All about Budgets
Direct costs are easily identified as belonging to a specific sponsored project. Examples of direct costs include the following:
- Salaries, wages, and fringe benefits of faculty, technicians, scientists, research assistants, post-docs, students, or other personnel who are necessary to meet the goals of the project
- Scientific and technical equipment (including shipping and installation)
- Computer costs (hardware, software, supplies, and services) if specific to the project and not general purpose
- Materials, including non-capitalized equipment
- Participant expenses (e.g., travel and per diem of workshop participants)
- Supplies (consumables, e.g., chemicals, glassware)
- Services (including outside consultants)
- Subject costs (e.g., incentives paid to research subjects from whom data are collected)
- Travel for the Principal Investigator(s) and other project personnel
- Conference fees (e.g., abstract submission, registration)
- Publication and page charges
Facilities and Administrative (Indirect) Costs
In addition to the direct costs of conducting a project, most proposals will include an amount to cover Facilities and Administrative Costs (F&A), often referred to as indirect costs or overhead. F&A costs reimburse the University for laboratory and office space, utilities, administrative services (e.g., purchasing, accounting, research administration, personnel, security), custodial services, library services, and building, grounds, and street maintenance. In summary, facilities and administrative costs cover the institutional infrastructure essential to support sponsored research that cannot be allocated and directly charged to a specific grant or contract. Capital expenditures (including items of equipment costing more than $5,000) and the portion of each sub-grant or sub-contract in excess of $25,000 are excluded from the calculation of indirect costs.
- all salaries and wages
- fringe benefits
- materials and supplies
- the first $25,000 of each sub-grant or sub-contract
Capital expenditures (including items of equipment costing more than $5,000) and the portion of each sub-grant or sub-contract in excess of $25,000 are excluded from the calculation of indirect costs.
KSU Facilities and Administrative (F&A) Cost Rates
Kennesaw State University collects F&A costs based upon a federally negotiated rate. The University has separate Facilities and Administrative cost recovery rates for research performed on and off campus.
On-Campus Rate – Kennesaw State University’s negotiated rate with federal agencies is 35.5% of the total direct costs. Total direct costs include everything except for capital expenditures (including items of equipment costing more than $5,000) and that portion of each subaward in excess of $25,000.
Off-Campus Rate – KSU’s federally negotiated Facilities and Administrative off-campus rate is 15.2% of the total direct costs. In general, if 50% or more of the project will be conducted off-campus (in facilities not owned by Kennesaw State University), the off-campus rate should be used for the whole project. If there is any question about which rate to use, investigators should confer with Office of Research staff.
Some sponsors limit Facilities and Administrative cost recovery or prohibit it altogether. If a sponsor prohibits or limits F&A charges, a copy of the sponsor’s F&A rule must be attached to the Proposal Routing Form. If the sponsor does not have a rule on F&A costs, but there is a compelling reason to waive or reduce the charges, the PI must complete the Request for Facilities and Administrative Waiver. Without documentation of the sponsor’s limit or an approved waiver request, the University applies the standard F&A rate to all proposals.
When faculty/staff from more than one college collaborate on a proposal, the question, “Who gets the indirects?” often arises. The distribution of the PI college share of indirects is decided by the project investigators and their deans, not the Office of Research. Although projects often have multiple investigators, only one is named the PI and is the contact for the Office of Research and the sponsor. The collaborating investigators decide who will serve as the PI.
Where more than one college is involved, it is advisable to have a written plan signed by the respective investigators and deans, and possibly also the department chairs and college business managers. This should be done at the proposal stage.
Once indirects are earned, the Office of Research will post them as listed above. The college business manager(s) will be responsible for transferring the agreed-upon amount(s) to the collaborating college(s)/unit(s).
Allowable CostsSubpart E of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at Title 2, Part 200 of the Code of Federal Regulations establishes principles for determining costs applicable to grants, contracts, and other agreements with educational institutions. These principles apply regardless of whether the item is treated as a direct or indirect cost. Not all items of cost are listed in the Circular; however, this does not imply that a cost is either allowable or unallowable. In order for costs to be allowable, similar or related items must be treated consistently.
ProcurementKSU's Office of Procurement sets policy and procedure for purchasing at KSU. In addition to agency policies, we must follow KSU and the University System of Georgia (USG) guidelines on procurement. By reviewing and following their policies at the proposal stage, you can help avoid potential procurement issues once awarded.
