400.00 Budget Development

• Table of Contents
• 410.00 Direct Costs
• 420.00 Facilities and Administration Costs (formerly known as Indirect Costs)
• 430.00 F&A Guidelines and Uses
• 440.00 Cost Sharing

The cost elements of a budget must be those necessary to accomplish the proposed activity. Cost estimates of individual line items should be carefully calculated so that the requested funds are adequate, but not excessive. As you develop your budget, it is important to keep in mind that sponsored project costs fall into two broad categories: direct and facilities and administration costs. Because the definition of "facilities and administration" versus "direct" costs vary at each institution, no blanket definitions of these types of costs exist.

410.00 Direct Costs

Generally speaking, direct costs are those which can be specifically identified andf allocated to a single sponsored project. At the Montana State University-Bozeman Grants and Contracts Office these costs usually include salaries/wages, fringe benefits, contracted services, supplies, equipment, travel, communication, awards (tuition remission) and participant support costs.

1. Salaries and Wages
   1. Faculty - Use current salary figures adding an inflation factor up to a maxiumum of 10% per year if desired. No extra compensation may be paid from a sponsored project unless it is specifically identified as such and requested from the agency in the proposal and approved. For summer salary, the National Science Foundation will only pay 2/9 salaries.
   2. Classified Staff - Use current salary figures adding for inflation. If the position is to be new, contact Employee Relations to establish an approximate grade and salary.
   3. Post-Doctoral Hires/Research Associates - same as classified.
   4. Graduate Research Assistants - contact the Graduate Office to obtain the current graduate stipend amount. If paying graduate fees, they should be shown as a separate line item in your budget.
2. Fringe Benefits

   There are four different benefit rates for budgeting depending upon whether the employee is faculty, classified, a full-time student, or temporary help. See the current Grants and Contracts Information Sheet. These are also available on the web.

3. Equipment

   Only items costing $5,000 or more, each with a useful life of two years or more should be listed here. Cost estimates should include any tax and shipping costs associated. Parts or pieces of equipment to be fabricated (totalling $5,000 or greater) should also be included in this category.

   ** Restriction on General Purpose Office Equipment: Please note that on Federal awards, the Office of Management and Budget does not allow purchase of general purpose office equipment. According to OMB Circular A-21, "'General purpose equipment' means equipment, the use of which is not limited only to research, medical, scientific or other technincal activities. Examples of general purpose equipment include office equipment and furnishings (chairs, file cabinets, etc.), air conditioning equipment, reproduction and printing equipment, motor vehicles, and automatic data processing equipment." These are only allowable if they have been approved by the sponsoring agency in advance of purchase.

4. Travel
   1. Check with local travel agencies for transportation costs.
   2. Per diem rates, mileage rates and motor pool rates are available through the MSU-Bozeman Business Office Procedures Manual and Facilities Services. (See also the current G&C Information Sheet.
   3. See if your sponsor requires a separate category for domestic and foreign travel.
   4. Always provide detail for G&C review as to how you arrived at your figures.
   5. Agencies are often asking for detail when they do proposal review. Keep in mind that a lump sum travel figure with no destinations and/or detail may hold up your award process.
   6. Travel must follow State of Montana rates.
5. Materials and Supplies

   Principal Investigator's best estimate or catalog price, plus tax and shipping costs for each item.

   ** Restriction on General Purpose Office Equipment: Please note that on Federal awards, the Office of Management and Budget does not allow purchase of general-purpose office equipment. According to OMB Circular A-21, "'General purpose equipment' means equipment, the use of which is not limited only to research, medical, scientific or other technical activities. Examples of general purpose equipment include office equipment and furnishings, air conditioning equipment, reproduction and printing equipment, motor vehicles, and automatic data processing equipment." These are only allowable if they have been approved by the sponsoring agency in advance of purchase.

   The University's current interpretation of this regulation is that this restriction applies to material/supply purchases of items such as chairs, file cabinets, workstations, printing equipment, etc., even though the purchase price of the item may not exceed the University's $5,000 capitalization level.

6. Publications

   Principal Investigator's best estimate of page charges, etc.

