Develop Your Budget

It is important that your budget reflects, as accurately as possible, the funding needed to carry out the proposed research. Please work with your OGC coordinator to help develop your budget. You should neither overestimate the funds required nor underestimate budgetary needs — either of which may lead to proposal rejection. Additionally, so not provide cost-sharing if it is not required by the funding agency, as it affects the university’s ability to negotiate for a higher indirect cost rate. 

A budget that accurately details the funds necessary to carry out the scope of work (or services) can strengthen the total proposal and increase the likelihood of funding. Furthermore, a carefully prepared budget can often identify weak areas in the proposal narrative and result in improvement of the proposal. OGC provides expertise in completing a budget request, applying appropriate fringe benefit and facilities and administrative (F&A) cost rates, and documenting subrecipient agreements, consultants, matching or cost-sharing funds, as applicable.

In preparing proposal budgets, CSUF and ASC comply with university and CSU policies and the cost principles prescribed by the Office of Management and Budget (OMB).

Allowable and Unallowable Costs

Regulations and policies governing costs may vary significantly among different sponsors and/or solicitations/requests for proposals. However, federal sponsor guidelines are usually the most prohibitive and will typically be used to determine allowable costs. 

Beginning 2015, the guidelines at CFR Part 200 Part 200 – Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards will be followed. 

Allowable Costs: A simple guide

  1. REASONABLE: An expense is reasonable if the purchase is necessary, allocable, appropriate in quantity and fairly priced. Occasionally, a purchase, which on its own may look unreasonable, may be reasonable when examined in context with its necessity.
  2. NECESSARY: An expense is necessary if the purchase is needed to carry out the project. Will the project be harmed if this purchase is not made? The sponsor considers all expenses specifically identified in the approved budget necessary expenses.
  3. ALLOCABLE: A cost is allocable if the goods or services involved are chargeable in accordance with benefits received, or if it is incurred solely to advance the work under the project. Costs that benefit more than one project are not allocable when it cannot be determined how much each project benefits. Allocable costs may not be shifted to other sponsored projects to meet deficits caused by overruns. Nor may those costs be shifted to avoid restrictions imposed by law of the sponsored project. Allocable funds may not be shifted for reasons of simple convenience either. 

In calculating budgets, the OGC has prepared an internal budget template that calculates funded salary requests, fringe benefits, and other applicable cost items. The budget template applies current fringe benefits and indirect cost rates automatically. Please contact your OGC Coordinator for assistance in developing your budget.

The following are the typical items of cost that can be included in proposals.

Direct Costs

1. Salaries and Wages

To determine total salaries and wages, list the amount of time (% effort) to be spent by each person, including any administrative staff, who will be working on the project. Time should normally be shown in terms of percent of full-time effort (will be converted to person-months effort, as required by funding agency). Show a breakdown between summer and regular academic year for faculty and personnel with academic time appointments (normally, 9 months). No employee may be scheduled for activities in excess of 100% of effort in any given month, unless specifically additional pay/overload was proposed, and was approved by the university as well as the funding agency. Click here to download the Additional Pay Policy.PDF File Opens in new window

Proposal estimates for requested personnel costs should be based on current salary bases (if employee is identified and currently employed by the university of auxiliary), or market or published rates for comparable positions (if employee has not been identified). For multi-year projects, it is acceptable that the budget takes into consideration any possible salary increases.

EXAMPLE:

Dr. Smart will perform a case study on Indian Casinos in California. The university requests funding to support release time/course buy-out for two 3-units courses each academic year and for the duration of the project. In addition, Dr. Smart will devote 50% effort for 2 summer months.

Using a 24-weighted teaching units (WTUs) full teaching workload per academic year (AY):

Salary base = $60,000 per AY.

3 units/24 units = 12.5% effort for each course release, or 25% for 2 course releases.

Estimated salary for the academic year = 25% x 60,000 = $15,000.

Estimated summer salary: $60,000/9 months x 2 months x 50% = $6,667.

