Budget Development

Definition of “Budget”: a detailed statement outlining estimated project costs to support the sponsored project. A budget should include all the Direct Costs and Facilities and Administrative (F&A) (or overhead) costs required to carry out the project objectives. Proposal budgets in Kuali Coeus should match the level of detail submitted to the sponsor. Specific requirements, including cost principles as defined by the federal government in the Office of Management & Budget (OMB) Circular A-21and OMB’s Uniform Guidance, must be adhered to at the proposal stage and when the funds are expended. Proposals to non-federal sponsors requesting approval of direct costs which are unallowable for federal reimbursement should clearly include and justify those costs in the budget.

  • Direct Costs – Expenses that are specifically associated with a particu­lar sponsored project or activity and/or can be directly assigned to that project or activity with a high degree of accuracy for example graduate student stipend and tuition.
  • F&A Costs Institute expenses that cannot be specifically identified with a particular project or activity.

Budget DevelopmentSubcontracts and ConsultantsTravelAllocation Costs
Materials and Services
Facilities and Administrative Costs
Equipment
Other Costs
Personnel Costs

Faculty and Research Staff and Salary Effort

The largest category of expense on any sponsored program budget is normally personnel expenses. Proposals should accurately represent the amount of direct research effort that key personnel are committing to the project.

  • Faculty academic year (AY) and summer effort should be budgeted as separate line items.
  • When the contributed AY effort of faculty members is expected to be less than 10 percent, and no effort (AY or summer) is identified in the budget, OSP recommends including the statement: “MIT fully supports the academic year salary of Professors, Associate Professors, and Assistant Professors, but makes no specific commitment of academic year time or salary to this particular research project.” The statement should not be used for sponsors (e.g. NIH) that require a commitment of PI effort.
  • The National Institutes of Health (NIH) sets salary caps on faculty compensation that are revised annually. OSP recommends budgeting proposals using actual institutional base salaries (not the cap) so that NIH has the most current information in hand at the time of award. NIH will adjust the budget at award stage to reflect the current salary limit.
  • Any other salary limits imposed by a sponsor in its solicitation should be brought to OSP’s attention as early as possible.
  • Note the OSP Guidance for faculty who, in addition to their nine-month academic year base salary, choose to devote effort and receive compensation from sponsored projects during the summer months of June, July and August.
  • Note the HR Guidance on complying with the Federal Fair Labor Standards Act (FLSA) for salary levels of full-time exempt staff. 

Sample Budget Justification

P. Jones, Principal Investigator (PI), will devote two person-months to the project. She has overall responsibility for the proposed project, including the design and conduct of experiments, analysis of data, preparation of manuscripts, and presentations.

W. Smith, Co-PI, will devote two person-months to the project. He will assist PI Jones in all activities, and will personally conduct all experiments involving animals described in Objective 2.

Graduate Student Research Assistantships and Stipends

  • Graduate Student Financial Assistance Policies & Procedures are described at http://odge.mit.edu/gpp/assistance/rata/
  • The monthly stipends of full-time Graduate Research Assistants (GRAs) are set annually by individual departments. The Schools of Engineering and Science establish ranges for GRA stipends which are announced by the Dean of Graduate Education in March and become the framework for departmental rates. Any deviations are approved by and recorded with the Associate Provost.

The Institute subsidizes 50%* of the fall and 100% of the summer semester tuition for qualifying GRAs. *This rate changes periodically.

  • For NIH training awards, (e.g. T32s,) MIT subsidizes the tuition for NIH trainees to cover the shortfall created by the tuition cap. Departments are expected to fund the shortfall between normal stipend level and what NIH provides.
  • Similarly, MIT subsidizes the tuition of IGERT trainees to cover the tuition gap.
  • For all other awards, stipend and tuition costs not paid by the sponsor must be covered by the department.

Sample Budget Justification

GRA Betsy Blue will conduct synthetic experiments described in Objective 1. She will assist the PI in the collection and analysis of data and in the preparation of manuscripts from this work.

Postdoctoral Salary

Postdoctoral associate salaries are established by the DLCs, making the appointment within Institute guidelines. Fellowship appointments may not be budgeted and charged to sponsored research project awards.

Sample Budget Justification

Lily Wu, PhD—11-month effort—began her postdoctoral Research Associate (RA) work in this lab one year ago. She has four years of prior experience with small animal behavioral studies and provides day-to-day oversight of laboratory personnel. She personally conducts all experiments described in Objectives 3 and 4.

FAQ

Can a Post Doc Fellow be charged to a research account?
 
