Pre-Award Budget Preparation Tips

A budget has two functions:

1. It estimates the cost of completing a proposal’s objectives. The sponsor will use budget details to determine whether the proposal is economically feasible and realistic.
2. It provides a means of monitoring the project's financial activities over the life of the award against the original proposed budget and project objectives.

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.

Budget Development

A budget should generally be divided into two cost classifications:

1. Direct costs; and
2. Facilities & Administrative costs (also referred to as F&A, indirect, or overhead costs)

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)

• Who will work on the project (Principal Investigator(s), Research Assistants, etc.)?
• What tasks will each of these people need to complete and what concrete deliverables will comprise their principal duties and responsibilities?
• How much effort will they need to dedicate to complete program tasks?
• At what rate will personnel be paid? Always remember that any payments to employed personnel will also incur additional fringe benefits costs. The Fringe Benefit Rates Chart details current fringe benefit rates.

Other Than Personal Service (OTPS)

Equipment

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.

Supplies

• Include necessary items (unit cost under $5,000) which are directly related to the project’s objectives. Do not include office supplies, or supplies of a general nature.
• Office supplies, furniture, phones and phone lines are generally considered unallowable in proposals for federal funding, as they are considered part of the indirect cost.
• However, guidelines permitting, these items may be included in some foundation submissions. Additionally, NIH proposals may permit the cost of paper and printing associated with producing data collection if these costs are included in the budget.

Travel

• Where will the research project take place? Will the PI need to travel to a remote location several times in order to coordinate data collection?
• Will data collectors need to travel locally in order to recruit and engage study participants? How many trips will they need to make? What is the cost per trip?
• Will the PI need to attend conferences to disseminate study findings? What conferences are critical to attend? Where will these take place in the years of proposed activity?
• Domestic travel is considered to be travel within the United States and Canada.
• Sponsors may have restrictions on foreign travel. Refer to the sponsor’s RFP, announcement, etc.
• Additional travel policies and procedures may be found under Adhering to Travel Guidelines.
• All travel by either a CUNY or RFCUNY employee to North Carolina or Mississippi using RFCUNY-held funds is banned irrespective of the source of the funding (Federal, State/City, private or college funds). Any exceptions to the ban must be authorized by the Office of the CUNY General Counsel or by the University Controller’s Office. 

Consultants

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.

• Consultants are never listed in the Salaries & Wages section of a proposal's budget.
• Some sponsors, such as NSF, have per diem rate limits.
• Generally, the consultant relationship may be considered a contract or procurement of vendor services.

Subaward Costs

Some proposals represent a collaboration of work by more than one institution:

• Costs of such other institutional collaborations are represented in the budget as a single line item and are generally accompanied by a separate budget.
• In accordance with CUNY and federal guidance, the total budget of subawardee should include both:
  • Direct costs (include any estimated travel costs to the subawardee); and
  • F&A costs (if the collaborating institution does not have an F&A rate, a 10% de minimis rate should be used instead).

Budget details should categorize costs as outlined in this document (e.g., PS, OTPS and F&A).

• A subawardee institutional authorization should be obtained before submission to the collaborating prime institution.

Other Expenses

• Tuition and fees charged for enrolled students may be charged as a direct cost on training grants. However, charges to this cost category are frequently subject to specific program restrictions and therefore sponsor guidelines should be reviewed to guarantee the allowability of expenditures.
• Will the project require shipping materials and supplies to or from a remote performance site? What is being shipped and how often?
• Will the project require registration in professional organizations for the purposes of disseminating study results? Which organizations? What is the annual membership fee?
• Service Centers – services may be purchased from various CUNY service centers to support research activities. Review published service center rate when developing budgets.

F&A or Indirect Costs

F&A costs are:

• General institutional expenses
• Costs incurred for common or joint objectives
• Cannot be identified readily and specifically with a particular sponsored project
• Not a specifically budgeted figure, but a calculation based upon a federally negotiated rate unique to the CUNY College/Institution

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

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

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.

Exceptions

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.