University of St. Thomas

Budget Preparation

The format of a proposal budget is determined by the funding agency.  In all cases, be sure to refer to the application instructions for information on preferred budget categories, overall budget format, and allowable costs.  This section provides information you will likely need as you prepare a budget for submission from the University of St. Thomas.

While the format of budgets differs from agency to agency, most budgets contain requests for the following cost areas:

• Personnel
• Fringe Benefits
• Travel
• Equipment
• Consulting
• Indirect Costs

PERSONNEL COSTS

Calculating Faculty Salaries on Grant Proposals

In most cases, grant proposals involve the effort of faculty and/or staff, and personnel costs often consume the lion's share of a grant budget.  It is important that you always provide the funding agency with a clear and precise estimate of how much time you and your colleagues will spend on your proposed project if it is funded.  In the case of faculty time and effort, by far the most common way of doing this is to assign a certain amount of time to the project during the summer (when faculty are otherwise not under contract with the University of St. Thomas).

Case #1: Citing Time and Effort During the Summer

Rules to Consider:

• When citing summer effort on a sponsored project, you must calculate the value of your time during the summer based upon your actual salary for the PRECEDING academic year. 
• To determine the value of a month of your time during the summer, divide your previous year's salary by nine (months).  To determine the value of a week of your time during the summer, divide your previous year's salary by nine (months) and then divide again by four.
• You can cite effort on a sponsored program only in a period during which you are otherwise not employed by the University of St. Thomas.  Most faculty contracts engage you full-time for the following periods:

Most faculty
September 1 to May 31

Law School faculty
August 1 to May 31

School of Divinity faculty
August 15 to May 31

• The University of St. Thomas allows faculty to commit up to three months (June 1 to August 31) to work on sponsored projects.  Some agencies, notably the National Science Foundation, allow researchers to commit only a total of two months to grant projects.

Example:

Sam will work the equivalent of about 2 weeks each year on his grant project over the period June 2009 to May 2010.  Because he is on contract with UST for the period September 1, 2009 to May 31, 2010 and therefore 100% employed, Sam will have to assign some of his summer time to the project.  

Sam's annual salary for 2008-09 is $60,000.  In order to cite this effort and get paid for it, Sam must tell the agency that he will spend 2 weeks each summer on the project and calculate the value of his time according to his salary during the previous academic year.  Therefore, the budget line for Sam for summer 2009 should be calculated:

$60,000/9 months =    $6,667 (one month of academic salary)
$6,667/2                  =     $3,333 (1/2 of one month of academic salary)

The budget line for Sam should therefore read:   Sam Smith [.50-months @ $60,000 per year]     $3,333

Case #2: Budgeting for a Course Release

Rules to Consider:

• You may include a request in your grant budget for one course release per year (with the permission of your chair and dean).  Requests for more than one course release per year require the permission of your chair, dean, and the executive vice president for academic affairs.
• Whenever your budget allows, you must request the equivalent of 1/10 of your academic year base salary (or  a minimum of $4,000) for each course from which you plan to be released.
• When your budget or the funding agency does not allow you to budget for 1/10 or your academic year base salary, you must request $4,000 for adjunct salary, plus $500 in fringes for each course from which you plan to be released.

Example:

Sam wants to be released from one course during the year so that he can work on his grant project.  His academic year base salary is $60,000.  He must request the equivalent of 1/10 of his annual base salary from the funding agency, and his budget line should state:

Sam Smith [1 course release @ $60,000 per year]:   $6,000

Estimating Staff Salaries

Many grant proposals contain requests to hire lab assistants, lab managers, database analysts, and other professionals.  You must tell the funding agency how much time (effort) these individuals will commit to the grant project and how much they are paid each year.  In the case of full-time UST employees whom you wish to reassign to work on a sponsored project, you must use their actual salaries,  When anticipating hiring a new person, you must consult with Human Resources for an estimate of the market value of such an individual.

Rules to Consider:

• The citation of effort on the part of a person having a full-time, 12-month position is done by determining the person's annual salary and dividing that salary number by the number of person-months to be spent on the sponsored project.
• No staff person may be employed more than 100% without the written permission of his or her direct supervisor and others.  If such permission is granted, the staff person will be paid his or her normal salary and retain his or her normal duties.  In addition, he or she will take on a set of additional duties that will be paid by the grant on an overload basis.  The hourly rate of pay for the additional duties must be the same as that earned when carrying out the employee's normal duties.
• If the grant-funded duties of a staff person are to be integrated into a 40-hour week, then some of that person's normal duties must be reassigned so that the total effort (UST duties + grant-funded duties) does not exceed 100%. 

