Budget Preparation Guidance

Generally, a budget for an externally supported project will include information on these components:

Direct Costs

Facilities and Administration (F & A) costs, sometimes called Indirect Costs or Overhead

Cost Sharing

Justifications (explanations for why the budget items are necessary for the project)

Granting entities usually have explicit instructions regarding the preparation of budget materials. Follow those instructions. Listed below are resources to assist you in understanding, generally, the sorts of expenses often included in a project budget. Be sure the particular grant for which you are applying allows a given cost item before you decide to approve it. Also, please note that OMB Circular A-21 establishes certain costs that are not allowable on federal grants, and this guidance is generally applicable to all grants regardless of the funding source. UMW will not approve the submission of an external grant proposal that seeks funding for expenses that would be deemed as improper or unallowable.

DIRECT COSTS cover expenses that can be identified with a specific project, or that can be directly assigned to a project with relative ease and a high degree of accuracy. These costs must be allowable by both the University and the sponsor. For further information on allowable costs, see OMB Circular A-21.

Direct costs typically include the following

Personnel — Salaries or wages actually paid by a grant, fellowship, or contract must be consistent with University policy. As a general rule, for amounts to be budgeted in future budget years of a project, include a3-4% increase to account for inflation.

Fringe Benefits — In addition to salary, associated fringe benefits should also be included on the budget. For nine-month teaching faculty requesting salary for a summer project, include 7.65% of the salary amount to cover the cost of the University’s share of FICA. (This is the only fringe benefit that pertains to summer salary for nine-month teaching faculty.)

For grants that would replace a full-time faculty member’s salary during a portion of a normal contract year (e.g. a full semester), all fringe benefits most be covered. Use a figure of 33% of the salary amount in such cases.

For students or part-time wage employees to be hired as a part of the grant, figure 7.65% of the total wage amount to be paid to such workers.

Equipment — Fixed assets with a value in excess of $2,000 and a projected life cycle of more than one year. Federal guidelines, for example, state equipment items are fixed assets costing more than $5000. For UMW guidelines on purchasing that might pertain to equipment secured under a grant, see http://provost.umw.edu/grantsoffice/umw-grant-policies/equipment-purchases/.

Also see http://provost.umw.edu/grantsoffice/umw-grant-policies/equipment-purchases/ for ownership details about equipment that might have been purchased as part of a grant.

Travel — The cost of transportation, lodging and meals. All Commonwealth of Virginia travel regulations are strictly applied to external grant travel. See http://adminfinance.umw.edu/ap/travel/

Materials & Supplies — Items such as laboratory supplies, animals, instructional material, software, and equipment costing less than $5,000. Itemize such requests as clearly as possible.

Consultant Services — A consultant is not a UMW employee. This is an “outside” individual is hired to provide advice or perform a specific service for a fee. All UMW faculty who contribute an professional service on a grant project must be included as part of the personnel budget for the grant. Itemize their expenses (such as stipends or salary and any travel expenses).

Publication Costs — Funds to cost of preparing and publishing research results produced by the project, such as reports, reprints, page charges, illustrations, and so forth.

Subcontracts — A legal agreement between the UMW as the primary contractor or grantee and another party. A subcontract is used when a major portion of the grant work will be performed by a second party.

When UMW is to be included as a subcontractor of a grant awarded to another institution or entity,that agreement must be reviewed in advance following the same steps as if it were a grant being submitted by UMW. All contracts involving UMW must be signed by the Executive Vice President. Contact John Morello in the Office of the Provost (GW Hall 309, x:1269)for additional guidance.

When a UMW proposal includes a subcontract as a part of the proposed budget, a subcontract agreement between UMW and the subcontractor must be created and signed by both the UMW Executive Vice President and the appropriate, authorized official at the institution with which UMW will have the subcontract.

Other Direct Costs — This category includes items such as rental of space, funds for equipment maintenance contracts and repairs, stipends for research participants, and so forth. Tuition would also fall into this category, unless the granting entity has different instructions. If the grant will provide compensation for persons serving as research subjects, the applicable portions of the UMW Gift Policy relating to payment of research participants must be followed.

Adjusted Tuition Charged as Part of a Grant — In some cases, the grant proposal may desire to charge a reduced rate for UMW tuition in the case of a grant that will be subsidizing tuition costs as a direct cost. Any such agreement must be approved in advance. Contact John Morello in the Office of the Provost for additional guidance.

FACILITIES AND ADMINISTRATION (F&A) COSTS

General guidance is available here. Be sure to understand and follow the granting entity’s specific guidelines related to these costs. In some cases, the F & A costs are calculated on the basis of the salaries and fringe benefits included as direct costs. Other times, the F&A cost may be calculated on the basis of all direct costs. Again, consult the specific regulations established by the granting entity.

COST SHARING

Any cost sharing proposed by a grant project must be discussed in advance and approved before a grant project containing such an arrangement is submitted to a funding entity. Consult the general cost sharing advice presented here. Federal regulations state that cost sharing may be a consideration in the evaluation of a grant application in only those cases where the grant program guidelines require it. Including cost sharing in a grant proposal that doesn’t expressly request it will not necessarily help your proposal.

JUSTIFICATION

A typical budget justification would be one to two pages of text explaining the costs listed on the budget outline. The budget outline might list a personnel cost as a dollar figure; the justification would explain that that personnel cost is for a one-course teaching load reduction, or two months of summary salary plus
FICA. Usually, the granting entity provides guidelines for the amount of detail to be provided in a budget justification.