7. Consultant and Contracted Services

   This category consists of services rendered by others EXCEPT equipment rentals, repairs, and maintenance. It includes consultant and professional services, honorariums/speaker fees and general off-campus and on-campus services (e.g., animal care, technical services, plant growth, etc.).

   Most federal agencies will limit the minimum daily compensation rate paid to off-campus consultant services to GS-18 level ($482 per day as of 4/01).

   Legal Counsel's signature is required on all contract service agreements for 45,000 or above.

8. Subcontracts
   1. Have each subcontractor prepare and submit a detailed budget and a scope of work.
   2. Each subcontract should be listed separately on your budget. Math on budgets submitted by subcontractors should be checked.
   3. If the subcontractor is requesting facilities and administration costs (formerly known as "indirect costs"), include them as a direct cost to MSU-Bozeman under subcontract costs.
   4. MSU-Bozeman can collect F&As (Facilities & Administrative Costs, formerly known as "IDCs") on each subcontract for the first $25,000 of that contract for the life of the award.
9. Communication

   This includes long distance telephone communication, postage, FedEx, advertising and associated costs.

10. Repairs and Maintenance

    This includes costs of maintaining property (e.g., maintenance contracts for office equipment and repairs of that equipment) and repairs to vehicles.

11. Participant Support Costs

    Typically used on federal awards for the costs of the travel, meals and lodging of project participants (not MSU employees); for example, the participants in a conference. There are no facilities and administration costs charged on participant support costs on federal awards.

A budget narrative should follow your itemized budget to fully identify and explain unusual items or activities. For example, the need for the use of contracted services, use of subcontractors or other collaborating organizations, items of equipment having a unit cost of $5,000 or more, or the necessity for foreign travel should be highlighted in the budget narrative.

420.00 Facilities and Administration Costs (formerly known as Indirect Costs)

Facilities and administration costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.

Because facilities and administration costs are specific kinds of costs, not all proposals will allow a request for facilities and administration cost reimbursement from the sponsor. If payment of facilities and administration costs is not allowed by the sponsor, or the sponsor has an established facilities and administration cost rate which is different from the MSU-Bozeman federally negotiated rate, a copy of the sponsor's statement to that effect should be attached to the Proposal Clearance Form when it is submitted for approval of the Grants and Contracts Office. Since MSU-Bozeman's facilities and administration cost rate is negotiated periodically with the U.S. Department of Health and Human Services, contact the Grants and Contracts Office for the current rate before assembling your proposal budget.

1. A. The full facilities and administration cost rate will generally be applied on all proposals unless the funding agency prohibits facilities and administration costs, has its own rates, or has been approved in advance by the VPR.
2. B. For the Current F&A rates, see the current Grants and Contracts Information Sheet. The type of proposal submitted may impact the applicable F&A rate.
3. C. Facilities and Administration Costs are charged on all costs with the exception of:
   1. Equipment items costing $5,000 or more for each item
   2. Costs over $25,000 on each subcontract
   3. Participant Support Costs
   4. Tuition Remission

430.00 F&A (formerly known as IDC) Guidelines and Uses

Pursuant to 1989 Montana legislative intent, the following applies to MSU F&A policy:

1. Philosophy

   The philosophy guiding the use of F&As at MSU include:

   1. the intent of the Legislature as stated above.
   2. the distribution of F&As using a merit driven system aimed at maintaining or making competitive the research and creative programs of the faculty;
   3. the distribution of F&As whenever possible on a competitive basis through set procedures and known guidelines;
   4. having the Faculty Advisory Committee (FAC) advise the Vice President for Research, Creativity and Technology Transfer (VPR) on all matters related to these guidelines.
2. General Guidelines

   An appropriate share of F&As will be returned to the local academic departments which generate them and the remainder administered centrally. Academic departments are defined to be those that administer academic degree programs. This return policy applies only when the university is collecting the FULL F&A rate on the contract. When the F&A collection is less than the full rate, the return will be negotiated with the Vice President for Research.

