A detailed budget is required with every proposal, even if the sponsor requires a general budget or only a total dollar amount. Before OSU can authorize a proposal, it must be reviewed for compliance with all university, state, and federal policies.
Draft budgets are highly encouraged, but do require two weeks lead time before submission of a final proposal to the Office of Sponsored Programs. Draft budget reviews must necessarily be fit in as time remains after processing proposals. Prior review of a draft budget does not reduce the expected three business day time-frame required for proposal processing and final approval through OSP. Along with your draft budget, a budget justification is important to determine allowable costs in your budget.
- Direct Costs Definition
- Budget Justification Definition
- Estimating Future Year Costs in a Proposal Budget
- Capital Construction Costs
- Computer Use Costs
- Electronic Items (Unique)
- Entertainment Costs
- Equipment Service Contracts
- Fabrication of Equipment
- Fees and Services
- Maintenance and Repairs
- Memberships and Dues
- OSU Services and Testing
- Other Direct Costs
- Participant Support Costs
- Public Relations Activity
- Real Property, Land
- Rentals & Leases (Space)
- Salaries and Wages
- Salaries-Clerical/Administrative Salaries
- Services and Testing
- Subcontracts, Subgrants, Subawards
BUDGET OVERVIEW AND GENERAL COST CATEGORIES
PROPOSAL BUDGET OVERVIEW
The budget is a listing, by category and item, of money needed to conduct a project. It is a project's price tag, a financial mirror of the narrative portion of the proposal. The proposal budget is composed of direct costs, F&A (or indirect) costs, and a budget justification.
Direct Costs Definition
Direct costs are all costs that can be directly attributed to the conduct of the project and are specified in the proposal budget. These costs can be readily identified and are itemized by name and amount.
Budget Justification Definition
A budget justification page immediately follows the budget to explain any item in the budget that may be questioned by the reviewer or any sponsor representative. It is often helpful to indicate how cost estimates were derived for each of the direct cost items unless already obvious. The justification page should be organized in the same order as the budget itself, although not every item in the budget may require justification.
Estimating Future Year Costs in a Proposal Budget
All direct cost budget items should include an appropriate increase for each future budget year in all categories, especially salaries. If the sponsor guidelines specify otherwise, follow the sponsor guidelines. Budgets will be charged actual salary levels and increases regardless of the salary budgeted. In some direct cost categories such as travel or paper costs, the rate of inflation may vary considerably. Use appropriate and reasonable rates of inflation and explain the basis for your inflated rates in your budget justification.
COST CATEGORIES IN A PROPOSAL BUDGET
The following cost categories are associated with various proposal activities. The allow ability for including the cost in your budget is dictated by federal and university policy. Some budget costs are included in the OSU F&A (indirect) cost calculation and are not allowable when listed as direct costs in a proposal budget. Other costs are unallowable by federal policy. The following categories of items are applicable to subawards as well as proposals sent directly to the sponsor from OSU.
Buildings cannot be purchased or constructed on restricted funds without specific sponsor approval.
Capital Construction Costs
Construction projects are defined as projects that add to, or change existing physical spaces. They must also meet the following criteria:
- planning and construction respond to university-wide priorities;
- planning and construction details respond to requirements of government-agency-adopted Uniform Building Code and land use requirements and any special requirements of Facilities Services; and
- records accurately reflect actual use of space.
When is Capitalization Required?
- On construction projects with total project costs of at least $100,000 and increase the future service potential of the asset. See http://www.ous.edu/cont-div/fpm/fixe.55.100.html#.721; section - Distinguishing Capital Improvements from Repairs – for further information.
- Any addition to an existing building/structure that adds square footage, regardless of cost.
- New construction of a separate building or structure, regardless of cost.
Capital Construction costs cannot by paid on restricted funds without specific sponsor approval and identified in the budget as separate line-item(s) If approval is given to construct a building, an 8XXXX plant fund will be established to record the costs.
Capital Construction costs, including architectural design costs are not charged overhead.
