| Budget Preparation
GENERAL CONSIDERATIONS
Special care should be taken to insure that a complete and accurate representation of the cost of the project is presented to the funding agency. The PI, with the assistance of Human Resources, Purchasing, and various other offices, arrives at a best estimate of the costs to be incurred in each category. These estimates should be based upon historical data, current costs, and projected increases as described in the following sections.
Each agency sets forth their own requirements as to format, level of detail, and justification. Most have a specific form as part of the application packet for the budget and the budget justification. Follow the instructions precisely with regard to these forms. If it is necessary to request funding for a cost that would not normally be allowed, such as secretarial support, include it as a separate line item in the budget and be certain that it is well justified on the budget narrative page. Some agencies require a special designation for projects making such requests, and justification that such costs are necessary based upon the size and scope of the project.
All budgets must be approved on Campus prior to submission to the funding agency, and an award may be declined by the Accepting Authority on Campus if the budget and proposal have not met prior review requirements. Budgets should be developed in cooperation with the Office of Grants Management, and must be approved by the appropriate Dean or Director prior to Campus approval of the research proposal.
Direct vs. Indirect Costs
Direct costs are those costs that are directly related to the performance of the project as awarded. They may include, but are not limited to, salaries, wages, benefits, supplies, equipment, travel, capital improvements, and on-campus purchases. Any direct costs incurred by a project must be allowable and allocable to that project specifically. Many agencies have in recent years become much more stringent in their requirements for justification of certain nebulous purchases, the cost of which might be borne by any number of projects under the direction of the PI.
Indirect costs include various types of services and support that are not directly related to the performance of the project, and that are often difficult to measure and assign specifically. These might include the cost of maintaining the physical location of the project including electricity, water, heating, cooling, and janitorial support. These expenses are recovered by the institution through indirect costs charged to the funding agency. Typically, an indirect cost rate is negotiated between the Department of Health and Human Services and the institution, and remains in effect for seven years. At Fort Lewis College, the indirect cost rate (35%) is applied to salaries and benefits. This means that not all budget categories are included in the total used for indirect cost recovery. The appropriate amount is included as a line item in the proposal budget.
At Fort Lewis College, the indirect cost rate is negotiated by the Offices of Grants Management, Controller, and Budget. The Grants Management Office should be contacted to determine the current approved rate and whether or not indirect costs are allowable. The instructions that will be provided by the agency should state whether indirect costs can be included.
SALARIES, WAGES AND FRINGE BENEFITS
One of the first considerations in developing a budget is to determine what personnel will be required to complete the work being proposed. Will there be support needed in addition to the PI’s time commitment? If so, under what job classification and percent time commitment? The PI should consult closely with the Director of Human Resources to make these determinations since the anticipated duties of each position must fit into an existing job classification as determined through the state classified system. Care should be taken to assure that sufficient personnel are included in the original budget since it is extremely difficult to later request additional funding for this purpose.
Calculation Worksheet
This worksheet will assist you in calculating the cost for each salary/wage position to be included in your budget.
To calculate the budget requirements for your project, you will need to determine the following for each position requested:
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1. the position title or classification, including performance factors
2. the start date of the position
3. the monthly or hourly salary in effect at the start date for the position title and classification
4. merit/cost of living increases as standard formulas used in all proposal budgets for the position
5. the intervals at which merit and cost of living increases are anticipated
6. the percent effort that is being requested for this project |
This information may be obtained in consultation with the Director of Human Resources at Fort Lewis College. THE SALARY, WAGE AND BENEFIT AMOUNTS AND RATES USED HERE ARE STRICTLY FOR ILLUSTRATIVE PURPOSES ONLY.
For this example, we will anticipate that a position of Laboratory Assistant I will be required at a monthly salary of $2,500 at 75% effort. The project is proposed to start on September 1, and a merit increase is anticipated to be effective on March 1, 2002 at 3%. Also, a cost-of-living increase is being projected at 2% effective July 1, 2002.
