Grant Budgeting

Pre-Award budget development consists of determining the Direct Costs, F&A Costs and, as required, the Cost Sharing needed to successfully achieve the project’s objectives. Budgets are regulated by the Uniform Guidance, by the sponsoring agency guidelines/policy, and by University policy. 

Budget questions and assistance are available from Departmental Grants Administrators, College Grants Administrators and Sponsored Projects Administration.


Federal & Administrative Cost Rates/Fringe Benefits


MTDC Base:
Modified total direct costs (MTDC), consisting of all salaries and wages, fringe benefits, materials, supplies, services, travel and sub-grants and subcontracts up to the first $25,000 of each sub-grant or subcontract (regardless of the period covered by the sub-grant or subcontract). Modified total direct costs shall exclude equipment, capital expenditures, charges for patient care, tuition remission, rental costs of off-site facilities, scholarships, and fellowships as well as the portion of each sub-grant and subcontract in excess of $25,000.
Fringe Benefits:
Fringe benefits are specifically identified to each employee and are charged individually as direct costs. The fringe benefits for all full-time employees (faculty and staff) should be budgeted at 25% of their salary.
Facilities and Administration (F&A) Costs, indirect or overhead costs are those costs incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity.  For example, departmental secretaries, office supplies, classrooms, electricity, security, and other general administrative costs such as personnel, purchasing, and services of the controller’s office.

F&A Costs are negotiated with U.S. Department of Health and Human Services as the University cognizant agency and must be consistently applied to budgets both federal and non-federal. Rates include on and off campus rates for Research, Instruction, and Other. The exception to using the negotiated F&A Cost rate is when a sponsor has a documented policy limiting or disallowing F&A Cost rates. The policy must be attached to the University Transmittal Form during proposal routing.

The University F&A Costs rate is based on Modified Total Direct Costs (MTDC) = Total Direct Costs less equipment, capital expenditures, charges for patient care, tuition remission, rental costs of off-site facilities, scholarships, and fellowships as well as the portion of each subgrant and subcontract in excess of $25,000.  These budget items are deducted from total direct costs before calculating F&A Costs.


Direct Charges / OMB A-21 (relocated to 2 CFR Part 220)

Federal Circular A-21 regulates which items can be charged as a direct charge to grants and which items are included as part of the F & A expense. This circular defines the terms “direct charge” and “F & A expense” in grants. Examples of items that are generally considered to be F & A expense are secretarial salary, clerical salary, office supplies, copies, printing, computers, and local telephone lines. The federal government’s position is that when we negotiate our F & A rate, it includes all of these things so if we make a direct charge for one of these items, we are, in effect, double billing the government.

For information on exceptions to Allowable F&A Direct Charge Exceptions, please refer to CAS Budget Development Policy. Requests for F&A Direct Charge Exceptions must be processed on the Cost Accounting Standards (CAS) Exception Form (Pre-Award) form during proposal routing.

Project / Budget Periods 
The Project Period represents the multi-year period of time in which the entire project will be executed. The sponsor guidelines will usually indicate the start date. Budget Periods represent each one-year time period of the budget.

Personnel Salary
The personnel category includes only University employees, including student employees. Calculate faculty and other nine-month contract staff salaries by using the current academic year’s actual salary as a base. Effort may be requested as number of months or as a percentage of time to be spent on the project by each individual. For 9 month faculty, summer salaries on grants are calculated in ninths with 1/9th of AY salary = 1 month of summer salary.

If personnel are contributing volunteer effort to the project for which they are not reimbursed, they should be listed as project personnel. Their effort should be described the same as the effort of paid personnel with “-0-“showing on the budget forms and their contributions clearly described in the budget justification.

Undergraduate students may work on grants and are usually hired as bi-weekly employees. Undergraduate work loads are usually limited to equal or less than 20 hours per week and effort is described in hours.

Fringe Benefits
Fringe benefits must be included whenever faculty/staff salary is included in the budget. No fringe benefit for undergraduate and graduate student wages.  Fringe benefits should always be calculated and listed as a separate budget category.

