Budgets

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Budgets
Budget Preparation Components

Overview:
The guidance in this topic is generic information and doesn't apply to any specific agency. It provides succinct guidance on typical major budget categories contained in most proposal budgets.

A proposal budget is a section of the proposal that represents and/or reflects the Principal Investigator's best estimate of the actual costs for conducting the scope of work.

Prior to beginning the preparation of any budget, the Principal Investigator will need to define their Period of Performance, or their Beginning and Ending dates, which is the time-frame required to complete their desired work. The period of performance for most research projects or programs generally will last from 1 to 5 years.

Keep in mind that if a funding agency does have its own budget guidelines and forms, budget categories and/or terminology may be different than what is used here at UCSD. For example, a funding agency may categorize Salaries and Fringe Benefits separately on their form and not combine them into one category and refer to them as Personnel Salary and Fringe Benefits as the UCSD Proposal Budget Form does. But always rely on the requirements specified by the funding agency in regard to the proper placement of these budget costs.

UCSD and the University of California Office of the President or OP have specific guidelines and procedures in place that must be followed during budget preparation. In addition, specific budget rates have been established and must be used in all proposal budgets, regardless of the funding agency, when determining the appropriate indirect costs, fringe benefits, and tuition remission.

Budget Justification:

Most proposal budgets will also require a Budget Justification, which, when submitted along with the budget, will highlight, explain, and provide rationale for each budget category entry, and how the principal investigator arrived at certain cost estimates. For example, the salary or personnel category will explain each employee's role, what tasks they will perform, and the percentage of effort required to conduct the project or program.

The guidelines and/or instructions contained within the agency's funding announcement will contain information regarding whether a budget justification is required to be submitted along with the proposed budget.

If the potential funding agency requires a budget justification, and does not supply their own budget justification form or offer specific instructions, the budget justification should follow the format of the budget form used, with a justification for each budget category entry. If the funding agency decides to fund the project or program, they may ask for further budget details, verification, and/or justification of certain costs contained within the budget. Any such requests will be coordinated with the funding agency by your OCGA, SIO contract and grant office, or HSSPPO analyst.

Direct Costs vs. Indirect Costs:
There are two types of costs associated with preparing a proposal budget. They include:
• •

Direct Costs Indirect Costs

Direct Costs:


Direct costs are those costs that are specifically identifiable and which can be charged directly to the contract or grant. Examples of direct costs include:
o o o o o o

Salaries Fringe Benefits Tuition Remission Consultants Equipment Supplies and Materials

o o

Travel Subawards

Indirect costs:


Indirect costs, sometimes referred to as Overhead or IDC or Facilities and Administrative Costs or simply F & A costs, are those costs that are not specifically identifiable to any one project or program, but are valid expenses of conducting research, instruction, and other sponsored activities at UCSD. Or simply put, the costs associated with the general operation of UCSD and the conduct and support of its research activities. Examples of indirect costs include
o o o o o o

Building use Equipment depreciation Operation and maintenance of UCSD facilities Student services Departmental administration Administrative Support Offices

Once all of the direct costs have been determined for the proposed budget, total direct costs are achieved by adding all of the direct cost categories together. Total indirect costs, while not as straight-forward to calculate as direct costs, is achieved after an indirect cost rate percentage has been applied to a direct cost base amount. These various percentage rates, as well as how a direct cost base is determined is explained in greater detail within this topic or in the Indirect Cost Rates section. Direct costs plus indirect costs equal the total costs that are being requested for the proposed project or program.

Salaries:
Salaries are monetary compensation paid to UCSD employees working on a project or program. The UCSD employee or personnel, as they are sometimes referred, may include faculty, researchers, visiting scholars, staff, and/or graduate students. Their proposed UCSD salary should be in accordance with the current academic or staff salary schedules for each particular job classification.

Access to current academic or staff salary schedules and information can be found in several places, such as:
• •

Academic Salary Scales Policy and Procedure Manual or PPM 230-40 Compensation Menu within UCSD's Blink Web site



Title and Pay Information

Please Note: When opting to use the Title and Pay Information section in Blink, be sure that you know the correct Job Title or Title Code, as well as the exact spelling, before entering the information, otherwise the intended results may not be returned.


