Budget Development Guidance
- Salaries for existing UK employees should be based on current actual salaries plus a 3% raise, unless salaries are being prorated to take into account the portion of the project period that will occur in the current fiscal year and would not include the raise provision. Projects should at minimum provide for salary for the principal investigator.
NOTE: NIH currently only allows for a 2% escalation in costs (NOT-OD-11-068)
- Salary escalation recommendation for raises is a 3% increase for each year of the grant. The initial year can be prorated for the portion of the project that will occur in the current fiscal year.
- Administrative and clerical staff are unallowable unless project meets UK Costing Guidelines for Sponsored Projects, as required under OMB Circular A-21 F.6.4.2.
- Research Assistants should be budgeted in the proposal based upon the normal rate paid to RAs in the individual's department or program. If a RA is budgeted in a proposal, graduate tuition must also be budgeted under "Other" expenses. See the "Other - Tuition" discussion below.
- New Positions for guidance in determining estimates for new positions contact UK’s Human Resources Development; salaries for new positions should be consistent with the salaries for similar positions and responsibilities across campus.
- Intra-university consultants (overload) should only be used in unusual circumstances and should be budgeted under personnel. On federal projects, the intra-university consultant must not be in the same department as the project or must be located at a remote location from the project (see OMB Circular A-21 J.8). Intra-university consulting rates are limited to the faculty or staff member’s current salary on an hourly basis plus a 3% annual raise projection. There are 2,080 hours in a 12 month UK appointment; 1,560 hours in a 9-month academic year appointment. Fringe benefits must be calculated for intra-university consultants.
- Fringe Benefits should be calculated according to the table located on your useful information page. Follow this link for all the details.
- Non-salary escalation factor should be projected for all subsequent years of the project based on a 5% increase in costs.
NOTE: Some sponsors may limit escalation. Please review sponsor policy and the funding opportunity.
- Domestic Travel allowance costs should be reasonable, necessary, and based on university rates.
Mileage: 55.5 cents per mile
Per Diem Rates: Reimbursement of Travel Expenses
- Foreign travel on federally funded projects requires that budget estimates and charges be made using a U.S. airline (American flag carrier).
- Equipment is defined as nonexpendable, tangible personal property having a useful life of more than one year and costs in excess of $2,000. If rebudgeting from another direct cost item, review award terms and conditions to ensure that agency prior approval is not required for the purchase of equipment. When purchasing equipment note that the funds must be budgeted under "Other - Waste Recharge" which is more fully described below.
- Computer Equipment ($1,000 or higher) and High Risk Miscellaneous Equipment (any value) is unallowable as a direct costs unless justified based on UK Costing Guidelines for Sponsored Projects. Costing Guidelines specify that a direct cost computer equipment justification must meet the following conditions:
1. be specifically identified with the project,
2. be required to fulfill the scientific objectives,
3. have a preponderance of use (75% or greater) on the project, and
4. be specifically listed in the proposal budget and be awarded.
- General Purpose Equipment is typically an unallowable cost under UK Costing Guidelines and is defined by the use of the equipment not being limited only to research, medical, scientific or other technical activities. Examples of general purpose equipment include office equipment and furnishings, air conditioning equipment, reproduction and printing equipment, motor vehicles, and automatic data processing equipment.
- Supplies necessary for the conduct of the project should be budgeted.
- Office supplies (legal pads, folders, pens, etc.) are unallowable unless the project meets the parameters set forth in the UK Costing Guidelines for Sponsored Projects (OMB Circular A-21 F.6.4.3 and Exhibit C). Examples of office supplies which may be charged directly are special markers need to label refrigerated samples or providing notebooks for a large number of workshop participants.
- Software is unallowable unless it meets the same conditions that permit the allowability of the purchase of computer equipment, see above.
- Consultants provide a service or product for the project and their services are secured by using a Personal Services Contract (PSC). The Project Director or Principal Investigator does not control how or when the consultant performs the work. If they do, the person should be listed under Personnel. Some federal agencies have maximum rates for consultant compensation; refer to the specific agency’s guidelines for further guidance. (For further guidance on the definition of a consultant, review IRS publication 15-A, Form SS-8, Ruling 87-41.) Consultants cannot be UK employees.
- Contractual expenses include any contract for services you expect to let if the proposal is funded. Contractual expenses also include any subcontract whereby funds will be supplied to another university or entity as a result of this award. In most instances when a proposal includes a subcontract a separate budget should be submitted on sponsor forms for the subcontractor and the subcontract total is then listed as a lump sum (including Facilities and Administrative [F&A costs]) on the contractual line in UK’s budget. Subcontractors are entitled to request F&A costs up to the amount allowed by sponsor guidelines or their negotiated indirect cost rate agreement. (Reminder: only the first $25,000 of any one subcontract should be included in the Modified Total Direct Cost Base when calculating full indirect.)
