Budget Development

A detailed budget is required with every proposal, even if the sponsor requires a general budget or only a total dollar amount. Before OSU can authorize a proposal, it must be reviewed for compliance with all university, state, and federal policies.

Budget Overview and General Cost Categories

Proposal Budget Overview

The budget is a listing, by category and item, of money needed to conduct a project. It is a project's price tag, a financial mirror of the narrative portion of the proposal. The proposal budget is composed of direct costs, F&A (or indirect) costs, and a budget justification.

Direct Costs Definition

Direct costs are all costs that can be directly attributed to the conduct of the project and are specified in the proposal budget. These costs can be readily identified and are itemized by name and amount.

Budget Justification Definition

A budget justification page immediately follows the budget to explain any item in the budget that may be questioned by the reviewer or any sponsor representative. It is often helpful to indicate how cost estimates were derived for each of the direct cost items unless already obvious. The justification page should be organized in the same order as the budget itself, although not every item in the budget may require justification.

Estimating Future Year Costs in a Proposal Budget

All direct cost budget items should include an appropriate increase for each future budget year in all categories, especially salaries. If the sponsor guidelines specify otherwise, follow the sponsor guidelines. Budgets will be charged actual salary levels and increases regardless of the salary budgeted. In some direct cost categories such as travel or paper costs, the rate of inflation may vary considerably. Use appropriate and reasonable rates of inflation and explain the basis for your inflated rates in your budget justification.

Cost Categories in a Proposal Budget

The following cost categories are associated with various proposal activities. The allow ability for including the cost in your budget is dictated by federal and university policy. Some budget costs are included in the OSU F&A (indirect) cost calculation and are not allowable when listed as direct costs in a proposal budget. Other costs are unallowable by federal policy. The following categories of items are applicable to subawards as well as proposals sent directly to the sponsor from OSU.

Buildings

Buildings cannot be purchased or constructed on restricted funds without specific sponsor approval.

Capital Construction Costs

Construction projects are defined as projects that add to, or change existing physical spaces. They must also meet the following criteria:

• planning and construction respond to university-wide priorities;
• planning and construction details respond to requirements of government-agency-adopted Uniform Building Code and land use requirements and any special requirements of Facilities Services; and
• records accurately reflect actual use of space.

When is Capitalization Required?

• On construction projects with total project costs of at least $100,000 and increase the future service potential of the asset.
• Any addition to an existing building/structure that adds square footage, regardless of cost.
• New construction of a separate building or structure, regardless of cost.

Capital Construction costs cannot by paid on restricted funds without specific sponsor approval and identified in the budget as separate line-item(s) If approval is given to construct a building, an 8XXXX plant fund will be established to record the costs.

Capital Construction costs, including architectural design costs are not charged overhead.

Computer Use Costs

Costs included in this category include network, server, and computer/software maintenance charges. Computer operations that do not meet the following criteria may not be listed as a direct charge in the budget.

• Charge is for services over and above that provided to all faculty and staff, i.e. e-mail, communications, word processing, spreadsheets and other common functions.
• The charges are from a unit, which distributes costs to all users (not just grants and contracts)
• In addition, the distribution method has been approved by Business Affairs and listed as an approved fee in either the University Fee Book or OSU Internal Fee Book.

Only these OSU units have received approval for these charges to be shown as a direct cost:

• College of Earth, Ocean and Atmospheric Sciences.
• College of Forestry.
• Users of COSINe

Consulting

Electronic Items (Unique)

The purchase of personal digital assistants, laptop computers, watches, digital cameras, video equipment and other unique electronic items with sponsored project funds must be in conformance with OMB Circular A-21, part D.1.

• must be specifically identifiable with a particular sponsored project
• must be properly justified in the text of the invoice payment in Banner as to the direct relationship to the research project
• ownership of these items will remain with OSU
• these items must be maintained on the department's minor equipment/supplies inventory
• appropriate loan forms must be completed if item is removed from OSU locations

Entertainment Costs

Entertainment costs cannot be requested in federal grant proposals per OMB A-21. These costs may be allowed for proposals to non-federal sponsors if specifically approved by the sponsor and the PI provides sufficient detail of how the costs will be used. The costs would be exempt from indirect costs.

Equipment

Equipment is defined as any piece of tangible personal property with a unit value of $5,000 or more, a life expectancy of more than one year, and which is not consumed in the normal course of operation, unless the sponsor specifies otherwise. Equipment includes both purchase and fabrication of equipment and vessels. (see Fabrication below).If sponsor guidelines differ from OSU's policy, the PI needs to provide a copy of the sponsor guidelines and sponsor guidelines supersede the above.