Employee Link

In addition, the actual salaries of employees or personnel are available through Employee Link. This confidential information can be obtained and accessed by contacting the business office within your department or ORU.

Salaries should also include projected applicable cost-of-living and merit increases, and be applied in accordance with guidance that is provided by OCGA based upon information received from the OP Research Administration Office. In addition, the actual salaries of employees or personnel are available through Employee Link. This confidential information can be obtained and accessed by contacting the business office within your department or ORU.

Salaries should also include projected applicable cost-of-living and merit increases, and be applied in accordance with guidance that is provided by OCGA based upon information received from the OP Research Administration Office.

For additional helpful guidance and further detailed information please refer to the following:
• •

Salary Escalation Rates Academic Salary Escalation Tables

Information that will be needed when preparing the salary for each UCSD employee listed in the salaries category of the budget includes;


Name and Payroll Title of the employee. If you know a position will be required but the individual has not yet been identified at the time the proposal is being submitted, indicate To Be Named or TBN in place of their name. monthly or annual salary, which should be escalated for all applicable cost-ofliving and merit increases. Keep in mind that these increases must coincide with the future beginning date of the project or program.
o



To accomplish this for existing employees, escalate their current salary, based on payroll records, by the appropriate cost of living and merit increases or projections. In regard to actual salaries and any anticipated academic merit increases, be sure to contact your Department/ORU business office for specific information regarding salaries and any

proposed upcoming merits that may occur prior to the beginning date or during the period of performance of the project or program.
o

To accomplish this for To Be Named or TBN positions, use the Academic Salary Scales Policy and Procedure Manual or PPM 230-40, the Compensation Menu within UCSD's Blink Web site, or the Title and Pay Information which were all mentioned previously, and escalate the salary appropriately.



Additional information needed when preparing salaries includes; knowing the number of months per year that the salary is being requested for and the percentage of effort that each employee will expend on the project or program. These two items, when multiplied together, are then referred to as person months, and will appear as such on the UCSD Proposal Budget Form. To calculate the salary requested, multiply the monthly salary times the number of months per year times the percentage of effort. For example:
o o



$4,500/month x 12 months x 50% effort = $27,000 salary requested. For access to a "Person Month Calculator", click here.

Joint UCSD/VA Faculty Appointments:




• •

• • •

For employees with joint UCSD/VA faculty appointments, a UC/VA worksheet is required. This worksheet can be found on the UCSD Health Sciences, Dean's Office of Fiscal Affairs Web site. The UC/VA worksheet is required to ensure that investigators include the salary and percentage of effort on the proposal's budget that is solely associated with their UCSD appointment. The UC/VA worksheet should be completed as indicated on the form, and provided to your review office at the time of the initial review. In addition to determining the appropriate salary and effort to use on the proposal's budget, a statement is included on the UC/VA worksheet that must be added to the budget justification to notify the agency that the investigator has a joint appointment and to clarify the effort and salary associated with the proposal. The statement should be added to the end of the investigator's justification. With the exception of adding this statement to the budget justification, all agency budget instructions should be followed. Please Note: Although effort is represented in calendar months by some agencies, the UC/VA worksheet uses percent effort and does not need to be converted when added to the end of a budget justification where calendar months are used

Stipends:
For grant proposals that are being submitted in response to training programs, monetary compensation for trainees may also be in the form of a stipend, which is a fixed payment made to an individual.

Stipends are not to be budgeted in proposals for research projects. Only compensation in the form of salaries and wages commensurate with effort, and corresponding fringe benefits, is to be budgeted on a research project. As such, stipends should only be used specifically for proposals submitted in response to training programs such as National Institutes of Health (NIH) Institutional Training Grants and/or Minority Undergraduate Programs, some U.S. Department of Education training programs.

Budget Justification - Salaries:
The budget justification for salaries should indicate the following for the employees listed on the budget form:
• • • • • •

Name Role - whether it be the PI or a Co-PI Payroll title Percentage of effort Brief description about each of their roles in the project or program. After all employees or personnel have been discussed, include a general statement such as: "Salaries for all UCSD personnel are based upon current University of California academic and staff salary scales."