A generic budget spreadsheet is available to assist researchers with their budget calculations. Standard line items include the following:
Personnel costs include salaries and wages for faculty, staff, and student workers who are employees of Kennesaw State University. Payments to non-KSU employees are budgeted as consulting or subawards, not personnel costs. Salary amounts budgeted for grants are based on the proposed effort to be expended on the project as a percentage of the base salary. Effort can be expressed as either a percentage of annual effort or in person months, the latter the case for NSF and NIH.
Most KSU faculty members have a nine-month academic year (AY) appointment, while faculty with administrative appointments (e.g., department chairs, deans, associate deans), as well as faculty with special faculty appointments, have 12-month (CY) appointments. For faculty on academic year contracts, the period that constitutes the basis of their salary is nine months, therefore one month is equivalent to 11.11% (1/9). Per BOR regulations, nine-month faculty can earn up to 33.33% of the immediately preceding AY salary during the summer (the three months when they are not under contract).
Salaries for staff and 12-month faculty are calculated on the 12-month calendar. For these employees, one month is equivalent to 8.33% (1/12); there is no separate summer salary possible since they are already paid for 12 months of the year.
Salary should be budgeted as release time or summer salary, not overload. Budgets with overload will not be submitted unless the provost has approved the overload. In addition to provost approval of overload pay, sponsor regulations must be followed; please note that federal agencies allow overload or supplemental pay in very limited circumstances. You must discuss this with Office of Research pre-award staff prior to proposal submission. Salary budgeted as summer salary is paid to faculty during the non-contract summer period while salary budgeted as release time is charged to the grant, freeing up departmental funds for other uses in support of the department.
Per the faculty handbook, a typical semester-long three-credit course represents 10% of faculty effort for the academic year. For 12-month faculty, a course would represent 7.5% of effort for a full calendar year. In both cases, one course release is equivalent to 0.9 person month. Effort can be budgeted per course release at 10% (7.5%) or as a varying percent corresponding to the effort expended, not tied to a course release and as small as 1% and as much as 99%.
Undergraduate students are budgeted at $10/hour and non-GRA graduate student workers are budgeted at $12/hour.
Proposals to the National Science Foundation that include salaries are subject to additional rules. In budgets for all such proposals, KSU follows NSF’s compensation policy as stated in the NSF Proposal and Award Policies and Procedures Guide. In general, NSF will pay no more than two months’ salary for senior personnel. Senior personnel are PIs, Co-PIs, and faculty associates, as defined in the NSF guide. Salary must be based on the faculty member’s regular monthly rate (as described above), and effort must be certified by project personnel in accordance with federal guidelines. The two-month limit for each person covers all NSF-sponsored projects, meaning a faculty member may earn two months’ compensation from one project, or may distribute the two months’ salary across multiple projects. Under certain circumstances, NSF allows institutions to ask for more than two months of support for a faculty member. Requests for more than two months of support must be: (i) approved by the Office of Research; (ii) disclosed in the proposal budget; (iii) justified under the applicable federal regulations; and (iv)
specifically approved in writing by the appropriate agency official at the National Science Foundation.
Benefits are paid for Kennesaw State University employees. Fringe benefits for 9-month (academic year) faculty are calculated as 33% of their institutional base salary during the academic year and 23% during summer. The benefit rate for 12-month (fiscal year) faculty, staff, and administrators is 33% for an entire calendar year. In general, no fringe is paid to students. Please refer to KSU Payroll guidelines as rates may vary depending on different roles.
Capital expenditures include individual items of equipment, new buildings, and alterations and renovations of the existing physical plant.
Construction, Alterations, and Renovations – Projects that include new construction involve planning at the institutional level and are beyond the scope of this handbook. However, alterations or renovations of existing space are often required for the installation of new equipment or the creation of new laboratories or other special purpose rooms. The costs of these changes are considered as capital expenditures. Such projects require coordination with the offices of the Vice President for Research; Information Technology Services; Environmental Health, Safety, and Risk Management; and/or Plant Operations. When renovations or alterations are required, the appropriate offices should be consulted early in the budget planning process.
