverage by a state-sponsored group benefit plan. Thus, the fringe benefits charged to the research sponsor must include the statutory insurance benefits contribution amount for each employee proposed to be paid under the grant.
Per Uniform Guidance, Section 200.33, “equipment” means tangible property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000. See also Section 200.12, Capital Assets,Section 200.20, Computing Devices, Section 200.48, General Purpose Equipment, Section 200.58, Information Technology Systems, Section 200.89, Special Purpose Equipment, and Section 200.94, Supplies. Facilities and administration costs (F&A’s) may not be charged on equipment costs.
Per Uniform Guidance, Section 200.474, travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the non-Federal entity. Such costs may be charged on an actual cost basis or on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in like circumstances in the non-Federal entity’s non-Federally funded activities and in accordance with non-Federal entity’s written travel reimbursement policies. Allowable costs include meals, lodging, airfare, and ground transportation which must be in accordance with State of Montana travel rates. Current per diem and mileage rates are available from MSU University Business Services. Some sponsors require a separate category for domestic and foreign travel. Proposers must provide sufficient detail in the budget narrative or equivalent to support the costs. Insufficient, inaccurate, or inconsistent detail for travel costs could result in delays during submission through OSP or at the sponsoring agency.
760.00 Materials and Supplies
All consumable materials including the purchase cost of animals as well as small items of equipment that do not meet the threshold for “capital equipment” are listed under this category. Each item or group of items should be listed categorically and justified by using catalog prices or reasonable estimates plus taxes and shipping costs. All materials and supplies must be purchased in accordance with MSU Procurement Policy and Procedures. Uniform Guidance, Section 200.453 stipulates that:
- Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal award are allowable;
- Purchased materials and supplies must be charged at their actual prices, net of applicable credits. Withdrawals from general stores or stockrooms must be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied. Incoming transportation charges are a proper part of materials and supplies costs;
- Materials and supplies used for the performance of a Federal award may be charged as direct costs. In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated to the performance of a Federal award, and;
- Where Federally-donated or furnished materials are used in performing the Federal award, such materials will be used without charge;
Uniform Guidance, Section 200.461 stipulates that publication costs for electronic and print media, including distribution, promotion, and general handling are allowable. Proposers are to include a best estimate of the costs of any publications.
780.00 Services Provided by Non-MSU Entities:
- Subaward/subcontract: A subaward/subcontract issued to an agency, University, or independent contractor performs a portion of the prime contract/award scope of work and receives a portion of the prime budget, passed through from MSU. All of the terms and conditions in the prime grant or contract, applicable to the type of subrecipient involved, are included in the subcontract/subaward agreement. Each proposed subcontractor/subaward PI should prepare and submit a detailed budget and scope of work to be performed to their OSP office or equivalent and once it is approved, it should be provided to MSU’s OSP office for review and approval. Each subaward budget will be listed separately on the subaward line item. In most circumstances, Federal sponsors allow MSU to apply its negotiated F&A rate on the first $25,000 of the subcontract budget and the total cost shall be listed as a direct cost to the prime. For further guidance on Subcontracts/Subawards, consult OSP’s Subaward page.
- Contracted Services:Uniform Guidance, Section 200.459 stipulates that the costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the non-Federal entity, are allowable subject to some limitations. This category consists of services rendered by others excluding rentals, repairs, and maintenance. This category includes consultant and professional services, honorariums/speaker fees, and general off-campus services provided by others. On-campus services (e.g. animal care, technical services, plant growth, etc.) should also be included in this budget category. Most Federal agencies limit the minimum and maximum daily compensation rates paid to off-campus consultants which can be found by accessing the agency-specific grants administration guide. MSU Legal Counsel’s signature is required on all contract service agreements for $25,000 or above. OSP provides additional guidance on subcontracts, vendors, and consultants on the Subaward Page.
- Communications: This includes long-distance, cell phone, postage, courier service (FedEx, etc.) advertising, and other costs of communicating. Cell phone use must conform to MSU’s Policy on Mobile Communication Devices. Typically, cell phone use is treated as an F&A cost and not as a direct cost to the project. Cell phone costs are allowable on non-Federal awards when permitted by the sponsor. Cell phone costs may be charged to Federal awards in exceptional circumstances which must be fully justified in the budget narrative.
- Maintenance and Repair: Per Uniform Guidance, Section 200.452, costs for utilities, insurance, security, necessary maintenance, janitorial services, repair, or upkeep of buildings and equipment (including Federal property unless otherwise provided for) are allowable. Costs for improvements which add to the value of buildings and equipment must be treated as capital expenditures. Please consult with MSU Facilities Services before scheduling any of these services.
- Participant Support Costs: This category includes the costs of travel, meals, and lodging for non-MSU project participants (i.e. conference participants, participants in a clinical trial or study, etc.). Uniform Guidance, Section 200.456 deems that participant support costs are allowable with prior approval of the Federal awarding agency. Facilities and administration costs (F&A’s) may not be charged on participant support costs.
- Rental Costs of Real Property and Equipment: Per Uniform Guidance, Section 200.465, rental costs are allowable to the extent that the rates are reasonable in light of such factors as: rental costs of comparable property, if any; market conditions in the area; alternatives available; and the type, life expectancy, condition, and value of the property leased. Please note that rental or lease payments on facilities/space are not subject to facilities and administration costs (F&A’s) but rental costs for equipment are subject to F&A’s.