Back to the Top

Fringe Benefits:
Fringe Benefits are non-salary employee compensation expressed as a percentage of their salary. To calculate fringe benefits, the salary requested for each individual on a proposal budget is multiplied by the applicable fringe benefit rate percentage. Some examples of fringe benefits include:
• • • • •

Health Plan Social Security or FICA Dental Plan Vision plan Worker's Compensation

Fringe benefits rates are categorized as either Composite Rates or Miscellaneous Special Rates.

Composite Rates:
Composite Rates can either be for an Academic Appointee or a Staff Employee. There are several appointments that fall into the Academic Appointees type. Some examples include:
• • • • •

Research Scientist Professor Adjunct Professor Clinical Professor Postdoctoral Scholar-Employee

Staff Employees, who are full-time employees at 50% or more, for one year or more, and Academic Appointees, each use a Composite Rate percentage that is escalated every year on July 1st. To access those rates, click here.

Miscellaneous Special Rates:
Miscellaneous Special Rates, due to the nature of certain specialized employment appointments, are unique fringe benefit rates that have been developed to include various components, resulting in a variety of lower percentage rates. For example, a Miscellaneous Special Rate may be used for:
• • • •

Academic Visiting Appointees Retirees Undergraduate or Graduate Students Academic Salaries that are paid during summer months

Depending on the appointment and the various fringe benefit components that may be included, such as workers' compensation, unemployment insurance, and Social Security or FICA,a Miscellaneous Special Rate percentage is applied and does not need to be escalated.

Keep in mind that the fringe benefit rate that is used in a proposal budget is only an estimate based on a percentage or composite rate that has been established by OP. Once funding occurs, the employee's actual fringe benefits payment, is what will be charged to the grant, which may end up being a higher or lower percentage amount than what was originally estimated and placed in the budget.

Under special circumstances, or when a more precise measurement of fringe benefit costs is desirable, budgeting the employee's actual fringe benefits amount, expressed as a percentage of salary, would be warranted rather than total reliance on the use of a composite rate. Should this approach be used however, it must be applied consistently to all named employees only, and not applied for the "to be named" employees.

Budget Justification - Fringe Benefits:
The budget justification for fringe benefits should include a general statement such as: "Fringe benefits are calculated at rates currently in effect for the University of California." For further information regarding Fringe Benefit Rates, click here. Back to the Top

Tuition Remission:
Tuition Remission, which allows Graduate Student Researchers or GSRs, who are employed at 25% time or more during any one academic quarter to be compensated for their tuition and various UCSD student-related fees.

Graduate Student Researcher Tuition and Fee Remission or Tuition Remission, as it is commonly referred to, is assessed for each academic month, up to nine months, October through June, that the GSR is proposed to work on the project or program. No assessment is made for the three summer months of July, August, and September.

Tuition Remission rates are to be applied according to the graduate department of the GSR which, in some cases, may not be the same department as the principal investigator.

There are 4 separate groups or pools of tuition remission rates that are used depending on the Graduate Student Researcher appointment location in either:
• • • •

Engineering Physics Scripps Institution of Oceanography General, which is for all other UCSD appointment locations not included in the 3

areas above. Engineering is further separated into 4 subgroups:
• • • •

Computer Science and Engineering (CSE) Electrical and Computer Engineering (ECE) Mechanical and Aerospace Engineering (MAE) Structural Engineering (SE)

Calculating tuition remission begins with selecting the appropriate rate from one of the 4 groups or pools, depending on the GSR's department. If the period of performance continues for more than a year, escalate that rate by 7% on October 1st of every year there after until the ending date of the project or program.

Please Note: That due to some projects or programs beginning in the month of July, tuition remission will be a straight-forward calculation with all 9 months in the same academic year; October through June. However, given that tuition remission rates are escalated every October, and due to some projects or programs beginning in months after the academic year begins, say November or January, the tuition remission calculation amounts will need to be broken up onto 2 separate lines on the UCSD Proposal Budget Form; one line for the amount reflecting the remaining months within the current academic year, for example January through June, and another line for the escalated amount reflecting the months remaining in the new academic year, for example October through December.

