A budget is an estimate of income and expenditure for a set period of time. It is important to remember that this is a forecast or best guess of what will be needed on a particular project. While budgeting is not an exact science and budgets are reviewed and adjusted throughout their lifecycle. The key is to try to get as close as possible to the actual expenses and expenditures while adhering to federal, state and university cost regulations.
Direct costs are costs that are specifically identifiable and which can be directly charged to the contract or grant. According to the Uniform Guidance Cost Principles found in the Electronic Code of Federal Regulations (e-CFR), direct costs must be Allowable, Allocable, Necessary and Reasonable and Consistently Treated.
The following is a list of common direct costs on a budget.
When we talk about salaries as a direct cost, this is referring to those people specifically named on the project proposal. This would include the faculty/PIs as well as graduate student researchers, post docs, technicians, consultants, etc.
For UCSD faculty and staff, you will use their Institutional Base Salary (IBS), which is the base salary of an employee. IBS does not include any stipends, bonuses or extra money for summer teaching. The IBS is the amount that is used to determine the effort. If you are requesting 10% effort, you are requesting 10% of their salary. If you are requesting one month of effort, you need to determine if the faculty member has 9 or 12-month appointment, and then determine the value of a month.
Let’s talk about appointment types as they relate to effort.
Use the IBS to calculate effort of personnel assigned to a project.
If a PI has a 9-month appointment and works in the summer, that would be a 3-month summer appointment. For faculty and staff on a 12-month calendar appointment, they would never have a summer appointment.
Effort can be calculated in months or as a percentage.
Calculating Effort: Example A
Q: How would you calculate 5% effort?
A: $240,000 X 5% = $12,000
Calculating Effort: Example B
Q: What is the value of one month?
A1: $192,000 ÷ 9 months = $21,333
Q2: What if she also will dedicate two summer months to the project? What is the value of a summer month?
A2: One summer month = $21,333
Two summer months =$42,666
These are all of the additional benefits outside of the employee’s salary. This includes retirement plans, taxes such as disability and workers’ compensation, and health and welfare benefits such as health, vision and dental insurance.
The university now uses a Composite Benefit Rate (CBR) system with nine possible rates. This structure is a simplified methodology for predicting employee benefits charged to the university. The CBR rate is an average of all eligible benefits applicable to an employee group. Each group is based on individual employee attributes which fall into a certain group. The composite fringe benefit rate is a percentage of the employee’s gross salary based on which employee group they fall into. This is the rate you will use in your budgets.
To determine the appropriate CBR, please refer to the CBR Rate Table which can be found on Blink.
These rates vary around campus; different areas on campus have a different monthly rate and then it is proportional. For example, if you are requesting half of a student, you would request half tuition. This rate is charged during the academic year only and not in the summer months. Pay attention to the title code and the department as the salary varies by title code. For example, on the table below, you will see that the rate and title code for SIO differs from that of Computer Science and Engineering (CSE).
Refer to the Student Academic Title Rates sheet for salary rates.
Equipment is defined by the university as tangible personal property with an acquisition cost of $5,000 or more and a useful life of more than one year. This is considered “inventorial” equipment and must be tracked as property through Campus Asset Management System (CAMS). Conversely, equipment with an acquisition cost of less than $4999 is considered “non-inventorial”. The difference between equipment and supplies can be very nuanced.
The cost of a piece of equipment includes all charges involved in getting it to the university and set up for use on the project. Examples include shipping and delivery fees, set up and installation costs, etc.
Sometimes a project requires a specialized piece of equipment to be specially made. That is called fabricated equipment a “fab.” Fabricated equipment is defined as a specialized piece of equipment that is constructed in-house by University personnel. Funding sources may include awards and/or campus funds.
Fabricated equipment is non-expendable, tangible personal property that:
Consultants are hired to give professional advice or services for a fee but not as an employee of the University and they do not perform a portion of the programmatic work. They are not UC employees.
Supplies are tangible items, such as lab supplies, reagents, animals, laptops, etc., used in the course of conducting the scope of work for a project.
Travel costs must benefit the proposed project such as travel associated with fieldwork and attendance at scientific meetings for the purpose of presenting project findings and/or results. Costs associated with personal travel cannot be included on the budget.
A subaward is portion of the project work (programmatic or technical effort) that is transferred to another institution or Organization. For example, the UCSD PI might outsource a specialized type of laboratory work to another university as part of the project.
The costs for publishing research findings and results in scientific or trade journals. If a PI plans to publish findings of the project, make sure to include a line item on the budget for publication costs.
This category is a catch-all for direct costs that do not fit into the other cost categories. Examples include: human subject payments, campus recharge services, leased off-campus space, cloud computing costs, Next Generation Network (NGN), Health Sciences Technology Services Charge (HS-TSC), etc.
Indirect costs (IDC) are also commonly referred to as overhead, burden or Facilities and Administrative (F&A) costs. UCSD uses the terms IDC and F&A interchangeably. IDC are all of the costs that are not easily identifiable, such as staff salaries, HR services, building and maintenance costs on campus, etc. The campus IDC rate is what covers all of those other expenses.
The university has negotiated rates with Federal and State governments and industry, and rates can also vary depending on whether the project is taking place on or off campus. Nonprofit agencies may use different bases for the indirect cost calculation than the federally negotiated rate. Make sure to read sponsor’s solicitation or website for their IDC policy. The sponsor requirements supersede the negotiated rates.
Modified Total Direct Costs (MTDC) is the base that the indirect cost (IDC) rate is applied to. That is, there are some costs that cannot have IDC to applied to them. These are called exclusions. Uniform Guidance (2 CFR 200) requires that indirect costs be allocated on the basis of modified total direct costs (MTDC).
For sponsored proposals and agreements using the federally negotiated rate, the following budget items are excluded from the MTDC:
Note: Cloud computing costs acquired directly, or through purchase of equipment/licenses, will be subject to the assessment of IDC.