After you have designed your project and developed your plan of operations, a budget must be developed. The budget should clearly detail how much will be requested from the funding source and how much will be contributed by other sources. A high level of detail should be included in every budget. Each line item request must be clearly defined and related to the plan of operation.
Usually, budgets center around direct and indirect cost items. Direct costs include personnel, fringe benefits, travel, equipment, supplies, contractual, and other. Indirect cost is an accounting term used to describe costs that are common to two or more of a grantee's projects, such as building space, procurement, personnel administration, and grant accounting. These costs are real and represent actual costs to the institution. Indirect costs are added to the total direct cost and retained by the Institution to offset the additional expense of carrying out the project for that agency. The staff of the institute is prepared to assist you, as you begin the process of developing the budget for your project.
A project may also receive matching funds from the institution to develop a financial package to fund the program. Matching funds come in two forms, hard and soft. Hard matches are required by the agency and will be considered in the program audit. Soft matches are not required and are not included in the audit, but are seen as commitment of support by the institution. Under certain conditions matching dollars can be in-kind. Each program requiring a match will specify the limits of the required match. These limits are described in the program guidelines.
A plan of operation that is logical in sequence and clearly developed will lead to a budget that is adequate to support the project, and reasonable in relation to the objectives of the project. Before turning in your budget projections, check your calculations twice.
Working With Budgets
Purchasing equipment and supplies
- All purchases should be coordinated through the SU Purchasing Dept. (contact x.1386 or PurchasingDept@ship.edu)
- Equipment/supplies costing less than $300 can be purchased by the PI and reimbursed via petty cash within 30 days. Some items cannot be reimbursed via petty cash, so it's a good idea to check with the Purchasing and Contracting Office first. Note that no sales tax will be reimbursed. Sales tax exemption forms are available from the Purchasing and Contracting Office (OM 207). For reimbursement of petty cash, you will need to submit a Petty Cash Form including the original receipt to the Grant Accounting office.
- State vehicles should be used when available (within the U.S.). Reserve vehicles online via the Faculty Information System. If you have questions, contact vehicle dispatch at x.1567.
- Privately owned vehicle (POV) mileage is calculated using the current federal reimbursement rate. As of January 1, 2018 this rate is $0.545/mile.
- Current reimbursement rates are available at http://www.gsa.gov/portal/content/100715
- Hotel and meal costs will be reimbursed based on actual expenses shown on original receipts, up to a maximum of the federal maximum rates for lodging or M&IE (meals and incidental expenses) for your destination. In preparing a budget, see the federal rates established by the U.S. General Services Administration available at: http://www.gsa.gov/portal/category/21287
- Budgeting summer salary:
Faculty can be compensated for 12 weeks of summer effort in addition to their regular academic year contract. Extramural funding (e.g. research effort) plus university commitments (e.g. summer teaching, other summer contract work) cannot exceed 12 weeks of remuneration per summer. Summer salary for budgeting extramural grants can be calculated:
- One month summer salary = 1/9 academic year salary.
- Two weeks summer salary = gross salary for one pay period on 20 pay/year schedule.
- Budgeting replacement cost (i.e. reassign time or teaching load reduction):
Reassign time to reduce teaching load during the academic year should be budgeted as replacement costs based on your salary. [Example: Your academic year salary is $60,000 and you are requesting a one-semester, one-course teaching load reduction, which represents 1/8 of your load. Budget (0.125) x ($60,000) = $7,500 plus 35% benefits = $10,125.] If this method is not allowed by the granting agency or not workable in your budget, you may discuss options with the Institute for Public Service and your academic dean.
- Fringe benefits on faculty salary:
Fringe benefits are calculated as 35% of salary during the academic year and 18% of salary during the summer.
- Basic steps required to hire a student:
Before hiring a student worker, contact the Financial Aid Office and provide basic information (student name, ID, pay rate, starting date, grant cost center, etc.). You will also need to contact HR/Student Payroll (Belinda Johnson, x1124, email@example.com) Department administrative assistants will put the worker's hours on the system (e-time) in order for the student to be paid. Students will need to submit Time and Effort forms to the Grant Accounting office. Students must have a Social Security number to be employed.
- Student wages and benefits:
Undergraduate students are generally paid at the Pennsylvania state minimum wage, $7.25 per hour (from July 2009). Students can be paid higher rates based upon their qualifications as allowable under the guidelines of particular granting agencies.
- Graduate students hourly rate is $10.00 per hour, this rate may increase based on their qualifications and job requirements as long as allowable under the guidelines of the granting agency.
- For student workers who are enrolled full-time (e.g. fall and spring semesters), you should only budget 0.3% (.003) to cover the cost of workers compensation. For student workers who are enrolled less than full-time (e.g. summer employment), you should budget for benefits at a rate of 7.653% of wages.
- Budgeting tuition remission:
You can budget to fund student tuition (or tuition plus fees) based on actual costs. Tuition in future years is difficult to predict. It is wise to build an annual increase into multi-year grants to cover future increases in tuition cost. Current rates are available at: http://www.ship.edu/admin/stuaccnts/Tuition and Fees
- Budgeting a graduate assistantship:
To budget a graduate assistantship position you need to submit the Grant Funded Graduate Assistant Appointment form to IPSSP.
Direct / Indirect Costs:
- Direct costs include project personnel, fringe benefits, travel, equipment, supplies, contractual, and some other expenses all of which are directly related to the effort and program delivery of your project.
- Indirect costs are associated with the use of facilities and administrative support – such as Grant Accounting, Payroll, and Purchasing Department staff time.
- According to the Fall 2013 agreement with the federal government, Shippensburg University calculates indirect costs as the equivalent of 45% of all salary, benefit, and wage expenditures. NOTE: Some granting agencies (particularly non-governmental funders) may require an alternative method for calculating indirect costs (e.g. 8% of total costs, excluding equipment). Please contact the Institute for Public Service and Sponsored Programs (x1251) for assistance with calculating indirect costs.
- As indirect costs are reimbursed to the University during the post-award phase of a sponsored project, the funds are allocated as follows: 60% to the university general fund, 30% to the Office of the Provost, 10% to the Institute for Public Service and Sponsored Programs.
- Effective 2016, the Office of the Provost has agreed to a faculty professional development incentive. This applies only to faculty-generated grants that pay indirect costs. In these instances, the Office of the Provost will receive 20% of the recovered indirect costs, and 10% will be allocated to a professional development account to be used by the faculty PI for eligible professional development activities. Contact IPSSP for more details.
Many granting agencies require that some percentage of total support come from other sources and refer to these contributions as a match. Consider all opportunities to include in kind matches, such as professional time donated to the project. The university may have funds available for matching costs. Contact the Institute for Public Service (x1251) for more information.