2. Fringe Benefits

Fringe benefits are a direct cost to a sponsored project, are clearly related to the salaries and wages to be paid, and are shown as a separate entry in the budget. A pooled or average fringe benefit rate is used to estimate costs.  The actual applicable fringe benefit rate for each identified personnel will be charged at the time project effort is provided.

3. Consultants (Contractors)

Consultants are generally paid a daily consulting fee. If applicable, consultant’s travel expenses are also reimbursed. Whenever possible, identify in the budget the proposed consultant by name, indicate the number of days of work, daily rate, and provide curriculum vitae or resume for the consultant in the proposal. Note that consultants are considered as a different type of cost than subrecipient agreements to other institutions.   

Some sponsors do not permit payments to consultants and some may restrict or limit such payments, or require that the University obtain written approval prior to entering into a contract with a consultant. If in doubt as to the allowability of consultants or rates paid to consultants, refer to the award terms, sponsor guidelines or contact the OGC.

4. Subrecipients (or Subcontractors)

A subrecipients is a state or local government, college, university, corporation or other organiza­tion that expends funds received from a prime grantee/recipient or flow-through entity to carry out a sponsored program. A subrecipient is sometimes also referred to as a subawardee or subcontractor.

Typically, a subrecipient:

  • Has its performance measured against program objectives;
  • Has responsibility for programmatic decision-making;
  • Has responsibility for adherence to applicable sponsor program compliance requirements; and
  • Uses funds to carry out a program of that organization, rather than providing goods or services for a program of the prime grantee.
  • Other indications that an organization should be deemed a subrecipient include when:
  • The organization is contributing to the scholarly/scientific conduct of the project as described in a statement of work for the organization;
  • The conduct of the organization’s portion of the project requires use of the discretion and unique expertise of the organization; or
  • Payments are made before the work is performed and that ultimate settlement of the agreement will be on the basis of incurred allowable cost.

When the Principal Investigator contemplates collaboration with a colleague at another institution, if the collaboration is to be funded, this will constitute a subrecipient relationship. At the time of proposal submission, the collaborating institution should provide to OGC a completed Subrecipient Commitment Form, a statement of work, a detailed budget, and a budget justification. Additional documents may be required depending on sponsor requirements.  

5. Equipment

Equipment means an article of nonexpendable, tangible property having a useful life of more than one year and an acquisition cost of $5,000 or more per item or bundled system. At CSUF, capital equipment is not subject to indirect (a.k.a. Facilities and Administrative) costs.  

6. Supplies

These are items costing less than $5,000 individually. Normally, a research project will consume expendable supplies such as laboratory items, teaching aids, computer software, and other research/program supplies. A reasonable amount should be budgeted for these items.  

Although uncommon, it may be justified to include electronic items such as laptops, in a proposal budget. Please consult OGC regarding allowability of such items.

7. Publications

Include anticipated cost of publishing the results of the research, as applicable, keeping in mind that page charges may vary from journal to journal. Consider both page charges and reprint costs in the estimates. Use current published costs or previous actual expenses whenever possible.

8. Travel

In estimating travel costs, the university follows the university’s Employee Travel Policy and Procedures finance.fullerton.edu/controller/travel. Reimbursement levels for travel expenditures are set by the university’s policy or may be determined by sponsor guidelines. As a general rule, the most restrictive guideline will be used. Federal funds cannot be used to make trips to secure new or additional research support or funds. 

When estimating travel costs, the following information is required:

  1. WHO – Identify person or position
  2. WHAT - purpose (conference, presentation, collaborative meeting, etc.)
  3. HOW many days/nights required for travel
  4. WHERE - destination

If foreign travel is anticipated, the cost for international travel insurance should also be included. The cost for foreign travel insurance varies from country to country. Please consult OGC for the appropriate estimate.

9. Other Direct Costs

Other Direct Costs may include those for copying/printing; long-distance telephone calls directly allocable to the project activities; postage for the project; reference books and materials; tuition and required fees, stipends, etc. for participants (Participant Costs): equipment maintenance; and vendor services. The principal investigator should specifically justify the need for these items in relation to the project.