The Office of Graduate Studies or OGS is responsible for the development of policy, rates, and implementation of tuition remission for UCSD.

Budget Justification - Tuition Remission:
The budget justification for tuition remission should include the following general statement if there are Graduate Student Researchers or GSRs working on the project or program that are eligible for Tuition Remission: "Tuition Remission is calculated at rates currently in effect at the UCSD." For further information regarding Tuition Remission Rates, click here. Back to the Top

Consultants:
Consultants are individuals who do not provide a percentage of effort to the project or program, but rather provide expert advisory or other services for brief or limited periods of time during the period of performance.

The names of consultants should be specified along with the daily rate of pay and the number of days each consultant will be paid. The expenses for travel and per diem, if applicable, for bringing outside consultants to UCSD, or to other locations, should also to be included within this category.

In addition, documentation from the consultant, preferably in the form of a letter, should also be included in the proposal indicating their willingness to participate in the project or program, and any justification supporting their daily rate of pay.

Keep in mind that UCSD employees may be listed as consultants, but are generally not able to receive payment or compensation. Any compensation that a UCSD consultant receives, may only be authorized by special exception of the Chancellor. However, UCSD has traditionally not supported such exceptions. As such, the general rule is for there to be no compensation listed for UCSD employees who serve as consultants on the project or program.

Budget Justification - Consultants:
The budget justification for consultants should include the consultant's name, the services and/or advice they are going provide, their daily rate of pay, and the number of days they will work on the project or program. Costs intended to cover any travel and per diem of bringing outside consultants to UCSD should also to be included here as well. Back to the Top

Equipment:
Equipment is identified as an item of non expendable, tangible personal property, meaning it can be appraised for value, has an acquisition cost of $5,000 or more, is freestanding or can stand alone, and has a normal useful life expectancy of one year or more.

Items that cost less than $5,000 are not considered equipment, and unlike equipment, are assessed indirect costs, and belong in the Supplies and Materials category of the budget.

Each equipment item should be listed individually on the budget form, and their estimated cost should also include sales tax, shipping, and assembly, if necessary. Please Note: UCSD, through the Office of Research Affairs, offers the Shared Research Facilities Search for researchers who want to try and locate the necessary equipment they need here at UCSD, instead of going out and buying a new one. There can be several clarifications and/or caveats necessary when you include equipment in any proposal budget, they include:


Repair/replacement components for equipment, regardless of cost, are not considered to be equipment and should be budgeted in the Supplies and Materials category. Computer software, regardless of cost, is not considered to be equipment and should be budgeted in the Supplies and Materials category. Accessories or component parts are considered to be equipment when the acquisition cost is $5,000 or more, and either:
o

• •

The accessory or component permanently increases the value of the existing equipment, or The accessory or component permanently increases the useful life of the existing equipment

o •

Under the University's federally negotiated indirect cost rate agreement, equipment is exempt from indirect costs.

Fabrications:


If a piece of equipment is to be fabricated (i.e., assembled) rather than purchased, the cost of its components plus all materials, supplies, and services from outside vendors or authorized internal recharge activities used in the fabrication process are exempt from indirect costs if title is retained by the University and the item has a useful life expectancy of more than one year. Department labor, travel or other operating expenses associated with the fabrication such as salaries of Principal Investigators, graduate student researchers, or other comparable personnel who participate in the fabrication process are not included in the acquisition cost of the item and are subject to indirect costs.





If the fabricated piece of equipment will be a deliverable and the title is not retained by the University, all costs of the fabrication are subject to indirect costs. If the fabricated item has a life expectancy of less than one year, it does not meet the definition of equipment and all fabrication costs are subject to indirect costs.



Leasing:
When preparing a proposal budget that will involve the leasing of equipment, as opposed to the outright purchase, please be aware of the following caveats as it pertains to the assessment of indirect costs:
• • •

If equipment is being leased with an option to buy, indirect costs are not assessed. If equipment is being leased/rented with no intention to buy, indirect costs are assessed. The determination of option-to-buy verses lease-only is made at the time the lease agreement is prepared. In order to insure that sufficient costs have been included, namely indirect costs if applicable, this should be looked into at the time of proposal preparation.

