Budget Preparation

The format of a proposal budget is determined by the prospective funding agency (sponsor).  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 to an external sponsor.  

Though the budget submitted to the potential sponsor will be in the format that the sponsor specifies, we will usually prepare an internal budget in a standard format to be used for the internal approval process.  The standard budget format facilitates the approval process by placing costs in standard buckets on the budget and making review easier and faster.  The internal budget will also include all project costs, including those costs that may not be included in the sponsor-specified budget format.

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

UST as a Subawardee

When UST is a subawardee on another institution’s proposal to a sponsor, our proposal is prepared as a proposal to the prospective prime awardee institution for them to include in their proposal to the prospective prime sponsor.  All budgeting and internal proposal approval rules remain the same.  For example, you may have a colleague at the University of Antarctica who is preparing a proposal to the National Science Foundation, and they want to have you complete part of their scope of work for the overall project.  You will prepare a budget and scope of work for your part in the overall project, and UST will submit your proposal to the University of Antarctica.

PERSONNEL COSTS

Salary charged to a project is always a function of institutional base salary (IBS). IBS constitutes that salary received by a faculty member as remuneration for their standard contract workload, and is usually expressed as a monthly rate for purposes of proposal budgets. IBS does not include overloads for J-term, summer teaching or similar supplements to salary. IBS does include supplements for serving as chair or similar long term appointments (though the nine month rule described below becomes 12 for these amounts). The discussions below assume 1.0 FTE appointments. For people with less than 1.0 FTE appointments, the amounts will be pro-rated.

Calculating UST Faculty Salaries During the Summer:

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.

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).  The nine month rule applies for most faculty, but there are some instances (e.g., the Law School) where a different rule applies.  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. 
  • The University of St. Thomas allows most 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 (summer or otherwise) to grant projects without special approval.

Example:

A faculty member will work the equivalent of about two weeks each summer on their grant project over the period June 2022 to May 2025 (a three-year grant).  

Annual salary for 2021-22 is $80,000. To cite this effort and get paid for it, we must tell the sponsor that the faculty member will spend two weeks each summer on the project and calculate the value of their time according to their salary during the base academic year. Therefore, the budget line for this faculty member for summer 2022 should be calculated:

$80,000/9 months = $8,889 (one month of academic salary)
Two weeks = $4,444 (1/2 of one month of academic salary)

The budget line for Sam should therefore read: Sam Smith [.50-months @ $80,000 per year] $4,444

It is typical to apply a cost of living adjustment (COLA) to a multi-year proposal budget. The standard starting point for the COLA is 3%, but another rate can be used.

Calculating UST Faculty Salaries During the Academic Year:

In some cases, it is necessary to cite faculty effort during the academic year, when most UST employees are already committed to 100% effort in their regular positions. In these cases, grantseekers must buy out some of their regular academic appointment.  The decision to buy out academic time requires a conversation with your chair and dean before the appropriate budget can be constructed.  That conversation will determine a) if a buyout is possible; b) whether or not a course release(s) will occur; and c) what the structure of the budget will look like.

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 IBS. 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 who already has a full-time, 12-month position at UST is done by dividing the person's annual salary by 12 and multiplying that number by the number of person-months to be spent on the sponsored project.
  • No staff person may be employed more than 100%.
  • When 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:

Caitlin intends to hire a lab assistant for 10 hours per week throughout the calendar year. This equates to 3 person-months. Caitlin determines, after consulting with Human Resources, that the lab assistant's annual salary will be $45,000. Caitlin should calculate the lab assistant's grant salary at: $45,000/12 = $3,750, times 3 months = $11,250 and the budget line should read:

TBA (Lab Assistant) [25% time @ $45,000 per year] $11,250

UST Faculty Serving as Internal Consultants

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 Uniform Guidance 2 CFR 200.430.h.3: “Intra-IHE consulting is assumed to be undertaken as an IHE obligation requiring no compensation in addition to IBS...”
  • Such payments are allowed only “in unusual cases where...such consulting arrangements are specifically provided for in the federal award or approved in writing by the federal awarding agency ."
  • 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 based on IBS.

