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Budget Overview

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 (e.g match). 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. IPSSP staff are 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 the 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.

Developing a Budget

Use the information below to develop a budget for your program that aligns with university policies. 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. Note: each funder and grant opportunity should provide specific details regarding allowable expenses within a budget. Please review these guidelines carefully as you develop your budget.

  • 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. 
    • As of our May 2020 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.
    • The Office of the Provost has discretion to redistribute indirect costs to the PI and/or University Center to encourage additional scholarship and professional development. The share of indirect costs recovered by the Centers or PI is intended to support research and creative activity efforts and enhance future grant acquisition.
  • 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. 

    The formula to calculate the hourly rate of pay for compensation for sponsored research in summer is as follows:
    • Academic Annual Salary (based on rank/step) ÷ 30 weeks (academic year[two 15-week semesters]) ÷ 37.5 (standard workweek) = Hourly Rate of Pay 
    • Example: $81,559.54 (Associate/Step 6 Fall 2017 Schedule) ÷ 30 ÷ 37.5 = $72.50/hour
    • Fringe Benefits (based on employee benefit package): use 18% fringe benefit rate as a placeholder (actual rate ranges from 18-45%)
    • Contact to confirm benefit and salary information.
  • 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 $90,000 and you are requesting a one-semester, one-course teaching load reduction, which represents 1/8 of your load.  Budget (0.125) x ($90,000) = $11,250 plus 60% benefits, $6,750. The total amount is $18,000.]  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:
    The cost of fringe benefits can vary depending on the individual. They can range between 45% and 60% of salary during the academic year. Meanwhile, the cost of fringe benefits for work during the summer months is calculated at a rate of 19% of salary. IPSSP staff will work with you and Human Resources to confirm your fringe benefit costs for your budget proposal.
  • Budgeting salary and benefits:
    HR must review the job description for employees to determine the appropriate job title and classification. For Grant-Funded Employees, submit a job description to to receive estimated salary and benefit information for the position.
  • Basic steps required to hire staff:
    Before hiring staff, contact IPSSP and HR. A request to fill and job description will be required, along with documentation that funds are available to support the position. All positions will be posted to the Shippensburg University jobs portal. Grant-Funded Staff will submit Time and Effort forms to the Grant Accounting office. 
  • 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, 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 student's 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 worker's 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: and Fees
  • Budgeting a graduate assistantship (GA):
    To budget a graduate assistantship position you need to submit the Grant Funded Graduate Assistant Appointment form to IPSSP. GA positions must include $6,966 in tuition and $2,500 stipend each semester ($9,466 per semester or $18,932 total for 2022-2023 academic year). Contact The Graduate School for current rates.

Purchasing equipment and supplies 

  • PI's are expected to research the cost of necessary equipment and supplies for their project. All procurements (supplies, speakers, consultants, and equipment) will go through SourcePoint and SAP. The PI will need to coordinate access to these systems and navigate the procurement process. Please note: SU does not currently have a purchasing office. Contact the Regional Procurement Office or Grant Accounting with questions.
  • 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 you may want to check with the Contracting Office first.  Note that no sales tax will be reimbursed.  Sales tax exemption forms are available from the 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.   
  • Enterprise Guidelines: Current University policy and preference is to use state vehicles or to rent vehicles through Enterprise as opposed to using personal vehicles. As of October 2022, there is an updated, detailed process for making Enterprise vehicle reservations on the University’s business account. There are some notable changes. It is imperative to know that Enterprise has now assigned a Billing Number to the University and uses this number to confirm the authenticity of your reservation request. At some point in the reservation process (it could be when making the reservation, or could be when at the branch picking up the vehicle), you will be required to provide the University’s Billing Number.
  • Rental Car Process: For the current Rental Car Process, email Vehicle Dispatch ( If you have any questions, reach out to Vehicle Dispatch (x1567) or the Administrative Services Manager (x3316).

  • Private vehicle: If a privately owned vehicle (POV) must be used, mileage is calculated using the current federal reimbursement rate. This rate changes annually; current reimbursement rates are available at
  • Hotel and meal costs: these expenses 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: 

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. 

Contact the Institute for Public Service & Sponsored Programs Old Main 207 Phone: 717-477-1251 Fax: (717) 477-4053