Policies & Compliance

Budget Development

6.2 Major Budget Categories

6.2.1 Direct Costs

Direct costs are those that can be directly attributed to carrying out the work of the proposed project or "those costs that can be identified specifically with a particular sponsored project relatively easily with a high degree of accuracy." Examples include the salary of a principal investigator (PI) or the purchase of specific supplies for a specific experiment.

Costs involved in conducting sponsored projects are categorized in two ways: direct costs or indirect costs. The federal government refers officially to indirect costs as facilities and administrative (F&A) costs, sometimes simply called "overhead" costs. Direct costs and F&A costs together are the actual cost of a sponsored project.

Direct costs may include the following:

6.2.1.1 Personnel Costs

Personnel costs should include only University personnel. Collaborators at other institutions should be included either as consultants or within a subcontract budget. Proposed salaries should be in accordance with approved salary scales and position grades, and the budget should reflect the actual percentage of effort that is anticipated. In developing multi-year project budgets, remember to factor in salary increases if the sponsor specifically allows salary escalation. The University has no escalation policy so the sponsor guidelines should be observed.

Note: some sponsors have limitations on the amount of salary that may be charged to a grant ("salary caps"). See the NIH Salary Cap current limitations.

6.2.1.1.1 Stipends

Stipends are payments to students and include scholarships, fellowships, financial assistance grants, training grants, or other contributions supporting educational or training expenses. A stipend does not require the performance of services, and by definition, an employment relationship does not exist. Stipends generally are not allowed except for training grants or if specifically approved in the award document.

6.2.1.2 Fringe Benefits

Fringe benefits include such items as health insurance, retirement benefits, and Social Security and Medicare. Fringe benefit rates should be charged to the grant in relationship to the salaries and percentage of effort committed to the grant using current fringe benefit rates as detailed.

6.2.1.3 Consultants

A consultant (also known as an independent contractor) is an individual or organization capable of providing a service not available at the University. Consultants are normally engaged for short periods of time to provide services that are not material in relation to the overall project scope of work. The University has developed a policy and forms regarding independent consultant and independent contractor professional services. You can find the Agreement and Independent Contractor Classification Checklist here.

Note that some sponsors limit the rate at which consultants can be paid and consultant costs are not excluded from the F&A calculation.

6.2.1.4 Equipment

Equipment needs should be itemized and justified. Most sponsors rely on the University's definition of "capital equipment" to differentiate between equipment and supply categories.

Capital Equipment - An item having an acquisition or donated value of $5,000 or more and a useful life in excess of one year. These items are not subject to Facility and Administrative (F&A) costs when the negotiated F&A rate schedule is used or when F&A is not an allowable cost by the awarding agency.

Computer equipment (under $5k unit cost) and other kinds of multiple use materials can be purchased on a federal grant, BUT the purchase would have to be included in the budget and budget justification demonstrating the equipment is essential to meet the grant purposes and that the project does not have reasonable access to other devices or equipment that can achieve the same purpose. PI's are responsible for determining whether or not the device is "essential" and to what extent the cost of the device is allocable. The award would then include approvals for those items and deemed appropriate by the agency. Read more on the NSF Grant Policy in Section 612.2 and the NIH Grant Policy in Section 7.9.1 under "Equipment".

Software costs that fall under the definition of equipment, per University policy 3-043, must equal or exceed $100,000 and its useful life must exceed 5 years. Software packages and associated licenses and/or costs incurred to develop and implement software may only be budgeted as equipment if they fall within this policy.

Insurable Equipment - An item having an acquisition or donated value of between $1,000 and $4,999 and a useful life in excess of one year. These items should be budgeted under the category "supplies" and are subject to F&A costs. This account category exists solely for the purpose of accounting for items which if missing or destroyed are possibly subject to a University insurance claim.

Fabricated Equipment - Equipment that is constructed by combining or assembling modular components and/or materials into one identifiable unit is referred to as fabricated equipment.

When completed, each component loses its individual identity and the end product becomes an identifiable single unit. Typically such equipment is made or designed inhouse for a specific purpose. In order to be capitalized, the finished product must have a unit cost of $5,000 or more and a life expectancy of more than one year (fabricated equipment can also be recorded as insurable equipment if the cost is between $1,000.00 and $4,999.99).

Items to take into consideration with fabricated equipment:

University labor costs related to equipment fabrication by an approved recharge center qualify for inclusion in the capitalized cost. All other University labor costs are not allowed to be capitalized as part of the fabricated project.
The purchase price on individual components does not have to exceed $5,000, as long as the total combined price of the end product is equal to or greater than $5,000. If a fabricated project is approved, then the individual items must be purchased using a fabricated equipment account in the range of 61100 - 61108.
Repair of existing equipment, regardless of the cost, is not fabricated and is subject to F&A costs.
If there is an upgrade of existing equipment, which results in the existing equipment implementing new technologies (not just an upgrade or repair of existing technology) and the total of the components of the upgrade are greater than $5,000, then the purchase of the components are not subject to F&A costs.

Center for High Performance Computing (CHPC) services (including cluster nodes, virtual machines and storage) where funds are paying for a portion of assets, both under and over $5,000., may be treated as capital equipment purchases. Only in the occasional case when CHPC charges for staff time would those services be for non-equipment or "other services" and CHPC is paid directly from the project.

6.2.1.5 Materials & Supplies

Materials and supplies include all consumable materials including the purchase cost of animals as well as small items of equipment that do not meet the threshold for "capital equipment". Each item or group of items should be listed and carefully justified.

Note that federal sponsors do not allow general office supplies unless their use is above and beyond what would be provided through overhead and can be specifically justified for the project.