Budget Justification - Equipment:
The budget justification for equipment should describe each item of equipment as completely as possible and address the need for the equipment necessary to accomplish the project of program. Include the estimated cost of the equipment, based on a catalogue, Web site, or other vendor quotation. Back to the Top

Supplies and Materials:
Supplies and materials can include some of the following items;
• • • • • •

Chemicals Glassware Animal purchases Equipment items that have an acquisition cost of less than 5,000 dollars Repair parts or replacement components for equipment items Computer software.

Each item in the supplies and materials category of the budget should be listed separately and include sufficient detail.

Budget Justification - Supplies and Materials:
The budget justification for supplies and material should separately list each item of supplies and materials and their intended use related to the project of program. Include the estimated cost for each item, based on historical costs, or on a catalogue, Web site, or other vendor quotation, and address in more detail any particularly high-cost, unusual, or one-time purchases. Back to the Top

Travel:
Travel are costs associated with the required travel for each UCSD employee working on the project or program. The following aspects of each trip should be outlined on the budget form:
• • • •

The specific destination, if known, of each trip. The number of individuals going on each trip. The mode and cost of transportation to be used. And the number of days of per diem and the per diem rate.

Keep in mind, as mentioned previously, travel intended to cover costs of bringing participating outside consultants to UCSD are to be budgeted in the Consultant category of the budget.

Budget Justification - Travel:
The budget justification for travel should address the purpose of the travel related to the project or program, as well as reiterate the destination, individuals traveling, air fare and per diem costs associated with the travel. For further details and specific rates related to travel, click here. Back to the Top

Subawards:

Subaward includes those sites outside UCSD, or the subaward sites as they are referred to, that will perform a specific portion of the research for the principal investigator.

For example: Rather than UCSD performing all aspects of the proposed research, a portion may be performed by another institution, say the University of Michigan. The University of Michigan, who is then referred to as the subaward site, will receive its funding directly from UCSD to perform the intended portion of the research.

List the subaward site's total costs, which are their direct costs plus their indirect costs, in this category of the budget form.

In addition, the entire grant proposal that was prepared by the subaward site and approved by their contract and grant office would also be required as confirmation of their participation in the proposed project or program.

Budget Justification - Subawards:
the budget justification should list the name of the subaward site, their total costs, what aspect of the research they will be performing, and how their participation will benefit the project or program. For further detailed information regarding subawards, click here. Back to the Top

Other Expenses:
Other Expenses is also commonly referred to as Other Direct Costs, and generally consists of 3 separate subcategories:
• • •

Miscellaneous costs Next Generation Network or NGN costs Patient Care Costs

Miscellaneous Costs:
Miscellaneous costs may include:


Publication expenses

• • • • • • •

Animal subject care per diem Human subject payments and travel Reimbursements Service contracts for equipment maintenance Other campus recharge services Annual software licenses, as opposed to software purchases Rent or lease costs for off-campus non-UCSD owned space

Each of these miscellaneous costs should be listed separately and include sufficient detail. For example, animal subject care per diem should be itemized by animal species, number of animals, number of days per year, and the per diem rate.

Budget Justification - Miscellaneous Costs:
The budget justification for miscellaneous costs should separately list each item, their intended use, and the estimated cost for each item, based on historical costs, or on a catalogue, Web site, or other vendor quotation, and address them in more detail if necessary.

Next Generation Network (NGN) Costs:
Next Generation Network or NGN Costs, was implemented on July 1, 2001 as an enhanced data and voice network supporting the needs of UCSD employees.

NGN costs are generally assessed for UCSD employees who are defined as a Communication User, or those UCSD employees who make use of a telephone, the computer network, or both, during daily work activities. However, these costs are not assessed on undergraduate or graduate students.

In order to determine the appropriate rate for each Communication User in the budget, your department must determine the location of each user.

NGN rates are separated into 4 categories depending on where the user's building is located; for example,


On campus

• • •

Off campus Medical center Public computer lab.

The appropriate NGN amount is then pro-rated based on the percentage of salary that has been estimated to be charged to the grant when funded.

Once the NGN cost is calculated, the cost is placed on the budget form and referred to as communications/computing and not as NGN costs, which is an internal reference used only within UCSD.

