Budget Review
Prior review of the budget and justification must be conducted by your Grant Specialist or other CGS pre-award or post-award resource.
The information provided here should be used as a general guide in all instances. When an agency provides specific budgetary directions, those directions should be followed or, when UK policies provide more specific guidance than outlined here, that guidance should be followed. Your Grant Specialist can provide detailed explanations.
Salaries and Wages
Types of personnel frequently involved in projects include:
- faculty members: 12 month or academic year and summer appointments
- staff members
- research assistants and associates
- postdoctoral scholars
- graduate research assistants
- undergraduate assistants
- technicians and other support personnel
- temporary, part-time, or STEPS employees
For each person involved in the project, list name (if known), position, person-months (if Federal), and percentage of time on the project. The base salary should include a salary increase of 3% if the majority of the budget takes place in the next fiscal year. The associated fringe benefits will charge along with any salaries in accordance with the payroll system.
Projects should, at a minimum, provide for the salary of the principal investigator.
Academic Year Appointments/Summer Pay
Funds to cover the cost of faculty time spent on a project can be requested from almost all sponsors. Once an award is received, the appropriate salary and fringe benefit amounts are charged to the project rather than to the usual university funding source.
Faculty with nine-month appointments may receive a portion of their academic year salary during their off-duty periods from external grant and contract funds. The external funds portion cannot normally exceed 2.5/9 of base salary. Nine-month faculty requesting a full 3/9 during the off-duty period are expected to discuss with their Chair and must account for their time and effort in accordance with the Office of Faculty Advancement guidelines.
Administrative, Executive, and Clerical Staff are normally unallowable on Federal or Federally funded projects unless integral to the fulfillment of the project’s goals. Please consult your Grant Specialist.
Graduate Research Assistants should be budgeted in the proposal based on the minimum rate paid to GRAs in the individual's department or program. A GRA may normally not work more than 20 hours per week during the academic year. If a GRA is budgeted in a proposal, graduate tuition may also be budgeted under "Other" expenses. See the Tuition section below.
New Positions
For guidance in determining estimates for new positions, contact UK's Human Resources Department or your college’s business department. Salaries for new positions should be consistent with the salaries for similar positions and responsibilities across campus.
Consultant Costs
Consultants bring a particular expertise to a project that is otherwise not available within UK. Some Federal agencies have specific limits and guidelines regarding the use of consultants and the reimbursement rates for consultants. Appropriate rates for consultants include all travel and professional fees. Consultants cannot be current or recently-separated UK employees. The Project Director or Principal Investigator does not control how or when the consultant performs the work. If he or she does, the consultant should be listed as an employee under personnel.
Fringe Benefits should be calculated according to the table located on the Frequently Needed Information page.
Non-salary/non-tuition costs should be escalated for all subsequent years of the project based on a 5% increase in costs.
NOTE: Some sponsors may limit escalation. Please discuss with your Grant Specialist.
Domestic Travel allowance costs should be reasonable, necessary, and based on university rates.
- See the Frequently Needed Information page for current rates.
Foreign Travel on Federally funded projects requires that budget estimates and charges be made using a U.S. airline (American flag carrier).
Equipment
For an item to be considered equipment, it must meet all three of the following criteria:
- Cost $5,000 apiece or more
- Have a useful life of at least one year
- Be stand-alone and tangible
Some fabricated equipment may be treated as exceptions to the standard definition of equipment; please consult your Grant Specialist. Anything that does not meet the criteria for equipment should be budgeted in another cost category.
Equipment for federally sponsored projects is normally excluded from facilities and administrative (F&A) charges if a project recovers the current negotiated F&A rate. If the sponsor pays less than the appropriate negotiated rate, then the F&A rate is applied to all costs, including equipment (unless specifically prohibited by sponsor policy).
If rebudgeting from another direct cost item, review award terms and conditions to ensure that agency prior approval is not required for the purchase of equipment.
Computing devices are allowable as a direct cost when justified as essential for the proposed scope of work.
General purpose equipment and administrative software are typically unallowable costs on Federal funding; “general purpose” is defined as the use not being 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; general purpose software includes programs normally provided by an employer to a non-technical employee.
Supplies necessary for the conduct of the project should be budgeted.
Vendor expenses include any contract for services/goods you expect to need if the proposal is funded. Contractual expenses may also include any subagreement whereby funds will be supplied to another university or entity as a result of this award.
In most instances when a proposal includes a Subagreement, a separate budget should be submitted on sponsor forms for the subrecipient, and the subagreement total is then listed as a lump sum (including the appropriate Facilities and Administrative costs) on the contractual/consortium/subaward line in UK’s budget.
Subagreement (subaward/subcontract) costs represent that portion of a sponsored project that is performed by another organization using its own facilities such as subawards and subcontracts. All direct and indirect subrecipient costs must be identified and justified in the proposal budget.
