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 or other funding solicitation for which you are applying allows a given cost item before you decide to approve it. Also, please note that the Office of Management and Budget (OMB) Uniform Guidance document 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 a proposal that seeks external 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 the OMB Uniform Guidance.
Direct costs typically include the following:
Personnel — Salaries or wages actually paid by a grant, fellowship, contract, or agreement must be consistent with University policy. As a general rule, for amounts to be budgeted in future budget years of a project, include a 3% 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 or other project awards 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 must be covered. Contact the College Dean for advice on the benefits costs associated with a proposal for replacing an existing faculty member for a semester (or longer) — in other words, having the grant “buy out” that faculty member’s time.
If the external funding project proposes to provide a stipend (add on) to a current faculty member in order to take on new duties associated with the grant that will be done during the nine-month academic (contract) year, the grant must cover the added benefits portion of the stipend amount. Use a figure of 18.45% of the stipend amount as the added benefits portion.
If the external funding project proposes to hire a new full-time faculty or staff member as a part of the project expenses, use a figure of 18.45% of the salary for faculty and 22.97% of the salary for staff plus $26,148 as the fringe benefit amount. (This higher figure budgets in the estimated cost of the maximum health care plan; if the person hired does not chose the maximum plan, the grant budget would be adjusted.) Please note, Cabinet approval is required before any new hire regardless of funding source.
For part-time wage employees to be hired as a part of the external funding project, figure 7.65% of the total wage amount to be paid to such workers. For student workers, if the student will be working while enrolled as a student and taking courses as the time the work is done, the 7.65% UMW FICA share is not required. If the student will be working in the summer, include the 7.65% FICA share as a project expense.
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 Equipment Purchases.
Also see Equipment Purchases for ownership details about equipment that might have been purchased as part of a grant, contract, or other agreement.
Travel — The cost of transportation, lodging and meals. All Commonwealth of Virginia travel regulations are strictly applied to external grant 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 grants, contracts, and other such agreements must be made in the name of the University of Mary Washington. The University President, the Chief of Staff, the Vice President for Administration and Finance, and the Associate Vice President for Finance are the only individuals authorized accept grants on behalf of the University of Mary Washington or to execute sub-award contracts that would lead to the acceptance of grant funding from an external entity.
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, Agreement, or other Externally-funded Proposal — 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. Please email grants@umw.edu for additional guidance on these requests.
Facilities and Administration (F&A) Costs
(also called “overhead” or “indirect costs”)
UMW’s policy is available here. Be sure to understand and follow the external funding entity’s specific guidelines related to these costs. In some cases, the F & A costs are excluded by the entity that would fund the proposal. Other times, there may be a cap on the amount that may be claimed for indirect costs. Again, consult the specific regulations established by the granting entity. If an external funding proposal will use UMW facilities or space and no overhead amount is included as part of the project budget, the proposal must include an amount for rental of UMW space and facilities (unless the Provost and the Vice President for Administration and Finance has agreed to reduce or waive those fees).
Cost Sharing
Any cost sharing proposed as part of a project budget, whether in-kind or in the form of a direct UMW contribution), must be discussed in advance and approved before a project containing such an arrangement is submitted to the external funding entity. Consult the general cost sharing advice presented here. Federal regulations state that cost sharing may be a consideration in the evaluation of an application in only those cases where the program guidelines require it. Including cost sharing in a proposal that doesn’t expressly request it will not necessarily help the 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.