6.2.1.6 Travel

In addition to meeting all other policy requirements, travel costs charged to grants and contracts are subject to specific limitations and restrictions, in accordance with terms set by the sponsor. Travel policies of federal and non-federal sponsors vary. Travelers on University trips that are funded directly or indirectly by a federal grant or contract must abide by the federal rules on air travel.

Fly America Act: For international air travel, federal requirements state that American carriers be used when a traveler is flying between the U.S. and another country or between other countries to the maximum extent possible. Convenience and/or expense are not considered appropriate reasons for not using U.S. carriers. Foreign travel paid from federal contracts and grants requires advance approval by Grants & Contracts Accounting and often the sponsoring agency.

Travel costs include expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business related to a sponsored project. Such costs may be charged on an actual basis, or on a per diem or mileage basis in lieu of actual costs incurred subject to the maximum amounts specified in the current Schedule of Allowable Travel Rates set by the University and within the University's Travel Policy and practices consistently applied to all institutional travel activities. Reimbursement of travel costs associated with sponsored research projects must comply with all provisions stipulated by the sponsoring agency, or with all provisions of the University's travel policy if more restrictive. Funds can be requested for travel to scientific meetings, to conduct fieldwork, to collaborating laboratories and for consultation with the funding agency or with colleagues concerning project research. For more information contact the University Travel Department.

6.2.1.7 Other Direct Costs

Other direct costs may be used for other project expenses that do not fit into the above classifications. Examples include publication costs, computer services, human subject participation fees, participant support, repair and maintenance of equipment, rent and utility expenses, animal services, communication costs, tuition, and some types of telephone service.

6.2.1.8 Subcontracts/Sub-Awards

Subcontracts and sub-awards are agreements by which some scientific or programmatic aspects of a grant made to the University are contracted out to another organization or institution under the direction of a non-University of Utah investigator.

The subcontractor is expected to work with autonomy and take full responsibility for its portion of the work. This level of independence and participation in the development and execution of the project distinguishes a subcontractor from the provider of a purchased service (vendor).

The primary proposal submitted to the sponsor should include evidence of commitment from the subcontractor, if the subcontractor has been identified, as well as a statement of work and proposed budget. See Obtain Subrecipient Documentation in the Grant Life Cycle. Sponsor guidelines may vary; consult OSP for a discussion of typical requirements.

The subcontract budget shall include the sub-recipient's F&A. The sub-recipient's direct and indirect costs are included in the University's budget as direct costs. The University should only calculate the first 25K of the total subcontract budget into the indirect cost base.

6.2.1.9 Patient Care Costs

The cost of routine and ancillary, or special services, to research patients is an allowable direct cost or research agreements. Routine services include the costs of the regular room, dietary and nursing services, minor medical and surgical supplies, and the use of equipment and facilities for which a separate charge is not customarily made. Ancillary or special services are the services for which charges are customarily made in addition to routine services such as operating rooms, anesthesia, laboratory, EKG, etc.

Where federally sponsored research programs provide specifically for the direct reimbursement of nursing, dietary, and other services, appropriate adjustment must be made to patient care costs to preclude duplication and/or misallocation of costs. Taken from 45 CFR part 74, appendix E

University Tracking of Clinical Research (uTRAC) is the clinical research management system that the University uses to estimate allowable direct patient care costs. Clinical Research Compliance and Education (CRCE) administers uTRAC and provides training on its use to study teams. This system can be used to help facilitate comprehensive pre- and post-award financial compliance.

uTrac is an automated research pricing tool in addition to serving as the key patient care research charge routing system. It facilitates budgeting of per-participant and project-wide costs, automates inflation, facilities and administrative (F&A) fees, and estimates some personnel costs.

All clinical research studies that involve one or more prospective clinical procedures, services, or other items are required to use uTRAC. See policy.

6.2.1.10 Participant Support

Participant support costs are defined in Uniform Guidance as direct costs that support participants and their involvement in a sponsored project.

Participant support costs may include the following:

Event registration fees
Stipend (predetermined amount regardless of actual costs) for housing and subsistence allowance
Travel costs when the sole purpose of the trip is to participate in the project activity
Even support costs for lodging and food expenses paid directly to the even facility, only if the payment is made on behalf of, or reimbursed directly, to the participant
Meals and incidentals when on travel status
Per diem paid directly to or on behalf of participants
Training materials
Temporary dependent care

All costs that are reimbursed or paid on behalf of the participant must be incurred within the project period and be specifically allowed by the sponsoring agency. Participant support costs are budgeted in 6230B and should not be confused with 6215B Participant Compensation. Participant Support must be accounted for separately and therefore requires a companion project to house these costs.

Generally, participant support may not be rebudgeted from the participant support category without prior written approval from the sponsor. Verify rebudget requirements with OSP or by checking applicable terms and conditions or agency specific regulations.

Documentation must be retained when managing participant support costs. Types of documentation may vary based on scope of work.

Participant generally means an individual participating in or attending activities under a sponsored project, such as trainings or conferences, but who is not responsible for implementation of the project.

A participant is an individual who is receiving a service or training opportunity from a workshop, conference, seminar, symposium, or other short-term instructional or information-sharing activity funded by a sponsored project.

Individuals committing effort to the development or delivery of program activities under the project (such as consultants, project personnel, or staff members of a recipient or subrecipient) are not participants. Examples of participants may include a University student/scholar, teacher, state or local government personnel, or someone who does not have a role in organizing the event or forwarding the project.

Participants can include U.S. citizens, permanent residents, or foreign nationals. A participant must have a social security number (SSN) or an individual taxpayer identification number (ITIN).

Go to Section 6.3 >>

Office of Sponsored Projects

VP for Research