Computer Use Costs
Costs included in this category include network, server, and computer/software maintenance charges. Computer operations that do not meet the following criteria may not be listed as a direct charge in the budget.
- Charge is for services over and above that provided to all faculty and staff, i.e. e-mail, communications, word processing, spreadsheets and other common functions.
- The charges are from a unit, which distributes costs to all users (not just grants and contracts)
- In addition, the distribution method has been approved by Business Affairs and listed as an approved fee in either the University Fee Book or OSU Internal Fee Book.
Only three OSU units have received approval for these charges to be shown as a direct cost.
- College of Oceanic and Atmospheric Sciences
- College of Forestry
See Fees and Services.
Electronic Items (Unique)
The purchase of personal digital assistants, laptop computers, watches, digital cameras, video equipment and other unique electronic items with sponsored project funds must be in conformance with OMB Circular A-21, part D.1.
- must be specifically identifiable with a particular sponsored project
- must be properly justified in the text of the invoice payment in Banner as to the direct relationship to the research project
- ownership of these items will remain with OSU
- these items must be maintained on the department's minor equipment/supplies inventory
- appropriate loan forms must be completed if item is removed from OSU locations
Entertainment costs cannot be requested in federal grant proposals per OMB A-21. These costs may be allowed for proposals to non-federal sponsors if specifically approved by the sponsor and the PI provides sufficient detail of how the costs will be used. The costs would be exempt from indirect costs.
Equipment is defined as any piece of tangible personal property with a unit value of $5,000 or more, a life expectancy of more than one year, and which is not consumed in the normal course of operation, unless the sponsor specifies otherwise. Equipment includes both purchase and fabrication of equipment and vessels. (see Fabrication below).If sponsor guidelines differ from OSU's policy, the PI needs to provide a copy of the sponsor guidelines and sponsor guidelines supersede the above.
- Equipment should be listed on the budget with a description and cost of each item.
- The cost to have equipment (capitalized equipment) installed or built should be included with the equipment cost.
- Training costs related to equipment must be broken out under Other Direct Costs - training costs are expense items, not capitalized equipment.
- Software is not considered equipment unless it is included in the purchase price of a computer. If software is listed as a separate item, it should be listed as an expendable supply, not as capitalized equipment.
- On Equipment Lease-Purchase:
- only the equipment cost should be included in the budget, the department must cover the lease-purchase interest costs from department funds
- On equipment lease (not lease-purchase), it is treated as an Other Direct Cost.
- The modification or reconditioning of a piece of equipment outside of the original fiscal year in which it was purchased is not a capital expense and should not be budgeted as equipment. These costs should be budgeted under materials and supplies and charged full F & A costs.
Equipment Service Contracts
Equipment service contracts can be included in budgets if the equipment is also included in the budget (or in the case of continuing awards from the same sponsor). The service maintenance contract cannot be for a time past the end date of the agreement.
Fabrication of Equipment
Definition: Supplies and minor equipment created into an identifiable unit by fabrication and meets the following criteria:
Total finished value =>$5,000 and has a useful life of > 1 year.The ownership or “title-to” code must be the same for the entire fabricated unit. Funding sources cannot be mixed so part of the fabricated unit is owned by the Federal Government or another outside entity and the remaining part(s) is owned by the university. Free standing, movable as an entire unit, not permanently attached to a structure, and will not lose its identity when installed in other property. Unit must be complete in itself. It will be added to, accounted for, and removed from capital inventory as one unit or record. All pieces stay together until entire unit is sent to Surplus.
Assembled parts must be integrated, permanently attached to each other, and essential in the performance of the unit. A basic schematic diagram with a description must show how the parts are integral to the unit.
A fabricated unit with all assembled parts must be physically found in one location at all times. Parts which do not meet this requirement are considered individually for capitalization.