- Training Participant Costs are allowable but some agencies restrict the movement of trainee costs from the training participant budget line to other cost objectives without prior written approval by the agency. Review sponsor guidelines for rebudget requests that will transfer funds out of participant costs.
- Other - Postage is typically an indirect cost item, but may be allowable under UK Costing Guidelines if, for example, there is a requirement to mail surveys, conference registration packets, or manuals.
- Other – Telephone charges other than long distance are typically an unallowable costs based on the UK Costing Guidelines, but may be appropriate if a dedicated line is necessary solely for the performance of a sponsored project and will be removed at the conclusion of the project.
- Other – Subscription charges are typically an unallowable direct cost item unless justified under the UK Costing Guidelines.
- Other - Tuition should be budgeted any time a graduate research assistant position is requested in a proposal. If the research assistant is working less than 20/week/year on the project tuition should be prorated. Tuition should not be budgeted for summer sessions. (Reminder: tuition should not be included in the Modified Total Direct Cost base when calculating indirect costs).
For 20 hr/week research assistants tuition is summarized here.
- Other - Waste Recharge allowance should be budgeted for any chemical or equipment to cover the cost of disposing bi-product waste. The current waste recharge rate and the GL Accounts to which it applies can be found here.
- Indirect Costs Charged as Direct Costs in federal proposals need to have an asterisk next to the items and need to be supported by a CAS allowable justification statement. The asterisk should then be referenced at the end of the budget justification with the following statement These costs are normally treated as indirect by the University of Kentucky, but are being requested due to a special purpose or circumstance as provided for under the institution’s costing guidelines and DS-2 disclosure statement. The CAS justification need only be included in proposals that are to be funded with federal funds.
- Total Direct Costs are the total costs from all items budgeted in the proposal. Direct Costs are costs that will be used to directly support the program activities.
- Modified Total Direct (MTD): Total direct cost minus exclusions is used to determine MTD. MTD excludes equipment, capital expenditures; charges for patient care, tuition remission, rental costs of off-site facilities, scholarships, and fellowships, as well as subcontract costs in excess of $25,000.
- Facilities & Administrative Costs (Indirect Costs) are the costs that cannot be directly associated with the grant, but are incurred as a result of the university taking on the proposed activity. The University’s indirect costs are based on actual university costs, with the rate being derived from a standard analysis of the university’s annual expenses. Examples of indirect costs are university security, facility space usage, utilities, services provided by grant and contract development, purchasing, payroll, and a host of other factors. F&A cost is calculated based on the MTD total (see UK’s negotiated F&A rates). The rate applied to the specific project should be consistent with sponsor guidelines and the type and location of the project activities, unless a waiver of indirect cost has been approved by the appropriate signatory officials (follow this link for details), demonstrated on the Internal Approval Form. If the sponsor guidelines limit indirect to less than the UK negotiated rate the F&A percentage should be applied to total direct cost, unless the sponsor has provided other guidance.
- Total Cost includes total direct costs plus F&A.
- Cost sharing. Expenditures should be:
Documentable (mandatory cost sharing that is not faculty effort and reportable on the Faculty Effort System, will require the establishment of a separate cost sharing account).
Required for the project.
Reasonable in relation to the proposal.
Cost sharing can be mandatory, required by sponsor guidelines, and is a condition of the award or cost sharing may be voluntary. Voluntary cost sharing is not a sponsor requirement, but is committed because it is deemed to be necessary to the success of the proposal.
- Cost sharing Items: Cost share items must be allowable direct cost items; or items that would normally be classified as indirect costs but are being justified as direct costs.
F&A underrecovery due to written agency guidelines limiting F&A should be used as part of the cost sharing contribution, unless prohibited by agency guidelines (Example: US Department of Education prohibits the use of unrecovered indirect cost on their training programs that limit indirect to 8%). F&A costs associated with UK’s cost share commitments can also be used as part of the project’s cost sharing.
- Program Income on any project expected to generate funds should be estimated and used in building the project costs total. Further guidance on allowable program income uses is available in OMB Circular A-110 C.24 and sponsor specific guidelines.
The information provided here should be used as a general guide in all instances. When an agency provides specific budgetary directions those directions should be followed or when UK Costing Guidelines for Sponsored Project provides more specific guidance than outlined here that guidance should be followed. For determining assignment of item as a direct cost or indirect cost pool item see the expenditure object codes in the UK Business Procedures Manual E-17-8 and the FRS Handbook.