BASICS OF PROPOSAL BUDGETING
SPONSOR GUIDELINES SHOULD ALWAYS BE CONSULTED FOR SPECIFIC DIRECTIVES ON BUDGET PREPARATION. THE FOLLOWING REPRESENTS GENERAL GUIDANCE.
The budget is the financial plan for the project or program. It includes both the sponsor and non-sponsor share of the total project cost. Proposed project costs are comprised of allowable direct costs, facilities and administrative (F&A) costs, and cost sharing. Allowable costs are those that are reasonable and allocable to the sponsored project and allowable under University and sponsor policy.
The budget should be subdivided into periods of twelve month duration (unless partial year funding is anticipated). If cost sharing is included, each budget period should include columns for both Sponsor and University costs.
A budget narrative (Narrative) should be prepared to explain how the budgeted costs relate to the project. The Narrative should provide sufficient detail to allow the sponsor to determine whether the proposed costs are reasonable and appropriate. Key elements to include in the Narrative are:
- A detailed justification of the expense or service
- How the expense relates to and benefits the project
- The anticipated cost
- The time period in which it will be utilized
- Other information that will aid the sponsor in evaluating the proposed item
BUDGET TEMPLATES
- Modified Total Direct Costs (MTDC) is applicable to many Federal Sponsors and utilitizes the University's negotiated indirect cost rates.
- Total Direct Costs (TDC) is often applicable for sponsors that limit the rate that is applied for indirect cost recovery.
PERSONNEL EXPENSES
Salaries:- The salary category should include the names of all individuals who will be involved in the project, if known, otherwise use To Be Named (TBN) and job classification. Dependent upon specific sponsored guidelines either the percent effort or person months that will be applied to the project should also be shown. Depending upon agency limitations, an appropriate inflation rate (e.g., 3% - 5%) should be used to determine salary requirements beyond the first fiscal year.
- Guidelines should be consulted for agency-specific salary caps.
- The salaries of administrative and clerical support staff are normally classified as indirect costs and are not allowable costs. It may be appropriate to charge these costs to a major project where administrative and clerical services can be explicitly budgeted to a major project, and the time and effort of the staff involved can be specifically identified with the sponsored project (see Direct Costs and OMB Circular A-21
for further clarification as to what constitutes a "major project"). Support for administrative and clerical staff should be detailed in the budget narrative to provide the sponsor with adequate information to evaluate whether these costs are allocable to the project. See “ Business and Financial Policies and Procedures ”
Fringe Benefits:
- Fringe benefits are charged as direct costs to the project.
- The most current fringe benefit rates should be used.
- The most current University rates may be found at the Office of Business and Financial Services .
NON-PERSONNEL EXPENSES
Consumable Materials and Supplies:- Consumable supplies (with life expectancy of one year or less) are items used exclusively in support of project objectives. See “Business and Financial Policies and Procedures Chapter 16 ”
- It is generally acceptable to sponsors to provide a breakdown of materials and supplies by broad categories as opposed to the detailed listing of individual items.
- When supply items are purchased to support the multiple activities of project personnel, they are considered to be indirect costs and cannot be charged directly to sponsored project funds. Such items would include University stationery, toner, pens, tablets, file folders, staples, paper clips, etc. (office supplies).
Travel:
- Costs for travel, lodging and subsistence may be charged on, a) an actual cost basis or b) a per diem or mileage basis.
- Charges incurred by employees for travel, lodging and other subsistence should be reasonable and allowable only to the extent of University policy, which may be viewed at http://www.obfs.uillinois.edu/manual/central_p/sec15-1.html .
- The Narrative should provide information regarding destination and names of conferences, if known, number of travelers, duration of travel and estimated total cost.
- Foreign and domestic travel should be itemized and justified separately.
- Sponsor guidelines should be consulted to verify the allowability of travel costs.
Equipment:
- Major items of equipment ($5,000 or more) proposed for acquisition should be itemized by descriptive name and estimated cost, and an adequate justification should be provided in the budget narrative.
- Items with a useful life of more than one year and costing $500 or more, but less than $5,000, normally should be included and justified under "Materials and Supplies."
- Equipment purchases should not be allocated between sponsor-provided and University-provided funds because of potential future points of contention associated with ownership of the equipment. If equipment is wholly pledged as cost sharing it must be purchased during the project’s period of performance.
Subawards:
- Should be clearly identified in the text of the proposal.
- Should be included as a line item in the budget.
- A formal proposal from the subawardee, including a statement of work, budget, budget justification, and letter of administrative approval from the subawardee’s institution should be provided when the proposal is submitted to OSPRA.
- In the event the subawardee’s proposal is not available at proposal submission it must be provided to OSPRA and approved by the sponsor prior to the subaward being issued.
- For guidance on distinguishing between subawardees and vendors:
(Subawardee vs. Vendor table).
Services:
Computing Services
- Network costs, including the hardware, software, personnel services, public access sites, and other related costs required to enable University personnel to share software or data or to communicate electronically with other individuals, are considered to be part of the physical infrastructure of the University and are classified as indirect costs. Charges for computing services may be budgeted only when these costs are justified as providing a direct benefit to the project.
Professional Services
- Consultants
- Current or former University employees may not be paid as consultants. Payments to current or former University employees must be paid through the University payroll system. (see OBFS Policies and Procedures Manual, Chapter 17 - http://www.obfs.uillinois.edu/manual/index.html#s17 ).
Other Direct Costs:
- Other Direct Costs should be itemized and described in the Narrative.
- Telephone service, including monthly service charges, ISDN, calling cards and cellular phone charges typically should not be included as these are classified as indirect costs. Memberships, postage, and food are typically deemed to be unallowable.
- Further guidance regarding allowability of costs may be found in the “Business and Financial Policies and Procedures Chapter 16 ” and OMB Circular A-21 .
- Tuition remission
- Tuition remission is assessed on graduate assistant stipends when allowed by a sponsor that pays full, negotiated F&A rates. View up-to-date rates .
- When a sponsor provides reduced or no F&A, the sponsor’s policy or the Request for Proposal should be reviewed to determine if tuition remission is allowable. If allowable, tuition remission may be included at the discretion of the department.
- The campus has elected not to charge tuition remission on State of Illinois projects with reduced F&A rates. By Federal statute, US Department of Agriculture Cooperative States Research, Education and Extension Service (CSREES) grants and certain Agricultural Research Service grants prohibits tuition remission. However, certain USDA National Research Initiative (NRI) programs will allow for tuition remission and may allow full recovery of facilities and administrative costs. Guidelines should be consulted.
COST SHARING
Cost sharing may include only expenses that are allowable on and allocable to the project and incurred during the project period. The establishment of a separate University account (FOP) will be required to record and track University cost sharing commitments. It is the department’s responsibility to provide documentation which supports cost sharing commitments. See “Policies and Procedures Applicable to the Conduct of Sponsored Projects - Cost Sharing Documentation Requirements.” Documentation and support of cost sharing commitments must accompany the proposal documents submitted to OSPRA for review.