Example:

Sam intends to hire a lab assistant for 10 hours per week throughout the calendar year.  The lab assistant's annual salary will be $35,000.  Sam should calculate the lab assistant's grant salary at:  $35,000 x .25 = $8,750, and the budget line should read:

TBA (Lab Assistant) [.25-time @ $35,000 per year]    $8,750

UST Faculty Serving as Internal Consultants

In most cases, UST faculty working on a sponsored project should be listed in your budget under PERSONNEL (since they are employees of the University of St. Thomas).  In very rare instances, UST faculty are allowed to serve as a consultant to a sponsored project based at UST.  In these cases, consulting stipends are subject to all federal policies.

Rules to Consider:

• OMB Circular A-21 [J.6.e.1]: “Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution.”
• Such payments are allowed only “in unusual cases where consultation is across departmental lines or involves a separate or remote operation AND the work performed by the consultant is in addition to regular departmental load."
• Since UST faculty are employees of the University, you must put their budget line under PERSONNEL (not CONSULTANTS) and charge appropriate fringes against their salary.
• Internal consultants on sponsored projects are NOT paid according to prevailing market rates for consultants, but rather at the hourly, daily, or weekly rate at which they are paid for their regular duties:
  • Hourly rates should calculated by dividing the faculty member's regular base salary by 1,440.
  • Daily rates should be calculated by diviiding the faculty member's regular base salary by 180.
  • Weekly rates should be calculated by dividing the faculty member's regular base salary by 36.

Example:

Sam wants to hire a faculty member in another department to do some very limited data analysis on a sponsored project.  The size of the job, and the fact that the faculty member will not be contributing any other effort or broader insights into the project beyond her narrow task of data analysis, means that she is functioning as a consultant rather than a partner in the project.  This kind of analysis is not part of her regular duties.  The task should take about ten hours over two months.  The line item in the budget, placed under PERSONNEL because the faculty member is an employee of the University of St. Thomas, should read:

Julie Jones, Consultant [10 hours @ $28.84 per hour]    $288

Calculating Students' Salaries on Grant Proposals

Undergraduate and graduate students can be employed at an hourly rate.  Check the current rates for student employment.  Human Resources may approve a higher wage for working on projects that require specific skills, but these wages generally do not exceed $10 per hour for undergraduates and $20 per hour for graduate students.  As with other University employment, wages are based on job responsibilities. Wages funded by external grants must be the same as those paid from internal funds for similar work.  When an agency specifies a rate for a research assistantship or other stipend that exceeds the institutional pay scale, the agency’s funding policy will apply.

FRINGE BENEFITS

Faculty

The calculation of fringe benefits depends upon the status of the faculty member and his/her period of employment on the grant:

Students

When calculating fringe benefits for students, it is important to know whether the student will be enrolled in at least one course during the term of employment:

Twelve-Month Appointments

Fringe benefits for persons on 12-month appointments should be calculated at 32% for all 12 months of the fiscal year.

EQUIPMENT

At the University of St. Thomas, equipment items that cost less than $500 can be listed in your budget under “Materials and Supplies.”   More expensive items must be listed under “Equipment.”

For federal proposals, permanent equipment is defined as an item or interrelated group of items of equipment that exceed $5,000 in value and one year’s useful life. Smaller equipment items can be listed as equipment (per UST policy), but will not be subject to the permanent equipment inventory restrictions imposed by the federal government.

TRAVEL

You should request funding only for travel that you absolutely need in order to carry out your proposed project.  Agencies scrutinize travel requests very closely.  In most cases, you will be asked to distinquish between domest travel (including Canada) and international travel.

Rules to Consider:

• Airfare should be calculated at round-trip, economy class rates.
• Travel outside of the United States, Puerto Rico, Canada, and Mexico must be carefully justified (and may be disallowed by the funding agency).
• The Fly America Act requires that all federally-funded air travel must be on U.S. flag carriers unless the use of such carriers results in a federally-defined delay when compared with a non-U.S. carrier OR no U.S. carrier serves a particular segment of the trip.   This requirement is firmly enforced; ignoring it can be costly to an individual project director.

Ground Transportation

Ground transportation costs might include mileage (at current mileage rates), a rental car (which also requires careful justification), taxis, or rental of buses for project participants.  

