A budget has two functions:
Funding Restrictions & Budget Guidelines
Whether an individual is putting together a proposal for federal funding or preparing an application for submission to a foundation, the proposal guidelines will almost always have specific directions and restrictions for preparing a budget.
The first step in preparing a budget is to create the “Award Budget” based on “Funding Restrictions” or “Budget Guidelines” described in the funding announcement. Any limits on the award amount, number of years and dollar limits will be contained there.
Many sponsors (especially government agencies) provide either a form or a format for creating a budget. It is imperative to follow the sponsor's instructions explicitly.
A budget should generally be divided into two cost classifications:
Costs incurred for the same purpose in like circumstances must be treated consistently as either Direct or F&A costs per federal regulation. In other words, if a particular item (e.g., a photocopier) is considered to be an indirect cost, an item associated with administrative activities, then it must not be budgeted as a direct cost (unless exceptions are warranted, requested, justified and approved by the sponsor).
Proposal Guidelines will often define the period of project performance (e.g., 9/1/X0 – 8/31/X1) and the items that are “allowable” (e.g., faculty salary, computers, etc.). With these guidelines in mind, one should create budget estimates using the following questions as a guide to completing budget categories (PS, OTPS and F&A):
Personal Service (PS)
Other Than Personal Service (OTPS)
CUNY’s Capital Asset Policy (7/1/2016) defines “equipment” as “fixed or movable tangible assets to be used for operations, the benefits of which extend beyond one year from the date of acquisition… with an acquisition cost of $5,000 or more…” All amounts related to putting the asset into service, including shipping, set up, etc., must also be included in the cost of equipment. Therefore, for projects with assets purchased below the $5,000 threshold, equipment may not be required to be budgeted. However, check sponsor guidelines to ensure that any segregation of sensitive assets below the capitalization threshold are included in the budget.
Consultants are individuals outside of CUNY whose expertise and skills will add value to the project; faculty or other institutional staff should not be listed as paid consultants on a project.
Some proposals represent a collaboration of work by more than one institution:
Budget details should categorize costs as outlined in this document (e.g., PS, OTPS and F&A).
F&A or Indirect Costs
F&A costs are:
Indirect costs are a negotiated charge added by the CUNY College Budget preparer to cover costs such as administering paychecks and providing the space associated with the sponsored project. Indirect costs are not the same as the Research Foundation administration fee, which is paid from college funds, not from the indirect cost recovery on the grant. The total cost of the project is equal to the sum of the direct plus indirect costs.
The general policy of CUNY and RFCUNY is to recover full indirect costs. This policy is consistently applied except where there are limitations imposed by the sponsor, where a private foundation sponsor has no formal policy on the reimbursement of indirect costs, or where the uniqueness of the project warrants exceptional action. Provisions for the recovery of indirect costs are as follows:
Federal sponsors support full indirect cost with minor exceptions. Where the Federal sponsor's formal indirect cost recovery limitation is less than the College's approved rate, the sponsor's limited rate shall be applied. An example of a limited F&A rate is the U.S. Department of Education’s indirect cost rate of 8%.
Additionally, provisional rates may be in effect at the time of an award. Provisional rates are not negotiated rates and are used for interim budgeting and billing purposes to allow adequate time for F&A rate negotiations. Provisional rates are used in proposals and sponsor billings until such time as predetermined rates are negotiated. Once rates are negotiated individual awards should be adjusted to reflect the formal rate for the period. An applied rate should never exceed the final predetermined rate.
Non-Federal sponsors may include New York State and City, private corporations and foundations. Where these sponsors support full indirect cost recoveries, the College will apply its approved indirect cost rate. However, if a sponsor has a formal written policy to limit indirect cost recoveries, the College will apply the lesser of the sponsor's limited rate or the CUNY College’s approved rate. Where foundations have no formal policy concerning indirect cost recoveries, the College will apply its negotiated federal rate.
F&A rates may not be waived on federal awards unless authorized by the sponsor. Additionally, the waiving of F&A recoveries where they are permitted by the sponsor results in cost sharing, which must be approved by the CUNY Research Administration. Where a sponsor is unwilling to provide F&A recoveries, approval must be granted by the CUNY Research Administration.
CUNY College F&A Rates
Negotiated F&A rates and additional rate information can be found under Understanding Indirect Costs.