If fabricated, assembled or constructed equipment that meets the above definition will be capitalized and added to the equipment inventory. The faculty member and department will be responsible for pre-approval prior to purchasing of any parts or items for the fabricated unit. This includes a basic schematic diagram of the proposed fabricated unit with explanations of the integration of the parts. See following link to get pre-approval form. http://oregonstate.edu/dept/budgets/PROManual/PRO210.htm
Fees and Services
These costs are for professional fees, e.g., consulting and legal fees, services rendered by commercial firms; service charges by institutional service departments; and fees assessed by other state agencies. Generally, all services must be performed within the award period. Consulting costs are normally identified separately in the budget and may also be called Personal Services Contracts (PSC). OSU employees and graduate students may not be listed as consultants on OSU budgets.
Entertainment and Interdepartmental Refreshment costs are not an allowable budget item. Hosting Groups and Guests, meals/expenditures for hosting official guests, can be directly charged to sponsored project funds when hosting a speaker or other activity appropriate to the award.
Maintenance and Repairs
Maintenance and repairs cover buildings, grounds, and equipment. They are intended for ordinary expenses of a recurring nature, including maintenance contracts. Outside labor charges for maintenance and repair services are included.
- Building repairs should not be charged to research projects. These expenses are included in the F&A rate.
- Equipment maintenance costs are allowable as a direct cost for those items that are used in the project.
Any item that appears to be general purpose or that will outlast the project cannot be direct charged in most circumstances. Examples include tires and automotive batteries.
Memberships and Dues
Normally, memberships are considered to be institutional and not individual (personal). To be a direct expense, the membership must be necessary toward the goals or functions of the program. OMB Circular A-21 require that all expenses charged to grants and contracts be identified with the sponsored work.
OSU Services and Testing
Fees charged for services or testing by OSU labs or other OSU units are allowable if these costs are listed in the OSU Fee Book.
Other Direct Costs
This category is used for all remaining costs, or may include some of the prior categories if the sponsor so defines.
Advertising expenses are allowed as a direct cost if recruiting for a permanent position (not temporary) used exclusively on the project. Advertising for GRA recruitment is not allowed.
- Computer software and hardware upgrades
Allowable if used in the project.
- Utilities and waste disposal
Reminder: utility and building operations/maintenance costs are normally not allowed as a direct charge to sponsored agreements where the activity takes place at an OSU-owned facility. Utilities are only allowed when the activity is off-campus and when the utility is separately metered. When the activity is based on-campus, the utility cost is part of the cost recovery for indirect costs. The exceptions to allowing on-campus charges to utilities include:
- The activity must be an exceptional unlike circumstance. This currently includes: wave tank, Center for Fish Disease Research, Marine Freshwater Biomedical Sciences Center, and the Radiation Center. Each of these four areas has exceptional utility costs, which are separately metered.
- The proposal must include a justification and be approved by the sponsor.
- Tuition Remission, Research Assistant/Graduate Teaching Assistant
Rates that are established presume nine credit hours for summer session and full-time status (12-16 hours) during the academic year. For the summer session, add the additional amount shown for each hour over nine hours. The student must pay any hours above the 16 hours in the summer session. Full tuition remission must be charged for all GRA and GTA appointments. Tuition remission not allowed by a sponsor is a cost-share expense that must be identified in the budget and on the proposal routing form. Appointment must be between .2 FTE and .49 FTE GRA tuition must correspond with the terms of appointment and salary included in the budget period.
- Tuition on fellowships (non-GRA/GTA appointments)
Tuition on fellowships must be at a rate appropriate for the person applying (i.e. resident, non-resident, international). Full tuition remission must be charged unless the following exceptions apply:
- When the sponsor does not allow tuition as a direct charge it must be shown as a cost share.
- When the GRA FTE is split between two budget indexes, tuition should be split proportionately.
- Graduate students can be paid hourly as a student worker, but will not be appointed as GRA, will not have tuition paid and will not receive Recruitment and Retention Differential.
- Graduate students can be both hourly and on GRA/GTA appointments as long as:
- it is specified in the budget
- the student does not go above .49 FTE
- Student fees (required institutional fees)
Budgets do not normally include GRA (other institutional) fees. These are considered personal in nature to the student and not a tuition cost. The ONLY exception to this is on a fellowship (the individual would have no GRA appointment) or training grant where the sponsor guidelines state that fees are allowable expenses and that the student is paid a stipend rather than salary.