• Equipment should be listed on the budget with a description and cost of each item.
• The cost to have equipment (capitalized equipment) installed or built should be included with the equipment cost.
• Training costs related to equipment must be broken out under Other Direct Costs - training costs are expense items, not capitalized equipment.
• Software is not considered equipment unless it is included in the purchase price of a computer. If software is listed as a separate item, it should be listed as an expendable supply, not as capitalized equipment. Note that extended warranties on capital equipment cannot be capitalized and therefore are subject to F&A Costs.
• On Equipment Lease-Purchase:
  • only the equipment cost should be included in the budget, the department must cover the lease-purchase interest costs from department funds

  Equipment Service Contracts

  Equipment service contracts can be included in budgets if the equipment is also included in the budget (or in the case of continuing awards from the same sponsor). The service maintenance contract cannot be for a time past the end date of the agreement.

  Fabrication of Equipment

  Definition: Supplies and minor equipment created into an identifiable unit by fabrication and meets the following criteria:

  1. Total finished value =>$5,000 and has a useful life of > 1 year.The ownership or “title-to” code must be the same for the entire fabricated unit. Funding sources cannot be mixed so part of the fabricated unit is owned by the Federal Government or another outside entity and the remaining part(s) is owned by the university. Free standing, movable as an entire unit, not permanently attached to a structure, and will not lose its identity when installed in other property. Unit must be complete in itself. It will be added to, accounted for, and removed from capital inventory as one unit or record. All pieces stay together until entire unit is sent to Surplus. Assembled parts must be integrated, permanently attached to each other, and essential in the performance of the unit. A basic schematic diagram with a description must show how the parts are integral to the unit.
  2. A fabricated unit with all assembled parts must be physically found in one location at all times. Parts which do not meet this requirement are considered individually for capitalization.

  If fabricated, assembled or constructed equipment that meets the above definition will be capitalized and added to the equipment inventory. The faculty member and department will be responsible for pre-approval prior to purchasing of any parts or items for the fabricated unit. This includes a basic schematic diagram of the proposed fabricated unit with explanations of the integration of the parts. Fill out the pre-approval form.

  Fees and Services

  These costs are for professional fees, e.g., consulting and legal fees, services rendered by commercial firms; service charges by institutional service departments; and fees assessed by other state agencies. Generally, all services must be performed within the award period. Consulting costs are normally identified separately in the budget and may also be called Personal Services Contracts (PSC). OSU employees and graduate students may not be listed as consultants on OSU budgets.

  Hosting

  Entertainment and Interdepartmental Refreshment costs are not an allowable budget item. Hosting Groups and Guests, meals/expenditures for hosting official guests, can be directly charged to sponsored project funds when hosting a speaker or other activity appropriate to the award.

  Maintenance and Repairs

  Maintenance and repairs cover buildings, grounds, and equipment. They are intended for ordinary expenses of a recurring nature, including maintenance contracts. Outside labor charges for maintenance and repair services are included.

  • Building repairs should not be charged to research projects. These expenses are included in the F&A rate.
  • Equipment maintenance costs are allowable as a direct cost for those items that are used in the project.

  Any item that appears to be general purpose or that will outlast the project cannot be direct charged in most circumstances. Examples include tires and automotive batteries.

  Memberships and Dues

  Normally, memberships are considered to be institutional and not individual (personal). To be a direct expense, the membership must be necessary toward the goals or functions of the program. OMB Circular A-21 require that all expenses charged to grants and contracts be identified with the sponsored work.

  OSU Services and Testing

  Fees charged for services or testing by OSU labs or other OSU units are allowable if these costs are listed in the OSU Fee Book.

  Other Direct Costs

  This category is used for all remaining costs, or may include some of the prior categories if the sponsor so defines.

  • Photocopying
  • Advertising
    Advertising expenses are allowed as a direct cost if recruiting for a permanent position (not temporary) used exclusively on the project. Advertising for GRA recruitment is not allowed.
  • Computer software and hardware upgrades
    Allowable if used in the project.
  • Utilities and waste disposal Reminder: utility and building operations/maintenance costs are normally not allowed as a direct charge to sponsored agreements where the activity takes place at an OSU-owned facility. Utilities are only allowed when the activity is off-campus and when the utility is separately metered. When the activity is based on-campus, the utility cost is part of the cost recovery for indirect costs. The exceptions to allowing on-campus charges to utilities include:
    • The activity must be an exceptional unlike circumstance. This currently includes: wave tank, Center for Fish Disease Research, Marine Freshwater Biomedical Sciences Center, and the Radiation Center. Each of these four areas has exceptional utility costs, which are separately metered.
    • The proposal must include a justification and be approved by the sponsor.
    Tuition on fellowships (non-GRA/GTA appointments)
    • When the sponsor does not allow tuition as a direct charge it must be shown as a cost share.
    • When the GRA FTE is split between two budget indexes, tuition should be split proportionately.
    • Graduate students can be paid hourly as a student worker, but will not be appointed as GRA, will not have tuition paid and will not receive Recruitment and Retention Differential.
    • Graduate students can be both hourly and on GRA/GTA appointments as long as:
      • it is specified in the budget
      • the student does not go above .49 FTE

      Participant Support Costs

      Participant support costs refer to costs paid to or on behalf of participants or trainees attending conferences, meetings, symposia, training activities and workshops. A participant must be an individual who is attending in the context of a "trainee."