Indirect Costs

Indirect Costs (IDC) or Facilities and administrative (F&A) costs must be included in proposal budgets unless the sponsor has a written policy on F&A rates applicable to all potential grantees. All deviations from full recovery of F&A rates are subject to CSUF administrative approval, using the IDC Waiver FormPDF File . Sponsor guidelines limiting facilities and administrative costs must be provided with a proposal.

To calculate F&A costs for a project:

  • Calculate the Total Direct Costs (TDC), which is simply the sum of all direct costs (salaries, benefits, supplies, equipment, etc.)
  • Calculate the base against which the F&A rate will be multiplied by subtracting exempt items (capital equipment, graduate student tuition and required fees, stipends, and subrecipient agreement costs in excess of the first $25,000 of each subrecipient agreement over the life of the agreement) from TDC. This will give the Modified Total Direct Costs (MTDC);
  • Multiply the correct F&A rate against the MTDC base to calculate the facilities and administrative costs for the project

TDC – exemptions as noted in (2) = MTDC 

MTDC x F&A rate = F&A 

Special Note about Facilities and Administrative Costs (also known as “Indirect Costs”): The University expects external sponsors to pay the actual costs of conducting the sponsored project. These costs include both the direct and the facilities and administrative cost obligations incurred by the University in the conduct of a project. The costs that are clearly identified with and benefit a specific research project (“Direct Costs”) include salaries, fringe benefits, equipment, supplies, travel and other expenses. The facilities and administrative costs (“F&A”) are those institutional research infrastructure costs that cannot be readily attributed to an individual project or monitored on an individual basis and include building and equipment use, operations, maintenance and utilities, general, departmental and sponsored projects administration, library, and capital improvements. Each sponsored project is expected to pay its proportional share of these research infrastructure costs. This payment is based on the facilities and administrative cost rate that is negotiated annually (or multiple years) between the University and the U.S. Department of Health and Human Services. Since the facilities and administrative cost rate is based on the level of existing facilities and administrative costs associated with research, the facilities and administrative cost income received by the University (and all other institutions of higher education) is a reimbursement for actual costs incurred. All research project budgets should include facilities and administrative costs as determined by this federally negotiated facilities and administrative cost rate. Exceptions to this policy may be considered if the sponsor has an established, written policy applicable to all potential proposers which deviates from these rates. All other deviations are subject to the University’s administrative approval in advance (see Appendix – Indirect Cost Waiver policy.)

Off-Campus F&A rate

Off-campus activities are those activities that operate primarily outside of University property (either owned, leased, or rented) and do not increase or decrease the costs of those activities (i.e., operations and maintenance) that would be affected had the activities been operated on property maintained and/or depreciated by the University.

Off-campus rates are generally used when the principal investigator conducts research away from the campus for a period of no less than one semester or all three summer months or if more than 50% of the project activities take place off campus. They are not used for conducting of workshops, seminars, etc. off campus, especially when data collection and analysis takes place on campus.

Prior off-campus review and approval is required for the use of off-campus rates, using the Off-campus IDC approval form. The current federally-negotiated indirect cost rates are as follows:

 

On Campus

Off Campus

Organized Research

39.1%

26%

Instruction

45%

26%

Other Activities

37%

26%

 Click here to download the Indirect Cost Negotiation Agreement PDF File for more information.

University Cost-Match/Cost-Sharing

It is the policy of the university not to offer cost-sharing for projects when cost-share is not required. If sponsor guidelines require cost-sharing or matching funds (cash contribution or donation of in-kind services such as contributed time and effort by the principal investigator and other key personnel), the details of any cost sharing provided by the PI, department/unit or college must be identified. If there is any third-party cost match, appropriate documentation such as a letter of commitment from the third-party source should be provided. All matching funds or cost-sharing commitments based on the faculty member's academic time and effort must be approved in advance by the principal investigator's department chair and dean.

Budget Justification/Narrative

In preparing the budget narrative, it is always recommended to ensure that it is consistent with the proposed scope of work and project activities. A sample budget narrative/boiler plate is provided in the Appendices. For more budget justification page for more information on preparing a Budget Justification/Narrative.