Equipment – Equipment includes property that costs more than $5,000 and that has an expected service life of more than one year. Because the prior approval policies of sponsoring agencies vary, listing equipment in an award does not necessarily provide approval to purchase the equipment. Budgeted equipment must comply with the specific rules and regulations of the sponsoring agency. Before requesting any new equipment, the Principal Investigator must determine that equipment already available to the University either will not meet the project’s needs or is not available for use when required. Such projects require coordination with the offices of the Vice President for Research, Information Technology Services, Environmental Health & Safety, and/or Plant Operations.
All purchases should be based on competitive bidding whenever possible. For anticipated purchases between $10,000 and $24,999.99, the PI should provide a cost analysis (see KSU competitive solicitation policy) or three quotes, or should provide a justification why the procurement should proceed without competition (i.e. sole source, two distributors/vendors). For purchases equal to $25,000 or more, KSU is required to follow the State of Georgia DOAS competitive solicitation procedure and PIs must obtain at least three quotes or provide a justification why the procurement should proceed without competition.
If the PI has already selected the vendor/product, justification for the selection should be included in the budget narrative. This will not obviate the need to follow the competitive bidding process, but will support the request for a sole source procurement. Justification could include appropriateness of the equipment for the research or complementarity with the lab’s other equipment, for example.
The costs of travel for personnel to conduct research or attend conferences, presentations, or workshops in performance of the project are an important component of many budgets. Reference the policies available at the following websites according to destination. All business travelers should review Kennesaw State University’s travel regulations.
Travel within the state of Georgia
Domestic travel outside Georgia
Travel outside the United States
International Students and Visitors
KSU often hosts international students and visitors during the course of a project and special care must be taken to avoid significant tax withholding on expenditures for lodging, meals and incidentals, and cultural activities. Questions about the tax ramifications of payments to foreign nationals should be directed to the International Services and Tuition Classification Team, Office of Finance and Accounting, Reporting and Compliance Department at email@example.com. The Office of Research will work with you in determining the most appropriate way to budget these expenses.
In general, students on a J-1 visa are taxed at 14% for lodging and meals, but at 30% for income, under which “incidentals” falls. A good strategy to employ is to arrange for the project to pay for the lodging, meals, and incidentals directly, in which case no money is paid to the visitors and they incur no tax liability.
As mentioned above, income paid to foreign nationals is taxed at 30%, but there are a number of tax treaties between the US and foreign countries that enable some foreign nationals to work for limited periods in the US and incur a reduced, or no, tax liability. Please contact the International Services and Tuition Classification Team at firstname.lastname@example.org.
Participant Support Costs
Participant support costs are defined in 2 CFR 200.75 as “direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects.” Participants are not Kennesaw State University employees and are not part of the project implementation team. Costs for transportation, per diem, stipends, and other expenses for participants or trainees should be budgeted as participant support costs when there is a category for participant support costs in the funding opportunity budget guidelines. Many agencies do not allow institutions to charge indirects on participant support costs, such as NSF.
NSF Participant Support Costs
When submitting a proposal to NSF that will include participant support costs, close attention must be paid to NSF guidelines. NSF defines participant support costs in Section II.C.2.g (v) of the Proposal & Award Policies & Procedures Guide (PAPPG):
This budget category refers to direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with NSF-sponsored conferences or training projects. Any additional categories of participant support costs other than those described in 2 CFR § 200.75 (such as incentives, gifts, souvenirs, t-shirts and memorabilia), must be justified in the budget justification, and such costs will be closely scrutinized by NSF. (See Chapter II.E.7). For some educational projects conducted at local school districts, however, the participants being trained are employees. In such cases, the costs must be classified as participant support if payment is made through a stipend or training allowance method. The school district must have an accounting mechanism in place (i.e., sub-account code) to differentiate between regular salary and stipend payments.
Of particular note:
- Participants are not KSU employees.
- Funds budgeted for participant support costs may not be rebudgeted out of participant support costs without prior approval from NSF.
- Indirects are not charged on participant support costs.
- PIs will need to provide participant selection documentation, as well as documentation of actual attendance (sign-in, attendance sheets), to the Office of Research Post-award Accounting Department.
- Human Subjects incentives are not considered participant support costs and should be budgeted under Other Direct Cost.