Fringe benefit rates are posted by the Office of Grants & Contracts:

“Equipment” means an article of nonexpendable, tangible property having a useful life of more than one year and an acquisition cost of $5000 or more. Equipment costs include the cost of the piece of equipment, plus the costs of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired.   Also included are any costs to put equipment in place, such as transport and installation charges. Before requesting funds for equipment, a reasonable effort must be made to check the University’s inventory of equipment.

Travel expenses should include all costs associated with transportation, meals, lodging, and registration fees necessary to complete the scope of work. Travel expenses should account for travel costs for USA personnel. Travel reimbursement rates are posted on the Travel and Entertainment Regulations website:

Material & Supplies
General office supplies, including computers, may not be allowable on federal grants unless they are related to specific project activities rather than general departmental activities.

External consultants may be individuals or firms to: provide identical services to others as part of their primary business, provide expertise vital to the project, but do not have authority over the direction of the project and are provided with specifications defining their contribution to the project rather than a statement of work requiring discretion.

Faculty serving as Consultants may not serve as a consultant within their department.

Consultants should be listed by name in the budget narrative. Information presented about the consultant should include the daily rate of pay, number of days of employment, any additional amounts to be paid such as travel and per diem, the consultant’s primary affiliation and expertise, and justification of the need for consultant services.

Procedures for Engaging Consultants and Request for Approval to Engage Consultants information and forms are available on the Business Office website:


The Sponsored Projects Administration office (SPA) is responsible for developing subcontracts and other agreements once an award has been received. For every subcontract, the University must have a proposal which has been through an institutional review process and authorized by the authorizing official at the recipient institution / organization.

Subcontract documents must include: A) A statement of work, B) A corresponding budget, C) The Subrecipient Commitment Form.

When preparing the prime sponsor budget, include the total costs of each subcontract, including the recipient institution’s fringe benefits and indirect costs, as a line item in the budget proposal.

Participant Costs

Participants are individuals, excepting university faculty/staff, who participate in the project. Often referred to as trainees, or scholarships/fellowships, these costs represent direct costs for items such as stipends or subsistence allowances, travel allowances and registration fees paid to or on behalf of participants or trainees (but not faculty/staff) in connection with meetings, conferences, symposia or training projects. These costs are interpreted as incentives for the individual(s) to participate in the project.  In turn, incentives should only be used for participants; incentives should not be used to replace compensation, for instance providing services or supplies in place of wages.

Other Direct Costs

This category includes all other allowable expenses that pay for services or fees such as postage, printing, and telecommunications, as well as graduate assistant tuition.

Graduate assistant tuition is calculated using the appropriate in-state or out-of-state graduate tuition rate. The Office of Admissions posts Tuition & Fees:

Post-doc employee medical insurance premiums may be included in the budget. Please contact your department/college grants administrator for premium rates.

Unallowable Costs

Unallowable cost categories are identified by the U. S. Office of Management and Budget.  The typical cost categories of interest to principal investigators include alcohol, entertainment, advertising, public relations, fund raising, lobbying and goods or services for personal use. Detailed information on Unallowable Costs is included in the USA Policy on Cost Principles:

Budget Narrative

The budget justification is a narrative, usually two to three pages, explaining the calculations used to determine the total cost for each budget category. Details MUST be used to show how each total cost was obtained.  The budget justification MUST match both the budget and the proposal narrative. For example, if the Principal Investigator is committing 25% of his/her time to the project, the 25% should be indicated accurately in the proposal narrative, in the budget, and in the budget justification. Funding agencies are very knowledgeable of appropriate budget costs for what you propose to do. Underestimating or overestimating your budget could create, in the funding agency, a lack of confidence in your ability to successfully complete the grant. Preferably, the budget should be close to the average award size. If a significantly lower or higher budget is proposed, be sure to explain why, in detail, in the budget justification.

Cost Sharing

Cost sharing by the University may be required by sponsor guidelines. Costs used to meet matching requirement are subject to the same policies governing allowability as other costs. In general, if the sponsor does not require cost sharing then cost sharing should not be included in the budget. Detailed information on Cost Sharing is included in the USA Policy on Cost Sharing:

Budget Tutorials