Subrecipients are entitled to request F&A costs up to the amount allowed by sponsor guidelines or their negotiated indirect cost rate agreement. (Reminder: only the first $50,000 of any one subagreement should be included in the Modified Total Direct Cost Base when calculating full indirect costs.)
See the Subaward page for more information.
Training Participant costs (also called Participant Support Costs) may be allowable, but some agencies restrict the movement of these costs from the original budget line to other cost objectives without prior written approval by the agency. Review sponsor guidelines for rebudget requests that will transfer funds out of Participant Support costs.
Participant support costs (PSC) are direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, symposia or training projects.
Participants perform no work or services for the project other than for their own benefit. A participant is not involved in providing any deliverable to the university or a third party. The expenses may be paid for by the project directly on behalf of the participant or as a reimbursement to the individual.
Other items of expense
Direct Costs. These expenses include a wide variety of items such as equipment rental, medical and laboratory supplies, publication, service center costs, and space rental.
Postage is typically an unallowable item on Federal funding, but may be allowable under sponsor guidelines if, for example, there is a requirement to mail surveys, conference registration packets, or manuals. Please discuss with your Grant Specialist.
Patient Care Costs This category includes costs for tests and procedures that are required only because the patient is participating in a research project – they are not a part of routine medical care. The costs of such tests are billed by the hospital and charged as patient care costs. Professional fees or costs collected by private billing agencies are not considered patient care costs.
Tuition should be budgeted any time a Graduate Research Assistant position is requested in a proposal. If the research assistant is working fewer than 20 hrs/week/academic year on the project, tuition should be prorated. Tuition should not be budgeted for summer sessions. (Reminder: tuition should not be included in the Modified Total Direct Cost base when calculating indirect costs.) For 20 hour/week Graduate Research Assistants, tuition is summarized here.
Indirect Costs Charged as Direct Costs in Federal proposals need to have an asterisk next to the items and need to be supported by an extra justification statement. The asterisk should then be referenced at the end of the budget justification with the following statement: “These costs are normally treated as indirect by the University of Kentucky, but are being requested here because [insert project-specific reason].” This additional CAS justification need only be included in proposals that are to be funded with Federal funds.
Expenditures for indirect cost categories are not regularly charged directly to Federal sponsored projects. Circumstances occasionally arise when these costs have such a specific relationship to the research being performed that their treatment as a direct cost may be considered an allowable exception. In these exceptional circumstances, the costs in question should be explicit, described in detail, appropriately supported and justified in proposals and accompanying budgets.
Direct Cost categories are costs that will be used to directly support the program activities in an allocable way.
Modified Total Direct Costs (MTDC): Total Direct Costs are the total costs from all items budgeted in the proposal. Total Direct Costs minus exclusions are used to determine MTDC. MTDC excludes equipment, capital expenditures; charges for patient care, participant support costs, tuition remission, rental costs of off-site facilities, scholarships, and fellowships, as well as each subrecipient’s costs greater than $50,000. Not all sponsoring agencies may apply all of these categories to the MTDC; check the specific agency guidelines for instructions on budget calculation.
Facilities & Administrative Costs (Indirect Costs) are the costs that cannot be directly associated with the grant. Find more information about F&A Costs.
Total Cost includes total direct costs plus F&A.
Cost Sharing
Some funding agencies require the grantee institution to demonstrate its financial commitment to the project or the commitment of other funding sources by sharing the project costs. Cost sharing should be included in the proposal only when the sponsor requires cost share as a condition of applying for an award.
Expenditures must be:
- Documentable (mandatory cost sharing that is not faculty effort will require the establishment of a separate cost sharing account).
- Allowable.
- Required for the project and incurred during the project’s budget period.
- Reasonable in relation to the proposal.
Cost sharing can be mandatory (that is, required by sponsor guidelines and a condition of the award) or cost sharing may be voluntary. Voluntary cost sharing is not a sponsor requirement, but is committed because it is thought to be necessary to the success of the proposal. Voluntary cost sharing requires additional UK prior approvals and is carefully reviewed at all levels.
Cost share items must be allowable direct cost items or items that would normally be classified as indirect costs but are being justified as direct costs.
F&A underrecovery due to written agency guidelines limiting F&A should be used as part of the cost sharing contribution unless prohibited by agency guidelines (Example: US Department of Education prohibits the use of unrecovered indirect cost on their training programs that limit indirect to 8%). F&A costs associated with UK’s cost share commitments should also be used as part of the project’s cost sharing.
More information about Cost Sharing is available here.
Program Income on any project expected to generate funds should be estimated, and its use explained in the budget justification. Further guidance on the use of program income is available from your Grant Specialist.