Budget Justification - Next Generation Network (NGN):
The budget justification for communications/computing costs should include the amount, as well as this general statement: "Communications/Computing costs have been included for telephone and associated voice and data communications charges which are directly related to the individuals working on the project or program." For further detailed information on NGN costs, click here.

Patient Care Costs:
Patient Care Costs, which fall into two types of costs;


Usual Patient Care Costs:
o

Which are those costs that would have been incurred even if the research study did not exist



Research Patient Care Costs
o

Which are the costs of routine and additional medical services, such as tests and procedures, provided by a hospital or hospital-operated clinic to individuals participating in the research project or program. This does not include laboratories of academic departments or organized research units or ORUs.

Costs for such services should be based on the rates contained within the negotiated patient care cost rate agreement currently in effect between the UCSD Medical Center Healthcare Financial Administration and the Department of Health and Human Services or DHHS, which is UCSD's government audit agency.

Access to current patient care costs can be found by contacting the UCSD Healthcare Financial Administration Office. Patient care costs do not include:


Personal expense reimbursement, such as patient travel, consulting physician fees, or any other payments made directly to individuals, including inpatients, outpatients, subjects, volunteers, and donors. Costs for additional tests performed in an independent, privately owned laboratory, or the data management or statistical analysis of clinical research results. Unlike patient care costs, these items are all assessed indirect costs and should be listed in the Other Expenses category, and not referred to as patient care costs.



Given the very specific nature and complexity of these costs and their indirect costexempt status, departments and ORU's planning to submit a proposal involving patient care costs should contact their appropriate OCGA, SIO contract and grant office or HSSPPO analyst for guidance before including these costs in your proposal budget.

Budget Justification - Patient Care Costs:
The budget justification for patient care costs should include details about the inpatient and/or outpatient costs including the names of hospitals and/or clinics where care will be provided and the basis for these costs. Back to the Top

Indirect Costs/IDC/Overhead/Facilities and Administrative (F&A) Costs:
Indirect costs, sometimes referred to as IDC or overhead or Facilities and Administrative Costs or simply F & A costs, are those costs that are not specifically identifiable to any one project or program, but are valid expenses of conducting research, instruction, and other sponsored activities at UCSD. Or simply put, the costs associated with the general operation of UCSD and the conduct and support of its research activities. Examples of indirect costs include:
o o o o

Building use Equipment depreciation Operation and maintenance of UCSD facilities Student services

o o

Departmental administration Administrative Support Offices

UCSD's Financial Analysis Office has the primary responsibility for the development and negotiation of UCSD's various indirect cost rates. After extensive financial analysis, an Indirect cost rate proposal is drafted and then presented and negotiated with the Division of Cost Allocation within the Department of Health and Human Services or DHHS, which is UCSD's government audit agency. Once negotiations have been finalized, this is documented through a formal Indirect Cost Rate Agreement. The most current formal Indirect Cost Rate Agreement was last documented on May 28, 2004.

All proposal budgets that are submitted to funding agencies must provide for the recovery of Indirect costs using the appropriate negotiated rate. For budgets that are being submitted to the Federal Government or For Profit agencies, there are 5 categories of federally-negotiated Indirect Costs rates for UCSD. The categories include:
• • • • •

Research Instruction Other Sponsored Activities The Nimitz Marine Facility The General Clinical Research Center

These various Federally-negotiated indirect cost rates above are not assessed on every direct cost category contained in a proposal budget; there are some exclusions.

The direct costs that are assessed indirect costs are referred to as the Modified Total Direct Cost base or MTDC base. The MTDC base consists of the following direct costs:
• • • • •

Salaries Fringe Benefits Supplies and Materials Travel First $25,000 of each Subaward issued by UCSD to an institution outside of the University of California 10-campus system.