Calculating Students' Salaries on Grant Proposals

Undergraduate and graduate students should be employed at an hourly rate.  Check the current rates for student employment (please note that the state of Minnesota and the cities of Minneapolis and St. Paul have enacted legislation that will increase the minimum wage at several times over the next few years, with a minimum wage of $15.00 per hour for St. Paul and Minneapolis in July 2023). 

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.  You must consult with Human Resources prior to budgeting for any student assistants from outside of UST.

FRINGE BENEFITS

Faculty

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

 

Regular Faculty

Adjunct Faculty

Part-Time Faculty & Staff

Academic Year

35%

$500

8%

Summer Only

8%

8%

8%

UST 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:

 

Enrolled in at least one course

Not enrolled in at least one course

Academic Year

0%

8%

Summer Only

0%

8%

Twelve-Month Appointments

Fringe benefits for persons on 12-month appointments should be calculated at 35% for all 12 months of the fiscal year.

TRAVEL

You should request funding only for travel that you absolutely need to carry out your proposed project.  Agencies scrutinize travel requests very closely.  In most cases, you will be asked to distinguish between domestic travel and international travel.

Rules to Consider:

  • Airfare should be calculated at round-trip, economy class rates. 
  • Travel outside of the United States 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.  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 for each state and for major cities worldwide. 

Per UST policy, the university does not use per diems. Only actual expenses incurred that are reasonable and necessary and appropriately substantiated will be covered by UST. All individual and group travel for faculty, staff and students for air, ground transportation, and hotel (except conference hotels), must be booked with St. Thomas' Preferred Travel Vendors.

EQUIPMENT

At the University of St. Thomas, equipment items that cost less than $5,000 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. 

SUBAWARDS

A subaward becomes necessary when you have one or more colleagues at another institution(s) that will perform part of the scope of work for your proposed project. You will work with your colleague (their Principal Investigator) at the other institution to define the scope of work that they will perform. Their institution will then produce a budget to perform that scope of work. Their budget will include all their costs (including F&A costs) to perform the scope of work. The sponsored programs office at the other institution will convey their scope of work and budget (i.e., their proposal) to the UST sponsored programs office.

You will include the subawardee proposal in your proposal to the prospective sponsor. The prospective subawardee’s scope of work and budget should be included with the documents routed for internal approval of your overarching proposal to the prospective sponsor. For your proposal budget, the first $25,000 of each subaward is included in the base for calculation of F&A costs - any amount that exceeds $25,000 for each subaward will be excluded from the base for calculation of F&A costs.

OTHER DIRECT COSTS

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. 

Consultant and/or contracted 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 no more than prevailing market rates in their field.
  • Fringe benefits are not charged against consultant services

Your project may require contracted services such as testing or similar 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.

PARTICIPANT SUPPORT COSTS

Participant support costs are incurred when payments are made to individuals to encourage their participation in a project activity. They are not salary/compensation costs, so by definition, cannot be paid to University employees. An example of participant support costs would be amounts paid to high school students to participate in a program or activity related to a funded project in which that participation is used to gather data about the effectiveness of that program.

INDIRECT COSTS

Otherwise known as “facilities and administrative costs” or “overhead costs,” this allocation is designed to cover the general costs for space, equipment, utilities, and administrative services (including your college and department) 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 41.4% of modified total direct costs (MTDC):

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 exclusions from your total direct costs:

  • Equipment purchases
  • Capital expenditures
  • Tuition remission
  • Rental costs (rooms, facilities, laboratories)
  • Scholarships and fellowships
  • Participant support costs
  • Amount of subgrants/subawards in excess of $25,000

Therefore:
Direct Costs minus Exclusions = Modified Total Direct 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 41.4% 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. 
  • Since the University of St. Thomas does not wish to put itself in the position of subsidizing for-profit entities, reductions of indirect costs on proposals to for-profit companies are not allowed.