Budget Preparation for Sponsored Projects

 

INTRODUCTION

The proposal budget is a plan for expenditure of project funds by specified cost categories. Many agencies provide budget forms or require budgets to be presented in specific formats.  Contact Candice Kinsey or Debbie Newton for agency specific spreadsheets that will assist you in preparing your budget.  The following points will assist in formulating a budget for submission with a proposal for sponsored funding.

  1. Budget items should be determined and cost estimates obtained. Cost estimates listed in budgets should be high estimates to allow for price increases.
  2. A realistic budget should be formulated to avoid underestimated or overestimated project costs. An overestimated or "padded" budget may be viewed unfavorably by the proposal reviewers. An underestimated budget will not increase the probability of award and may not provide adequate funds to cover necessary project expenses. (Note unallowable cost items - Sponsored Compliance).
  3. The sponsor's project guidelines often provide information useful in budget preparation. Guidelines generally include the sponsor's cost definitions (i.e. equipment vs. supply items) and description of cost allowability. The allowable indirect cost charge will also be given. Budget formats, when required, will be outlined in the guidelines.
  4. Rates most commonly needed for budget preparation are the University’s indirect cost rate, fringe benefit rate, the travel per diem rate, mileage allowance, graduate student stipend and graduate tuition rate. These rates can be obtained from the Office of Research and Sponsored Programs. If internal charges (i.e. computer time, SEM time) will be included among project costs, established University rates must be used. (Refer to Research Equipment Use and Rental Rates).
  5. Multi-year project budgets must include an appropriate inflation factor for succeeding years to allow for wage and price increases (3% is generally acceptable).
  6. The budget justification should briefly explain the need for other direct cost items in the budget. The justification should be consistent with the proposal narrative and should emphasize major cost categories not included in the narrative.
  7. Cents should be rounded off to the nearest dollar.
  8. Preliminary budgets should be submitted to the Office of Research and Sponsored Programs in rough draft for review. The final budget should be submitted with the proposal at least two weeks before the mailing deadline, allowing ample time for final processing.

 

BUDGET CATEGORIES

Expenses associated with sponsored funding are grouped into two types of costs: indirect costs and direct costs.

Indirect Costs

Indirect costs are real costs to the University and are incurred through common activity and, therefore, cannot be specifically identified with a particular project or program. General categories which comprise indirect costs are listed as follows:

  • Plant operation and maintenance (utilities, janitorial services, building maintenance and repairs, etc.).
  • Use of buildings and equipment.
  • Sponsored project administration and accounting.
  • Library expenses and collection acquisition.
  • Institution-wide general administrative expenses.
  • General office supplies.

Most sponsors allow projects to be charged a proportionate share of indirect costs. The University of Tulsa negotiates its indirect cost rate with the Department of Health and Human Services. Full recovery of this rate is essential to the financial well-being of the University. If a sponsor will not reimburse the University for its full indirect cost rate, the unallowable portion must be shown as University cost sharing. (See Cost Sharing).

Direct Costs

Direct costs are those expenses which can be specifically identified with a particular project or program. General categories which comprise direct costs are highlighted below.

1. Personnel

  • Only names of key personnel should be given in the proposal.
  • Pay rates must follow University pay scales.
  • Faculty summer salary charged to sponsored projects must follow University policy (Summer Pay Schedule).
  • A realistic percentage of the time and effort to be expended on the project should be given (Time and Effort).

2. Fringe benefits

  • Fringe benefits are allocated to projects at a pooled rate and include such items as group health insurance, group life insurance, disability insurance, retirement plan premiums, FICA taxes, and T-Flex.
  • The fringe benefit rate should be applied to all full-time employee salaries and wages to estimate the amount to be budgeted. The pooled fringe benefits should not be budgeted for part-time and student employees.

3. Equipment

  • The definition of equipment varies among sponsors. The Federal government has established the definition to be an item with a $5,000 acquisition cost and a useful life of two or more years.
  • Generally, each item of equipment costing over $5,000, with a useful life of two or more years, should be itemized in your proposal budget. Accessories, attachments, and shipping should be included in the cost estimate. Many sponsors require prior approval before equipment can be purchased. An effectively written proposal and budget will satisfy the sponsor’s prior approval requirement.
  • Sponsors may specify bid requirements for equipment purchases. When bids are required, they must be documented.

4. Supplies

Generally, supplies are items or materials with a unit acquisition cost of less than $5,000 and a useful life shorter than two years. However, this definition may vary among sponsors.

5. Travel

  • The University’s established per diem rates should be used; Federal and University restrictions may apply to certain travel costs.
  • When not a part of the original budget, foreign travel requires the prior approval of the University and, in some cases, the sponsor.

6. Consultants

  • A selection process or bids may be required for use of consultants on the project. 

7. Other direct costs

  • Other direct costs include expenses such as outside services, computer time, communication costs, tuition, equipment rental, etc.
  • For internal charges (computer time, SEM time, etc.), established University rates must be used.

 

COST-SHARING ON FEDERAL GRANTS AND CONTRACTS

What is Cost-sharing?

"Cost-sharing" was instituted by Federal legislation in 1966 (Bureau of the Budget Circular). This legislation stipulated that Federal funds cannot be used to pay the entire cost of a research project. In other words, non-Federal funds must support a portion of the total cost of federally-sponsored research projects, when required by statute.

Congress and the various federal agencies do not set a percentage for cost-sharing. Past experience and guidelines from various agencies have indicated that a five percent (5%) contribution of total costs on each project is an acceptable minimum. Some agencies have matching or significantly higher cost sharing requirements. Any proposal which has matching requirements, or cost sharing using University funds, must first be authorized by the Collegiate Dean and the Office of Research and Sponsored Programs. Cost sharing is subject to the same stringent audit requirements as the sponsor’s funds.

The University of Tulsa Policy on Cost-sharing

Cost-sharing should be restricted to contributions of budgeted personnel salaries, related employee benefits, and indirect costs based upon these salaries and wages unless stipulated otherwise by the sponsor. Any exceptions to this policy must be approved by the Collegiate Dean and Office of Research and Sponsored Programs before submission of a final budget.