Guide to the Preparation of Proposals for Grants and Contracts

SECTION III - BUDGET

A. Salaries
B. Summer Salaries
C. Additional Compensation
D. Provision for Anticipated Salary Increases
E. Employee Benefits
F. Direct Operations Costs
G. Cost-Sharing
H. Facilities and Administrative Costs (Indirect Costs)
I. Unexpended Balance

SECTION III

BUDGET

A. SALARIES

This section should include a list of names and titles of personnel with an estimate of the number of months and percentage of time each will devote to the sponsored activity, the salary rate, and the total amount of salaries to be paid to each from the grant or contract. Names and titles of all senior professional project staff should be shown, whether a part of their salary is to be charged to the project account, or pledged as University cost-sharing.

Salary rates included in proposal budgets are approved by the University as an estimate only. The current approved annual increment to use in grant budgets is 5% times the current year salary. In the spring grant writers can often learn of their salary for the coming year by contacting their department head or dean. In these cases, that new salary should be used if the project will begin after July 1.

B. SUMMER SALARIES

The current year salary times 5% or the approved salary for the next year, if it is known at the time the proposal is written, should be used. Keep in mind that the current year salary must be used for project activities before July 1, and the next year's salary is used for activities after July 1. The important point to remember here is to use regular University salary rates for this time period, as allowed by the sponsor. If the sponsor allows, faculty may compute summer salaries for up to 62 days of sponsored activity.

C. SUPPLEMENTARY COMPENSATION TO FACULTY

It is expected that the working time of University faculty is to be devoted to their contractual duties. Every effort is made to schedule University-related faculty work as a part of normal duties. In rare circumstances (when permitted in federally-funded projects), faculty or staff may receive supplementary pay for sponsored activities, but it must be approved in advance by the department head and the dean. (See 15th Edition, Faculty Handbook, 1996, pages 48-49.) Faculty members involved in extensive additional functions associated with the administration of funded projects will have an adjustment in salary for those additional responsibilities following a written request and prior approvals in accordance with the following:

1. The supplementary pay rate shall be consistent with the extent and duration of the added responsibilities and the compensation received by others having similar University administrative assignments.
   
   
2. Should the extent of involvement in administrative functions be equivalent to more than a 25% assignment, an adjustment in the conditions of the appointment of the person involved may be made.
   
   
3. The appropriate administrative unit head or director may submit in writing a recommendation with supporting documentation through regular administrative channels after conferring with the faculty member and the appropriate dean. This action requires complete administrative review and approval of the Board of Regents upon recommendation by the President.
   

D. PROVISION FOR ANTICIPATED SALARY INCREASES

Provision for anticipated salary increases should be made in grant and contract budgets. The approved estimated annual increment is 5%. Multiply this factor times the current year salary. If you are developing a budget in the late spring and the projected salary for the coming year has been approved, you may use this figure effective on July 1. For projects that begin after spring semester ends and continue on through July 1, please use the previous year's salary to compute salary up to July 1, and the approved new year salary (again, if known) after July 1. Otherwise, use the 5% times the previous year's salary.

The salary budget should be properly footnoted to explain the types of anticipated salary increases, the rate of increase, and the period to which the increases apply. Please separate the budget lines for regular year and summer salaries in the itemized budget.

If further clarification is needed, please contact Sponsored Programs.

E. EMPLOYEE BENEFITS

It is good practice to check the Office of Sponsored Programs Web site before computing employee (fringe) benefits because they change at least twice a year. Fringes are direct costs at the University. They include contributions to state retirement, unemployment, workers' compensation, disability, and life and health insurance. Different fringe rates are computed for each classification of employee. The current fringe rates are always available on the OSP Web site at: http://www.wku.edu/Dept/Support/SponsPrg/grants/fringe_s.htm

F. DIRECT OPERATIONS COSTS

1. TRAVEL - Indicate the number and estimated cost of trips as well as the destination of each trip (if known) and the number of individuals on each trip. If the exact location is not known, the general geographic location should be specified. The estimated cost should normally include an estimated air fare or other mode of transportation, the number of days of per diem, and ground transportation in accordance with University policy. Most sponsors require a statement about the purpose of the proposed travel and its relevance to the sponsored program, especially in connection with foreign travel.
   
   
2. EQUIPMENT (PURCHASED) - If you wish, Sponsored Programs can help you coordinate this item through the Purchasing Office. (See the Purchasing Office Web Site for more information about Purchasing Policies, or call the Department of Purchasing at 3056 and request a copy of "A Guide to the Western Kentucky University Purchasing Services.") When budgeting equipment in proposals to any sponsors, federal or non-federal, please use $1000 as the threshold for the equipment category. If an item is less than $1000 per unit, it should be budgeted as supplies. Each equipment item should be listed by type, model number, and manufacturer. Catalog prices should be listed plus any anticipated price increases (with justification) and Kentucky sales tax (sales tax is applicable to all purchases of equipment). Catalogs should be retained as supporting documentation or if catalogs are not available, written vendor quotes should be obtained and retained. If equipment needs are not definite, probable choices may be listed on a separate sheet and an estimated total shown on the budget page. Where it is difficult to predict the types and quantities, or where unusual items are required, the circumstances should be fully explained. You should tie your equipment justifications to your project objectives.
   