The direct costs that are not assessed indirect costs are referred to as Exclusions from the base. These exclusions are subtracted from the direct costs total before the indirect

cost rate is applied. The exclusions from the base consists of the following direct costs:
• • • • • • •

Tuition Remission Equipment Patient Care Costs Alterations and Renovations Rental Costs for off-campus Facilities Scholarships and Fellowships Portion in excess of the first $25,000 of each Subaward issued by UCSD to an institution outside the University of California 10-campus system, OR, the entire amount of any subaward issued to another University of California campus. Or in other words, no F & A costs are assessed on subawards from UCSD to other University of California campuses

For budgets that are being submitted to Non-Profit agencies, the University of California or UC programs, the State of California, or Foreign agencies, there are a multitude of indirect costs rates, which can be assessed in a variety of ways depending on the funding agency.

For example; Non Profit agencies, the State of California, and Foreign agencies may each have their own unique published indirect cost rate. The indirect cost rate, and the MTDC base that it applies to, should be stated in the each of the agency's grant application instructions.

University of California or UC Programs are not assessed indirect costs. As such, all of the costs in the proposal budget are direct costs. The exception to this is the UC Discovery Grant Program, which only requires the portion, which was contributed by the For Profit funding agency, to be assessed indirect costs using the appropriate rate.

Keep in mind that each funding agency may be different when determining which direct costs are assessed indirect costs. Not all funding agencies recognize the Federal MTDC base, and some funding agencies may not consider equipment or tuition remission to be an exclusion from indirect costs. So always read the potential funding agency's guidelines to determine their policy and requirements on direct costs, indirect costs, and the appropriate exclusions to be calculated for your proposal budget. For further detailed information regarding Indirect Cost Rates, click here.

Back to the Top

Future Years:
The period of performance for a proposed project or program routinely consists of the first, or initial year, and any additional, or future years. It is advisable to always incorporate an increase or escalation to each direct cost category of the budget to ensure that there will be adequate funds throughout the life of the project or program. For example, future salaries for UCSD employees should always be escalated using the appropriate cost-of-living and merit increases to allow for sufficient funds to cover future employee or personnel costs.

After preparing the budget for the initial year, the budget for any future years can be increased by either:
• •

Escalating all of the categories within the budget by a flat percentage rate of anywhere from 3% to 5% Increasing and/or decreasing specific categories of the budget to reflect the changing needs during the course of the project or program, while also escalating other categories by the percentages mentioned.

An example would be for the possible additional costs for equipment or supplies and materials that are needed, or a decrease in costs for human subjects that are no longer needed since all of the data has been collected, and the research has now shifted to the analysis of that data.

Keep in mind that some agencies limit future year increases to no more than 3% annually. Back to the Top

Cost Sharing:
Cost sharing isn't a common practice here at UCSD, but on occasion will sometimes be included within a proposal budget. It can be defined as any project or program costs that are not going to be paid for by the potential funding agency, but rather contributed from UCSD resources.

As simple as that might sound, cost sharing can be very complex and the procedures for including it within your budget can be quite time-consuming. In addition, Federal

regulations require full accountability and auditing for cost sharing that has been committed to accomplish the intended project or program.

Cost sharing consists mainly of direct costs, such as employee effort related to their salaries, fringe benefits, supplies and materials, equipment, and travel.

An example of how cost sharing might appear within the budget or budget justification would be; Doctor John Doe will devote 10% of his time to the project at no cost to the funding agency. Doctor John Doe's salary will be paid using UCSD departmental funds.

The funds that UCSD uses for cost sharing must be unrestricted, non-Federal funds. In addition to using departmental funds as indicated previously, these funds may also come from a gift or an endowment or from the salaries and fringe benefits of faculty and on the rare occasion other UCSD-paid staff.

In addition, it is the responsibility of the PI and their department to formally monitor, track, and document cost sharing during the entire period of performance of the project or program, and also to be sure they are in accordance with the funding agency's requirements.

Contact your OCGA, SIO, or HSSPPO analyst immediately if cost sharing is going to be included in your proposal budget. They can then assure that the timely review of the cost sharing component of the budget is accomplished. Due to the complexity of cost sharing in some proposal budgets, additional review and approval by the Dean, Vice Chancellor and/or Chancellor may also be required, especially if the cost sharing is outside the authority of the department. But regardless of the complexity, cost sharing approvals begin at the department level, and confirmation by OCGA of any cost sharing is required prior to the submission of the proposal to the funding agency.

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