A:   Post Doc Fellow appointments as referred to in 5.3.3 of MIT's policies and procedures are not appropriate costs to organized research activities (research WBS) of the Institute. The primary purpose of the Fellow appointment is the development of the individual and not the advancement of a research project.  
 
Non federal awards in particular could mention the term Fellow in the context of recruiting post doctoral level staff to work in their research programs. When we do have major agreements where the sponsor is supporting both an organized research program and a fellowship award program (two distinct purposes), OSP creates a research WBS for the organized research program and a fellowship WBS for the fellowship award program.

Administrative and Clerical Costs

  • OMB A-21indicates that the salaries of administrative and clerical staff should normally be treated as F&A
    • Direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and individuals involved can be specifically identified with the project or activity
    • “Major project” is defined as a project that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments
    • Four criteria must be met for direct charging administrative expenses to a sponsored project:
      • Incurred for the performance of a major project or activity
      • Specifically identified and directly benefiting the project
      • Budgeted and approved by the sponsor
      • Supported by a budget justification
    • If the administrative expense does not meet the criteria for direct charging described above, the expense should not be proposed or charged as a direct cost to the project
  • If the expense is questioned, the PI will need to justify the charges to the sponsor and any auditors
  • All questions regarding the appropriateness of administrative charges to work breakdown structure (WBS) elements should be addressed to your OSP representative

See Sponsored Projects Reference Manual for more detailed information.

Sample Budget Justification

An Administrative Assistant—six person-months—will provide dedicated administrative and clerical assistance to the proposed Center. Responsibilities will include coordinating weekly video conference meetings of all collaborators (five subawards), assisting investigators with the preparation of human and animal protocols, managing all purchases of Center materials and services, and overseeing the day-to-day financial management of the Center's budget in cooperation with the PI.

Employee Benefits

  • Employee Benefits (EB) are a direct cost charged as a percentage of salary. EB rates, like F&A rates, are negotiated and approved by the Office of Naval Research (ONR), MIT's cognizant agency. The rates apply to all sponsored projects.
  • OSP provides a table of Employee Benefit and Vacation Accrual rates on the OSP website for current and proposed rates, which are the rates to use in a proposal.

Vacation Accrual

Vacation Accrual is the budget tool used by MIT to estimate vacation costs for post docs, all research staff including sponsored research staff, project staff and hourly staff charged to sponsored research projects. Faculty and graduate students are not subject to the same practice, and should be charged effort at the proportion applied, without any vacation accrual.

MIT's policy is to charge sponsored projects directly only for effort spent working on a project, while charging a separate vacation accrual account for vacation time. Click here for current Vacation Accrual Rates. When preparing the budget, the vacation accrual rate is added to the employee benefit rate. The combined total is charged as “fringe benefits”. See budget justification at the end of this section.

Example 1

1. Calculating the effort and salary:

When budgeting staff on an effort basis, reduce the total projected salary/effort for the individual by the projected vacation salary/effort before applying the proposed effort. This applies to either percentage of effort or person months effort calculations.

Dr. Nelson's annual salary rate is $60,000 per year ($5,000 per month).

Dr. Nelson is provided one month of vacation time under MIT policy, so the maximum amount of effort to be charged to a project per year is 11 months (12 months minus one vacation month, or $55,000 annually.

2. Calculating Vacation Accrual:

For each of the staff, apply the vacation accrual rate to the effort being directly charged to the project.

Dr. Nelson will charge 100% time to a project for a year, or $55,000. Assuming a vacation accrual rate of 10.5%, the vacation accrual charge to the project is $55,000*.105 = $5,775. Add 10.5% to the current employee benefit rate when calculating the budget to the sponsor.

Example 2

Dr. Williams is a research staff member who will dedicate 25% of his effort to this project. His annual salary rate is $48,000, and he holds a 12-month appointment ($4,000 per month). Under MIT policy, he is eligible for 6 weeks of vacation each year.

Calculating the effort and salary:

$48,000 for 12 months less 1.5 months of vacation time = $48,000 - $6,000 = $42,000 base amount to which effort on sponsored projects should be applied. If he works 25% on this project, the salary charged is $42,000 * .25 = $10,500

Calculating Vacation Accrual:

Dr. Williams will charge 25% time to the project for a year, or $10,500. Assuming a vacation accrual rate of 10.5%, the vacation accrual charge to the project is $10,500*.105 = $1,102.50

Use the Sample Budget Justification to help clarify this charging method to the sponsors.