   EQUIPMENT (FABRICATED) - The nature of the equipment to be fabricated should be shown along with a breakout of the items that are being fabricated (e.g. materials, cost center services, etc.). If the cost estimate is based on recent historical experience in fabricating similar items, the documentation to support this should be available.
   
   EQUIPMENT (RENTAL) - Each equipment item to be rented should be shown by type, model number, and manufacturer along with the current rental rate of each item. Vendor catalogs or written quotes should be retained as support documentation. If inflationary factors are included, they should be explained. The University Purchasing Department can assist comparing rental versus acquisition alternatives. Equipment rental is considered a "service" charge.
   
   
3. SUPPLIES should be listed by major types, e.g., glassware, reagents, chemicals, etc., along with the estimated cost of each subclass. An indication of how the estimates were arrived at should be provided. Prior year accounting records or other documentation may be used to support these estimates.
   
   
4. OTHER DIRECT COSTS - This category includes items such as books and periodicals required for the sponsored activity, exclusive on-campus and off-campus telephone charges, publication costs, computer services, animal purchase and boarding costs, alterations and renovations. Each of the items listed should be separately coded by class with the estimated cost justified. For example, publications costs should list the number of pages to be published and the cost per page. Any other direct costs should be supported in as much detail as possible. Documentation should be kept by the department.
   
   "Miscellaneous" and "Contingency" categories should generally be avoided on the budget page.

G. COST-SHARING

Some Federal sponsors require cost sharing. Contracts, training grants, and certain special-purpose grants are usually exempt from this restriction. Federal sponsors have implemented cost-sharing requirements in a variety of ways . Presentation of cost-sharing in a sample budget where a government agency has not prescribed a printed form is shown in Appendix III.

Cash cost sharing may be shown in the second column of the budget. The account number that the cash cost share will be charged to and object codes shall be exhibited in the WKU Cost Sharing section on the sign-off sheet, along with yearly breakdowns if a multiple year project. After the project is funded, cost sharing will also be shown in the second column of the Chart of Accounts and Cost Sharing. This method is meant to ensure that there are no discrepancies from submission of the proposal to funding.

To facilitate the cost sharing burden, the University has calculated formula funding rates for maintenance and operations. Just calculate the square footage you will dedicate to the project and multiply by the appropriate category. Then insert the total in the WKU cost sharing column of your budget. Sponsored Programs will keep you informed as the rates change from year to year. Space cost-sharing rates may be found on the OSP Web site at: http://www.wku.edu/Dept/Support/SponsPrg/grants/stats.htm#space

Connection charges, terminal server accounts, and Internet connection monthly charges can sometimes be shown as cost sharing in direct costs on grants. According to OMB Circular A-21, direct costs must be readily identifiable to a particular sponsored project or be directly assignable with a high degree of accuracy to specific projects. More specifically, computer costs shall be treated as direct only when identifiable to a particular cost objective.

These costs would usually be considered to be part of indirect costs unless the following criteria are met: (1) the charges must be included in the budget justification and approved by the agency, and (2) the computer(s) utilizing that connection must be used solely for that sponsored project.

H. INDIRECT (or FACILITIES & ADMINISTRATIVE) COSTS

The May 8, 1996 revision to OMB Circular A-21, "Cost Principles for Educational Institutions," replaced the term "indirect costs" with "facilities and administrative costs (F&A costs)." F&A costs are synonymous with "indirect costs." University expenditures for departmental administration; for building operation and maintenance, e.g., heat, light, electricity, and janitorial services; for general expenses, e.g., recurring telephone, mail service, and services of administrative offices such as Purchasing, Accounting, Payroll, and Personnel Offices, are included in indirect costs. Information about F&A cost rates and their application is given below and an explanation about indirect cost rates that all grant developers should read is given in "Indirect Costs: A Primer About Allowable and Unallowable Expenditures." Wherever possible, proposals to outside sponsors should request full reimbursement of indirect costs. When a proposal provides for less than full indirect cost reimbursement, the circumstances should be discussed in advance with Sponsored Programs.

Indirect cost rates:

• Cognizant federal agency: DHHS
• Date of agreement: February 8, 2005
• Type of agreement: Predetermined, fixed
• Effective: From 07/01/2004 to 06/30/2008
• Federal negotiated rates change effective July 1 for the next three years:
  • Click here to download copy of the F&A Rate Agreement - a .PDF file
  • Contact the OSP for more information about F&A Rates

I. UNEXPENDED BALANCE

Proposals for the extension or renewal of existing sponsored activities should normally include an estimate of the unexpended balance anticipated upon expiration of the current grant or contract budget period. With some sponsors, the unexpended balance is applied as partial funding for the next budget period. The official amount of unexpended balance can be obtained from Sponsored Programs at the time you prepare the proposal for extension or renewal. Specific mention should be made in the proposal about what project objectives the request for extension is needed for and the amount of "carry over" funds needed to fund the activities to complete the objectives.

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Continue with Section IV of the Guide

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Last update made March 2, 2005.
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