Here is how the first year’s salary request would be calculated:
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September 1, 2001 - February 28, 2002 |
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2,500.00/mo |
X |
75% effort |
X |
6 months |
= |
11,250.00 |
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March 1, 2002 - June 30, 2002
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Merit Increase: |
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2,500.00/mo |
X |
103% |
= |
2,575.00/mo |
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2,575.00/mo |
X |
75% effort |
X |
4 months |
= |
7,725.00 |
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July 1, 2002 - August 31, 2002 |
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Cost-of-Living Increase: |
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2,575.00/mo |
X |
102% |
= |
2,626.50/mo |
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2,626.50/mo |
X |
75% effort |
X |
2 months |
= |
3,939.75 |
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Total first year salary request for this position: |
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22,914.75 |
To calculate the amount of fringe benefits to be requested, you will need to know:
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1. the fringe benefit rate projected to be in effect at the start of the first year
2. any projected changes in the fringe benefit rate over the course of the first year |
For our example, we will say that the rate in effect on September 1, 2001 is 19.4%, and that an increase is projected for July 1, 2002 of 1.2%, for a new rate of 20.6%.
Here is how the fringe benefits would be calculated for this position in the first year:
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September 1, 2001 – June 30, 2002 |
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18,975.00 total salary for the period |
X |
19.4% benefit rate |
= |
3,681.15 |
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July 1, 2002 - August 31, 2002 |
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3,939.75 total salary for the period |
X |
20.6% new benefit rate |
= |
811.59 |
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Total first year fringe benefit request for this position: |
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4,492.74 |
After calculating the first year salary, wage, and benefit costs for each position, those amounts are entered as line items in the appropriate sections of the budget page. If the identity of the individual who will perform the work is known, that person’s name should be entered with the classification for their position, along with their percent effort, the first year salary request, and any other information requested by the agency. If the request is for a new position, TBA (to be announced) should appear in place of a name, along with the desired classification, percent effort and first year salary request.
USE OF CONSULTANTS
The use of consultants should be approached cautiously. It is essential to determine that the required services, whether short-term, highly technical or specialized, are of such a nature that they cannot be provided by currently employed College personnel as part of their normal assigned duties. Consultant fees should not be requested as a means of bypassing existing employment and/or conflict of interest policies. Often, if consultant services are included in a budget, the agency will require prior approval of the Consultant Agreement or Contract before releasing payments.
EQUIPMENT
Careful consideration should be given to what, if any, equipment will be required to complete the proposed work that is not readily available for use. Equipment is defined as any single item or combination of components with a life expectancy of more than one year and/or costing more than $5000. The cost estimate should include the item plus sales tax, shipping and set-up, if necessary. Documentation of the budgeted cost should be via telephone, written estimate, or published catalogue. Retain all information relating to how these costs were determined.
If equipment is to be fabricated, all costs relating to the production of all components should be included in the budget request. This applies to those items produced by Fort Lewis College Physical Plant Services as well.
GENERAL SUPPLIES
This budget category includes all tangible consumable supplies needed to complete the work of the proposed project. The costs requested here should be broken down into line items such as office supplies, glassware, and chemicals. If the total is based upon a monthly, anticipated cost, then indicate such, on the budget page. These should be good faith estimates arrived at based upon past experience, telephone or written estimates, or any of several other means of determining these costs. Notes should be made and retained relating to how these costs were calculated. Be realistic! Do not over estimate, causing rejection of the proposal due to excessive cost, or under estimate resulting in insufficient resources to complete the work.
TRAVEL
When constructing a travel budget, estimates should be made for each day of travel for air and ground transportation, lodging, meals, and registration fees, based upon accepted criteria established by the funding agency, and state and local policies governing Fort Lewis College. If two differing policies are in place, the more restrictive of the two will apply. For example, some funding agencies will restrict travel costs to those associated with travel taking place within the continental US, Canada, and Mexico, while others might impose a dollar limit per trip. In addition, most international travel that is to be funded by extramural research support will require extensive justification when preparing the travel budget.
Generally, sponsoring agencies will not be concerned with what travel agency is utilized for making travel arrangements. The State of Colorado, however, requires that only travel agents who have agreed to Colorado State requirements for travel agency services be used for air and ground transportation arrangements. When preparing a budget estimate, one of these approved agents should be contacted to determine the correct amount to be budgeted for air and ground transportation.