Fringe Benefits:

Fringe benefits are calculated at nn.n% consisting of nn.n% employee benefits and n.n% vacation accrual. Institute policy is that for Post docs, research staff, sponsored research staff, project staff and hourly staff vacation time is paid from the vacation accrual pool and not directly paid from the research award salary expenses. Thus a 12 month full time effort on a research program is budgeted as 11 person months salary and 1 person month vacation accrual (assuming the person accrues 1 month per year.) Both expenses are charged proportionally based on the effort provided. Faculty are not subject to vacation accrual. Graduate Students are not subject to either employee benefits or vacation accrual.

Tuition and Tuition Subsidy

  • GRA tuition costs are allowable costs
  • The Institute subsidizes 50 percent of the AY and 100 percent of each qualifying GRA's summer tuition costs
  • The percentage of the non-subsidized tuition should be budgeted in accordance with the GRA's effort
  • MIT advises Tuition Costs be budgeted as an “Other Cost if no category for Tuition Costs exist.
  • If cost sharing is required on the project, and GRAs are proposed, MIT GRA tuition subsidy is a recommend source of cost sharing. However, to manage risks associated with this form of cost sharing no more than 66% of the anticipated GRA tuition subsidy should be proposed as cost-sharing.

Materials and Services

For expendable items with a useful life of less than two years or a cost of under $5,000:

  • Include a description of the category (e.g., glassware, chemicals) and a best estimate of costs
  • NIH Modular Budget – Breakdowns are not necessary but should be used in budget planning with the PI to assure that all project-necessary materials and services are included during budget development

Sample Budget Justification

Estimates for glassware, chemicals, and other expendable materials are based on average actual monthly expenditures of this laboratory. A significant annual increase has been included for the cost of liquid nitrogen based on estimates of price increases from our supplier.

Consultants

A consultant is an independent contractor who is not an employee of the Institute. Consulting services typically are provided by an individual who is considered an expert in the field. Identification of the consultant by name, specialty, and daily rate is required in the budget. Consult specific agency guidelines for caps on consultant rates.

  • List each consultant; their specialty or service to the project; and their daily, weekly, or monthly rate of reimbursement. Show the consultant's total projected cost on the project. In the proposal, include a letter of collaboration and the consultant's curriculum vitae.
  • A consultant may be compensated for services and reimbursed for travel (including meals and lodging) and other miscellaneous expenses.

Sample Budget Justification

Dr. James Brown is an authority on statistical analysis of cross-cultural social studies. He will conduct an independent analysis of our interview data to assure that our methods and conclusions are consistent with rigorous statistical standards. Brown will also participate in our annual research group meeting to advise on improving subject recruitment and retention concerns.

Subawards

Subawards – This term is used when MIT issues an award to another organization or entity to help carry out the technical and scientific aspects of a project awarded to the Institute. A subaward relationship is generally described at the time of proposal submission, but is not consummated until after the award has been made to the organization submitting the prime proposal.

Typical subaward situations include agreements in which two or more qualifying institutions work collaboratively on a sponsored project. Each institution has its own PI; however, one of the collaborating institutions functions as the prime awardee and is the legal contact with the sponsor.

The characteristics of a subaward include:

  • The other organization is intended to carry out a portion of the scope of work
  • Typically includes collaboration on the project; both MIT and the other organization have PIs involved, though MIT is the lead institution
  • The subawardee retains control of any intellectual property that they develop

Subaward Budget/Proposal Development

To include a subaward in an MIT proposal, the Department, Laboratory, or Center (DLC) obtains the following from the subaward institution:

  • A brief description of the scope of work proposed by the subawardee
  • A detailed budget, to be included in MIT's application to the sponsor. Budget to include Direct and F&A costs for the subawardee (typically in the same budget format as the MIT budget)
  • A face page or cover sheet bearing the signature of the subawardee institution's authorized official or a cover letter from the authorized official at the subawardee organization stating that it is willing to abide by the sponsors terms should an award be made
  • Other documentation as required, such as the PI's curriculum vitae as well as current and pending support
  • The proposed subawardee includes its total costs (Direct Costs + F&A) in its submission to MIT for inclusion in the MIT proposal

Sample Budget Justification

Marsha Roberts, PI, Riverside University, has collaborated with Institute PI Michael Lucco for the past ten years. Dr. Roberts will direct her laboratory's work with experimental aspects of this project while Lucco will be responsible for theoretical studies. Their work together has resulted in the Roberts-Lucco Scale for small molecule vibrations. The proposed new experimental studies are expected to further refine the scale and expand its applicability in the small molecule vibrational-rotational stability field.

Key References: