Budget Information

Overview

A cardinal principle to keep in mind when preparing a proposal budget is that the elements of cost must be necessary to accomplish, and directly benefit, the supported activity.

Direct costs are those which can be specifically identified with a sponsored project, or that can be directly assigned to such activity relatively easily with a high degree of accuracy.

Unlike direct costs, indirect costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project. Costs for services by Purchasing, Human Resource Services, and the Controller's Office; use of office and/or laboratory space and equipment; heat, light, power and janitorial services; time spent by academic departments, deans' offices, the ORSP Office, and Library Services, etc., all contribute indirectly to the sponsored-project. Some projects require extensive use of the institution's services and facilities, other involve minimal use. The intent and purpose of indirect costs is to reimburse the institution for the services/facilities used by all sponsored projects during a fiscal year period therefore do not interpret that the indirect cost assessed to a project are the actual costs for a specific project.

A budget narrative should be appended to the budget cost-estimate to fully identify and/or explain unusual items or activities. The need for the use of consultant services, items of equipment having a unit cost of $5,000 or more, or the necessity for foreign travel are examples of unusual items or activities.

A brief overview of the major cost categories for sponsored projects is as follows:

Salaries/Wages
Units are expressed as hours, days, months or as an academic or fiscal year, depending upon the type of employee. Employee salary compensation rates change annually as of October 1 or, for faculty, with the beginning of the academic year. It may be necessary to consider inflationary adjustments that may be effective either July 1 or October 1.

Fringe Benefits
Fringe benefits apply to all employees and represent that employer share of fringe benefits including, when applicable: F.I.C.A. (Social Security), retirement, unemployment insurance, health insurance, workers' compensation insurance, and sick and annual leave costs. Contact the ORSP Office for rates applicable to your proposed employees.

The components of the fringe benefit cost category most frequently change either January 1, or July 1, however, some items may change without notice.

Employees registered for six (6) credits or more will be classified as students and as such carry an extremely low fringe benefit rate.

Travel
Identify all travel associated with the project activity. Vehicle mileage rates vary with the type of vehicle used. Per-diem (meals/lodging) rates vary dependent upon whether travel is "in-state" or "out-of-state." Contact the ORSP Office for current rates.

Equipment
Equipment is identified as any item having a unit cost of $5,000 or more and a useful life of one year or more. Identify all items of equipment you plan to purchase for the project which the University does not currently have or which otherwise are not available for your use, but which are necessary for the completion of the project. When establishing your equipment budget, allow for inflation price adjustments, cost of freight from the supplier to your facility, and any other costs associated with procurement and installation.

Should building alterations or renovation be necessary to accommodate new equipment (including electrical or mechanical considerations) please contact the ORSP Office.

Supplies/Materials
This category includes standard items to be used or consumed during the course of the project, such as chemicals, glassware, paper products, disks, and xeroxing costs.

Contracted Services
Include here the estimated costs of services to be provided by others on a per-sample or other unit-price basis; special testing, professional or consultant services, including travel; or subcontracts to be issued for a part of the sponsored project activity.

If you are collaborating with an individual from another organization, firm, institution, or agency, it will be necessary to secure documents reflecting that firm's approval, proposed budget, and assurances of compliance for inclusion with your project proposal. Contact the ORSP Office early regarding minimum requirements.

Other Direct Costs
Include under this heading those cost items that may be unique to your proposed activity, such as: communication costs, computer mainframe use, repair and maintenance costs for equipment, etc.

Indirect Costs
The indirect cost rate to be assigned to a sponsored project will be determined by the location of the project, either on-campus or off-campus, and further, by the source of funds (state, federal, or private). Projects supporting instructional programs will normally carry an indirect cost rate which is less than those projects supporting a research activity. Contact the ORSP Office for the appropriate rate.

Other Cost Items
Items which may be necessary for the successful completion of your project not identified elsewhere but which may warrant consideration for your specific project may include the following:

*Discuss these items with ORSP personnel when reviewing your draft budget. They may be necessary for your project.