If travel will involve the use of a vehicle from the College motor pool, rates are determined by the type of vehicle, and charged on a per day, per mile basis as established in the Fort Lewis College Travel Manual. When the use of a personal vehicle is appropriate, reimbursement is made on a per mile basis for actual mileage.
The cost of meals is paid as per diem, per meal based upon departure and return dates and times. For travel destinations considered to be high cost cities, an increased per diem rate is allowed as shown in the Maximum Per Diem Table contained in the Fort Lewis College Travel Manual. If meals are included as part of a registration fee, the applicable meals will not be reimbursed through per diem.
Any conference or meeting registration fees should also be included, if applicable, along with other travel cost estimates.
Information relating to approved travel agents and rental car agencies, motor pool rates, mileage reimbursement, and per diem rates may be obtained by consulting the Fort Lewis College Travel Manual available in your departmental office.
Once the estimated cost per day for all appropriate categories is arrived at, a total cost for each trip can be calculated. If certain costs will be shared by more than one individual traveling, such as a rental car, this must be taken into consideration when calculating the total cost of the trip.
When completing the budget page, most funding agencies will accept a one-line entry for each trip. The budget line might look like this:
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3 persons |
Tri Beta Conference |
Phoenix, AZ |
March 2002 |
$1610 |
You would then breakdown and explain the total cost per individual and item when preparing the budget justification. For example:
“Funds are being requested for 3 students to travel to the annual Tri Beta Conference in Phoenix, AZ March 15-17, 2002. The cost of airfare = $296/person; per diem = $38/day/person (less $20.00 for one evening meal included in the registration fee); registration fee = $45/person; rental car = $65.00; hotel = $40/person/night.” You would then go on to justify this travel request by explaining its value to the project and the students involved in the travel.
Remember that travel policies and procedures change often so it is always a good idea to consult with your Department’s Administrator to determine what policies are in effect when a proposal is being prepared for submission.
CONSTRUCTION AND/OR CAPITAL IMPROVEMENTS
Occasionally, it may be allowable and appropriate to request funds to support new construction or capital improvements to existing property required to fulfill the requirements of the proposed research project. An example might be if facility renovations are necessary to accommodate specialized equipment needed by the project.
This is an area of concern that must be carefully addressed, and another reason why on-campus review is so important prior to submission of such a proposal. If facilities are required for the project that are not currently available, they must be identified prior to submission of the proposal, and the terms of any agreements between the institution and the funding agency must be confirmed. If a proposal is submitted that does not address these issues, the subsequent award may be refused by the institution due to lack of prior knowledge of the requirements of the project, and an inability to fund such requirements.
It is always advisable to be open and complete in expressing the needs of the project. Most reasonable requests can be accommodated if there is prior knowledge and if planning can be formulated in advance. The Office of Grants Management should be contacted prior to preparation of the proposal with any requests requiring new construction or capital improvements to existing facilities.
OTHER BUDGET ITEMS
This budget category is typically used to include miscellaneous, ancillary supplies and services required by the project. On-campus purchases should be included here. Some examples include, but are not limited to, telecommunications and computing equipment and services, bookstore purchases, and photocopying expense.
As with other budget categories, a good-faith estimate of the total cost for each category should be calculated based upon historical information or published costs.
SUBCONTRACTS
In some instances, a subcontract might be required to complete the work set forth in a research grant proposal.
For the purpose of budgeting for subcontracted services, published fee schedules or a written quotation should be obtained from the subcontractor. It should include a sufficient expiration date to allow for submission and awarding or declination of a proposal to assure that the budget estimate will still be sufficient to cover the cost of the subcontract when the services or products are required by the project. If published fee schedules are being used, a reasonable and appropriate yearly increase, provided by the subcontractor, should be utilized to estimate costs if the subcontracted services or products are required in more than one year of the project.
For example, suppose that a science lab is proposing a research project that involves the use of a very specialized and costly piece of equipment located off-campus, or that the services of an individual or company with the expertise to analyze research data or materials is required. That activity will require a subcontractor agreement between the College and the individual or company providing the service or product. Since any such agreement is between the College and the subcontractor, and not the Principal Investigator, he/she should communicate as early as possible the need for such an agreement to the Office of Grants Management. They will assist with the required special reviews and approvals necessary to enter into such an agreement.
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