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Preparing a Project Budget

We in the Office of Sponsored Programs and Undergraduate Research (SPUR) are available to assist Mary Baldwin faculty and staff in the preparation of project budgets and have the responsibility of reviewing all proposal budgets before they are submitted to an outside sponsor. We urge you to begin preparing your budget early, in tandem with project planning, to ensure that the budget and the project plan are compatible, comprehensive, and realistic.

Sample budget forms from several agencies may be found here, and a recent article from the Chronicle of Higher Education may also be of help.

A general explanation of budget categories appears below.  Use this as the basis for your draft budget, but remember that the final budget needs to be reviewed and approved before submission.

Salaries and Wages

For individuals currently under contract at the College, the amount to be charged to a project is computed as a percentage of “base salary” (the individual’s FTE or full-time equivalent salary). This percentage is based on a realistic assessment of how much time will be devoted to the project. Summer salary for faculty is often limited by sponsors to 2/9 of an academic year salary. Check your program guidelines.  As of  2014, individuals other than students who are hired on a temporary basis for the proposed project must go through an “on-boarding” process with the personnel office.  Check with SPUR for details. If salary is charged to a project, fringe benefits are also required.

Fringe Benefits

Fringe benefits cover the College’s contributions to social security (FICA); group medical insurance; term life insurance; long term disability insurance; the tuition assistance program; the TIAA-CREF retirement plan; the early and phased retirement plans; unemployment insurance; worker’s compensation; and the vacation and sick leave plans. Fringe benefits for full-time employees should be computed at 20% of the salary amount. “Full-time” means “working 0.60 FTE or more per calendar year” (1000 hours). Part-time employees are not eligible for College benefits, but the College’s contribution to FICA must be included in the project budget. FICA is equal to 7.65% of salaries and wages. Honoraria paid to external collaborators are exempt from fringe benefits if they are considered independent contractors.

Supplies and Materials

Supplies and materials are consumables and other minor items bought specifically for the project. Be sure to budget for all materials and supplies that you would not need were it not for the project. This includes items purchased through MBC Support Services as well as those bought through outside vendors. A standard rule of thumb is to allow $25 per person per month for basic office supplies. If you will be using a computer printer, be sure to add enough for replacement print cartridges, which can be expensive. Other project-specific supplies may vary greatly in cost, and may include books, instructional materials, videos, film, and laboratory materials. These costs should be carefully estimated. Sponsors vary in the amount of detail they require in the budget breakdown for supplies and materials. Check your guidelines.

Equipment

The distinction between supplies and equipment is that items in the latter category are generally more expensive and more durable in nature. The College’s threshold of capitalization is $1,000 and seven years expected life. Thus, all durable items purchased for the project that have a value in excess of $1,000 will be considered to be equipment by the College – they will be tracked and inventoried as part of the College’s assets. Sponsors may have different definitions for the term, so check your guidelines to determine whether an item should be included in the “equipment” or the “supplies and materials” category in the project budget. Sponsors also vary in their policies regarding who retains title to equipment after the grant period; again, check your guidelines or consult with the program officer to determine who retains ownership at the end of the grant period.

Consultants

Consultants provide specialized expertise for a certain period of time. Consultants are commonly used for project evaluation and may also be used to provide special content knowledge or review of materials produced through the project. They may also give special presentations or lectures. Consultants are generally paid at a daily rate and are often reimbursed for travel expenses and per diem (see below). FICA is not charged for consultants. Some sponsors limit the amount that a consultant can receive per day.

Travel

Travel costs include air and ground transportation and food and housing costs. Some sponsors have a standard allowable per diem to cover both food and housing costs; others have a standard per diem for food only; and still others require itemized budgeting and expenditures for both categories. For federally funded projects, you may use the federal mileage rate for auto use (see link for the current rate). For projects submitted to non-federal sponsors, use the college rate.

Remember to budget for student travel when, for instance, students will participate in conference presentations. All travel costs should be calculated on the least expensive means of travel. Check agency guidelines carefully to make sure that travel expenses are allowed and for any special requirements they may have. Some agencies do not allow or restrict international travel.

F & A Costs (Indirect Costs/Overhead)

F & A (facilities and administrative) costs, indirect costs, and overhead are interchangeable terms for the institution-wide costs of supporting a project that cannot be easily separated out and charged to that project. The College’s federal indirect cost rates are periodically fixed through negotiation between the college and the Department of Health and Human Services. The current rates are:

7/01/12 to 6/30/16  On-site projects   28.2% (salaries and wages base)

Off-site projects   14.5% (salaries and wages base)

Indirect costs at Mary Baldwin College are computed as a percentage of the total salaries and wages charged to the project, excluding fringe benefits. If, for instance, a project included $10,000 in salary for the project director and $5,000 for a research assistant and was to be conducted on campus, the “salaries and wages base” would be $15,000 and the total allowable indirect costs would be $4,230, even if the total direct costs of the project were $50,000.

This is the rate used for most federal sponsors. However, some agencies have policies that limit indirect costs in other ways. The U.S. Department of Education limits indirect costs to 8% of total direct costs. Training programs at the National Institutes of Health also limit indirect cost recovery at 8%. Foundations sometimes disallow indirect costs entirely. As always, check your guidelines,  consult with your program officer, and ask questions of the SPUR Offfice.

Cost Sharing

Some sponsors require matching funds or cost sharing. Cost sharing may be in-kind (costs that are already budgeted) or cash (“new” money). ALWAYS check with SPUR before you begin working on a proposal that will involve cost sharing of any kind.

A final note: be sure to check your arithmetic.