      • Participant support costs may include transportation, per diem, stipends, supplies, conference fees, and other related costs (registration fees, books, instructional materials) for participants only.
      • Conference panelists, organizers, consultants and speakers are not considered trainees and should not be included in the participant support section of the budget.
      • Employees of OSU, who are not students, should not be included under participant support in a proposal budget. Their costs should be incorporated into other budget categories (e.g. travel). Employees who are a student at OSU (including Graduate Research Assistants) may be considered a participant under the definition above, and included under participant support in a proposal budget, only if the grant in which they are employed is different than the grant which is sponsoring their training (i.e. a student cannot be a GRA and a participant in the same grant).
      • For the vast majority of proposal budgets (when the indirect costs are based on “MTDC” or modified total direct costs), participant support costs (non-employee participants) are exempt from indirect costs. When the sponsor specifies that F&A cost be based on the total award (“TDC” or total direct costs), participant support costs are included in the indirect cost calculation.

      Public Relations Activity

      Public relations and fundraising activity costs should not be placed on sponsored project funds.

      Real Property, Land

      Land (real property) cannot be purchased on restricted funds without specific sponsor approval.

      Rentals & Leases (Space)

      Office space or buildings that are utilized for non-OSU purposes are not allowed as a direct cost item or cost share item. However, if space (or buildings) is rented and that space is used exclusively for research or programmatic uses (other than administrative), this is an allowable direct cost (F&A would not then be charged to this item). Justification and explanation of rental space usage must be included in the budget justification.

      Salaries and Wages

      Salaries and wages include an itemization of all OSU employees and students involved with the activity and who are either paid from the sponsor budget or who are cited for cost sharing. See Budget-Personnel for further details on the salary and wage category.

      • NSF 2/9 Rule - Allows faculty to budget only two months' salary in the summer for those faculty who have nine-month academic year appointments.
      • Salary Caps - The National Institute of Health has a salary cap, an amount equal to Federal Executive Pay Level I. Department of Defense (DOD) also imposes salary caps for certain programs. Budgeted salaries must conform to sponsor restrictions and salary in excess of imposed caps paid by non-federal sources.

      Salaries - Clerical/Administrative Salaries (See Research Office Policy 16-005)

      Salaries of administrative and clerical staff are not normally charged as a direct cost budget item, as they are included as part of OSU’s Facilities & Administrative (F&A) rate calculation. In exceptional circumstances, direct charging of administrative and clerical salaries may be appropriate where all of the following conditions are met:

      • Administrative or clerical services are integral* to a project or activity;
      • Individuals involved can be specifically identified with the project or activity;
      • Such costs are explicitly included in the proposal budget or have prior written approval of the sponsoring agency; and
      • The costs are not also recovered as indirect costs.

      *OSU has determined that integral means: (1) the services are essential, vital, or fundamental to the project or activity; AND (2) a minimum of 15% FTE is budgeted in the proposal’s budget year.

      PI’s will be expected to describe how these administrative or clerical services are integral to the project/activity in their proposals. For modular budgets, administrative/clerical staff must be listed in the Personnel Justification within the Budget Justification section of the proposal, along with each person’s FTE.

      Services and Testing

      Supplies

      "Research supplies" are allowed when directly related to technical use on the project (e.g., computer paper, research notebooks, survey forms). General office supplies (e.g., pencils, letterhead paper, memo pads) are not allowable budget items (these items are accounted for in the F&A rate calculations). In no instance should research supplies be requested to replenish an inventory (supplies purchased are to be used with the activity).

      Subcontracts, Subgrants, Subawards

      These are subaward agreements written by OSU to another entity to perform a portion of the sponsored agreement. Go to Subawards for additional information.

      Travel

      Travel costs follow the OSU policies for travel. Foreign travel is eligible to use the U. S. Department of State Foreign Per Diem Rates (also available on the OSU travel website). For travel rates and policies see the OSU Travel Website.

      The U.S. Department of State provides information on travel advisories for foreign travelers visiting other countries.

      Current Travel Warnings

      All international travel using federal funds must be by U.S. flag air carriers if service by such a carrier is available. Cost is not a factor in determining availability. The first or last leg of travel from or to the U.S. must be by a U.S. flag air carrier in almost all instances. Business class is permitted. See section 602 Fly America Act.