Participant Support Costs
Participant support costs refer to costs paid to or on behalf of participants, trainees/Fellows attending conferences, meetings, symposia, training activities and workshops. A participant must be an individual who is attending in the context of a "student."
- Participant support costs may include transportation, per diem, stipends, supplies, conference fees, and other related costs (registration fees, books, instructional materials) for participants only. Honoraria and travel for speakers and receptions are not considered participant support costs.
- Employees of OSU, including Graduate Research Assistants (who are considered employees), may be considered a participant under the definition above, but should not be included under participant support cost in a proposal budget because they are an OSU employee. Their costs should be incorporated into other budget categories (i.e. travel).
- Participant support costs (non-employee participants) are exempt from indirect costs
Public Relations Activity
Public relations and fundraising activity costs should not be placed on sponsored project funds.
Real Property, Land
Land (real property) cannot be purchased on restricted funds without specific sponsor approval.
Rentals & Leases (Space)
Office space or buildings that are utilized for non-OSU purposes are not allowed as a direct cost item or cost share item. However, if space (or buildings) is rented and that space is used exclusively for research or programmatic uses (other than administrative), this is an allowable direct cost (F&A would not then be charged to this item). Justification and explanation of rental space usage must be included in the budget justification.
Salaries and Wages
Salaries and wages include an itemization of all OSU employees and students involved with the activity and who are either paid from the sponsor budget or who are cited for cost sharing. See Budget-Personnel for further details on the salary and wage category.
- NSF 2/9 Rule - Allows faculty to budget only two months' salary in the summer for those faculty who have nine-month academic year appointments.
- Salary Caps - The National Institute of Health has a salary cap, an amount equal to Federal Executive Pay Level I. Department of Defense (DOD) also imposes salary caps for certain programs. Budgeted salaries must conform to sponsor restrictions and salary in excess of imposed caps paid by non-federal sources.
Salaries - Clerical/Administrative Salaries
Salaries of administrative and clerical staff are normally not allowable as a budget item as they are included in the F&A rate calculation. Direct charging of administrative and clerical staff may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and the individuals involved can be specifically identified with the project or activity. OMB Circular A-21 defines major as: large grants (e.g. center grants and program project grants) which may require a larger than normal amount of administrative and/or clerical support. In order to be an allowable direct charge, one of the following criteria must be true:
- It is a clerical position performing program related work.
- It is a major program.
- The program requires making an unusual amount of travel arrangements.
- The funding is for a Center or Institute on campus that has an administrative core component
If any of these criteria are true, the following must be included in the proposal that is submitted to the Office of Sponsored Programs and Research Compliance:
- The PI must write a justification statement regarding the duties that will be performed and why they fit the above criteria.
- The salary and fringe benefits must be specifically identified in the budget.
- OSU Administration must approve the salary/budget in advance, before the proposal is submitted to the sponsor.
Services and Testing
"Research supplies" are allowed when directly related to technical use on the project (e.g., computer paper, research notebooks, survey forms). General office supplies (e.g., pencils, letterhead paper, memo pads) are not allowable budget items (these items are accounted for in the F&A rate calculations). In no instance should research supplies be requested to replenish an inventory (supplies purchased are to be used with the activity).
Subcontracts, Subgrants, Subawards
These are subaward agreements written by OSU to another entity to perform a portion of the sponsored agreement. Go to Subawards for additional information.
Travel costs follow the OSU policies for travel. Foreign travel is eligible to use the U. S. Department of State Foreign Per Diem Rates (also available on the OSU travel website). For travel rates and policies see the OSU Travel Website.
The U.S. Department of State provides information on travel advisories for foreign travelers visiting other countries.
All international travel using federal funds must be by U.S. flag air carriers if service by such a carrier is available. Cost is not a factor in determining availability. The first or last leg of travel from or to the U.S. must be by a U.S. flag air carrier in almost all instances. Business class is permitted. See section 602 Fly America Act.