Students as Participants:
NSF states, "a student cannot be compensated partially as an employee and as a participant on the same grant. It is up to the proposing organization to determine whether they should be a student employee or a participant based on the role of the student in the project. Student employees are compensated for services rendered and their level of compensation is tied to the number of hours worked. Participant support costs should be used to defray the costs of students participating in a conference or training activity related to the project" (Proposal & Award Policy Newsletter, Issue II, May/June 2017). Based on these guidelines and KSU policy, GRAs and Undergraduate Research Assistants are considered employees and not participant
Other Direct Costs
Materials and Supplies – This expense category includes all expendable materials to be used during the course of the grant period. Special purpose computers costing less than $5,000 are included in this category
Publication, Documentation, and Dissemination Costs – The costs of documenting, preparing, publishing or otherwise disseminating the findings of the research are included in this item. Examples of dissemination expenses are page charges, illustrations, indexing of data, and archiving sample collections.
Consultants – Each individual’s expertise, primary organizational affiliation, normal daily compensation rate, and number of days of expected service should be included. A description of consultants’ qualifications should be included if these individuals have not been identified. Please see the Office of Procurement for information on hiring consultants.
Computer Services – Computer services include the cost of software, hardware and leasing of computer equipment. Note that the cost of general-purpose computers is included in the University’s Facilities and Administrative costs.
Space Rental – In some cases a University department, school, or center may require rental space to house a sponsored project. If off-campus space is required, the Office of Research must be contacted early in the proposal stage to assure that University and State regulations are followed.
Human Participant Incentives – The University often conducts research where there is a requirement to obtain participation and/or collect information/responses from human subjects. These human subjects may include any individual necessary for the research being conducted (i.e. external individuals, Kennesaw State University employees, students, retirees, nonresident aliens, etc.). Researchers frequently find it necessary to offer remuneration in order to obtain sufficient participation. These incentives may be in the form of cash, gift cards, checks, non-monetary items or Visa Debit Cards and all are subject to Internal Revenue tax laws. Please visit the Institutional Review Board website for information about these payments: https://research.kennesaw.edu/irb/participant-incentives.php.
Subawards cover significant parts of sponsored projects contracted or otherwise transferred to another organization. A clear description of the work to be performed, the basis for selection of the sub-awardee, and a separate budget and budget justification for the subaward should be included as part of the proposal, along with a letter of participation from the subawardee’s sponsored research office or equivalent. The letter should state that the subaward organization has reviewed the budget and scope of work and agrees to participate in the proposal. During any programmatic discussions with potential sub-recipients, financial commitments or arrangements must be coordinated with and approved by the Office of Research.
All subaward costs are considered a composite direct cost by the University and should always be shown in the subaward cost line of the proposal. Subaward costs must be broken out and supported in the subawardee’s proposal to the University. Subaward costs should never be intermingled with Kennesaw State University cost elements. Subawards that include Facilities and Administrative charges as part of the budget must provide a copy of the institution’s current Facilities and Administrative costs rate agreement.
Cost Sharing or Matching
Cost sharing or matching in grants and contracts are terms that are used interchangeably. Project costs funded by the university (faculty salaries, fringe, travel, supplies, etc.) and in-kind contributions donated by third parties (equipment, supplies, etc.) are forms of cost sharing.
Types of Cost Sharing – The three types of cost sharing are:
- Mandatory cost sharing is required either by federal statute or by the established policy of the sponsor. Time and effort reports are required.
- Voluntary committed cost sharing is volunteered to demonstrate the University’s commitment to a project. Voluntary contributions specified in proposals become required financial commitments if the proposal is funded, even if the amounts are not included in the budget but are quantified in the proposal narrative. Time and effort reports are required.
- Voluntary uncommitted cost sharing is defined as effort over and above that which is committed and budgeted for in a sponsored agreement. More specifically, this is either additional time or resources provided by the applicant, which were not quantified in the budget or in the narrative of the proposal.
Guidelines for Cost Sharing – Commitments to cost sharing and matching should only be made when there is a compelling reason, such as when required by the funding agency or when the agency encourages costs sharing and it becomes a review criterion. Regardless of the percentage, the ability of the University to meet the commitment from acceptable resources must be clear.
As part of the proposal review process, when a Principal Investigator plans to include either KSU’s resources or external entities’ resources as cost sharing, this information must be specifically identified in SmartGrant and on the Cost Sharing Authorization Form. Proposals for cost sharing constitute a formal commitment to the sponsor by the department chair, dean of the academic unit, director of the center or institute, the Vice President for Research, or the Provost. In cases where the matching involves external entities, a letter of commitment from each entity and a detailed budget must be submitted with the proposal. If subcontractors are providing cost sharing, their budgets need to identify these commitments.