Meals and Lodging

Many travel plans also include meals and lodging when away, or “per diem costs.”   UST recommends that meals not exceed $50 per day.   Federal agencies expect a daily figure for meals and lodging that is in line with their own rates.   The federal government publishes per diem rates for each state and for major cities worldwide.

MATERIALS AND SUPPLIES

Beware of simply providing round-number estimates in this category—round numbers convey to your reviewers the impression that you have not carefully thought through the details of your request.  Carefully consider the items that you will need and quantify them explicitly either on the appropriate budget line or in a separate budget justification page.

Page Charges

If your discipline typically requires page charges for publication of research articles, this is an allowable item for many funding sources.

Copying and Printing

In most cases, you should budget $.08 per copy and provide the reviewer of your proposal with a good- faith estimate of the total number of copies you will need to make.   For special printing or binding projects, contact the Service Center (2-6585) for a more precise estimate of the costs.

Postage and Telephone

These will always be estimated items.   However, it may be useful to think through the number of mailings and the number of addressees that will be involved.   Consider whether bulk mail (>200) is a possibility.   Consider your anticipated telephone usage, calculating roughly 10 cents per minute or $6 per hour for long-distance charges.

CONSULTANT SERVICES

For budget purposes, consultants are independent contractors who provide a specific service; if in doubt about the independent contractor status of a consultant you wish to employ, consult Human Resources. 

• As noted above, an employee of the University of St. Thomas who provides services to a sponsored project is very rarely considered a consultant.   Individuals who are employed by the University should be listed under PERSONNEL, and the grant must provide fringe benefits for each person at the appropriate rate.
• On federal proposals, consultants must be paid according to prevailing market rates in their field.
• Fringe benefits are not charged against consultant services

A NOTE ON MULTI-YEAR PROPOSALS

For initiatives that extend two or more years, it is wise in most cases to build an inflation factor into your budget proposal to make certain that your projected expenditures keep up with rising costs.   You should, however, always consult the agency guidelines to make certain that an inflation factor is allowed.   In most instances, an inflation factor of about 3% per year is reasonable and defensible.

Please note, however, that actual annual raises for UST personnel are governed by UST Human Resources policies; that is, persons employed by the University of St. Thomas are treated equitably across employment categories – regardless of the source of funding supporting their position.  So, even if you have additional funds in your grant budget to give personnel a higher-than-average raise in any given year, you will not be able to exceed the standard institutional pay increases for that year.

INDIRECT COSTS

Otherwise known as “facilities and administrative costs” or “overhead costs,” this allocation is designed to cover the unallocable costs incurred by the University of St. Thomas in connection with your project.

How to Calculate Indirect Costs

At the University of St. Thomas, the prevailing indirect cost rate is 37% of total modified direct costs:

TOTAL DIRECT COSTS: add all of your subtotal costs for personnel, fringes, travel, materials and supplies, and other for each year of your proposed project.   This figure is your TOTAL DIRECT COSTS.

MODIFIED TOTAL DIRECT COSTS: subtract the following exemptions from your total direct costs:
     Equipment purchases
     Capital expenditures
     Tuition remission
     Rental costs (rooms, facilities, laboratories)
     Scholarships and fellowships
     Subgrants in excess of $25,000

Therefore:
Direct Costs minus Exemptions = Modified Total Direct Costs

To calculate indirect costs, multiply your MODIFIED TOTAL DIRECT COSTS by .37

Example

Sam's budget looks like this:

Personnel                                                 $50,000
Fringes                                                      $  3,825
Travel                                                         $  2,500
Equipment                                                $10,000
Other                                                          $  5,000
TOTAL DIRECT COSTS                         $71,325
Modified Total Direct Costs                   $61,325  (total direct costs minus $10,000 for equipment)
INDIRECT COSTS (@37%)                  $22,690  (Modified total direct costs x .37)
TOTAL REQUEST                                   $94,015  (total direct costs + indirect costs)

Waivers of Indirect Costs

All grant proposals submitted by the University of St. Thomas must include a request to recover indirect costs at the full rate of 37% of modified total direct costs (see above).  Exceptions to this policy include:

• When the funding agency forbids the recovery of any indirect costs.   You will have to provide documentation indicating the agency’s policy.
• When the funding agency caps the recovery of indirect costs at a rate lower than the UST rate, use the maximum rate allowed by the agency and provide documentation indicating that the agency has capped the recovery of indirect costs.
• When you have secured an institutional waiver of indirect costs.  While all requests for waivers of indirect costs for projects under $5,000 are automatic; in rare instances UST will provide a waiver of indirect costs on larger projects.