   F&As generated by local academic departments will be returned in the following proportions:

   Principal Investigator	10%
   Department	30%
   Dean	10%
   Vice President for Research	50%

   in order to enhance their research programs, to help cover the facilities and administration costs of doing research, and to ensure that each remains competitive. These returned F&As are to be used for such things as research support personnel, maintenance and repair of research equipment, computers, renovations, operations, graduate student stipends and fees, travel, matching, research or adjunct faculty, speakers, carry-over funding, support facilities, and support of new faculty members, including start-up costs.

   F&As generated by a Board of Regents approved Center/Institute, federal earmark or other non-competitive awards will be negotiated with the Vice President for Research on a case by case basis. If possible F&A returns will be used to assist in sustaining the Center. The standard policy is to not return F&As generated on these types of grants to either departments or to PIs. Historically, Centers have received:

   a 40% F&A distribution

   in order to establish a level of sustainability.

   F&As held centrally will fund major projects and will assist through campus-wide programs, those faculty who either are not grant competitive or who require support to succeed in their creative activities. Often in combination with local departmental funds, these F&As will support special projects, MONTS, block grants, department improvement grants, recruitment and start-up funds, research initiative awards, technology-transfer activities, library, computing center, campus-wide facilities, research facilities and centers, federally mandated regulatory activities, and major equipment purchases.

   Non-academic departments may request from the Vice President for Research, Creativity and Technology Transfer some F&A return to supplement or match a grant or contract or to support the administration of a program. This is done in writing at the time of submission of the proposal.

3. Detailed Guidelines
   1. F&As will be distributed monthly as earned from the generation grant as expenditures occur. Separate fund/index numbers can be established for each PI to receive the monthly distributions. Balances carry forward month to month and year to year.

       

   2. Block grants may be available from the VPR for those academic departments that do not generate reasonable F&A returns. These funds must maintain a positive cash balance.

       

   3. Full MSU F&A rates will be charged unless the funding source has a lesser rate that it charges uniformly to all grantees. If the PI requests an F&A rate which is less than that allowed by the policies of the funding source, then approval of the department head, dean and Vice President for Research, Creativity and Technology Transfer is required and no F&As will be returned to the PI, Dean or Department Head.

       

   4. Cost sharing (See 440.00) will be primarily the responsibility of the local departments and will be discussed and/or negotiated on a case-by-case basis among the PI, Department Head and Dean, i.e., the proportion of the fifty percent return to the local departments that will be committed. The VPR will only be involved on those occasions where substantial cost sharing is required.

       

   5. For PIs that are 100% funded from soft money, the F&A are currently being returned in the following proportions: 30% Departments; 30% PI; 10% Dean; and 30% VPR. These funds, together with the direct costs of the project, must fully fund the PI's research program.

       

   6. When there are multiple PIs on a proposal, and the proposal is awarded, they must agree on a split of the 10% return to the PI, and inform Grants and Contracts in writing of this agreement.

       

   7. For grants and contracts with Principal Investigators with split appointments, the F&A return will be split among the local departments in the same proportion as the FTE split, consistent with other elements of this policy.

       

   8. For awards that involve more than one department, the principals will decide how to distribute any F&A return. The PIs will inform Grants and Contracts in writing of the agreed upon split.

       

   9. Requests from faculty for funding, particularly smaller amounts for travel, student fees, operations, speakers, etc., are best handled at the local department level where priorities can guide decision. Therefore, the VPR will refer such requests to the appropriate department head and dean. Local departments must budget for contingencies and the future and not commit all of their funds at the beginning of the year or at one time.

440.00 Cost Sharing

Cost sharing is the contribution to a sponsored project that supplements agency funding. In general, cost sharing and matching represent the portion of project costs not borne by the project sponsor.

There are generally two types of cost sharing; they are referred to as hard dollar and soft dollar.

An example of hard dollar cost sharing would be:

1. Cash Contributions

   These represent the grant recipient's cash outlay, such as supplies purchased with state funds, and outlay of money contributed to the recipient by non-federal third parties to the project.

   Examples of soft dollar cost sharing could be:

2. In-Kind Contributions

1. General guidelines for computing cost sharing or matching

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