Budget Preparation Guidelines
The following information is intended to assist you in the preparation of budgets for all types of proposals for external funds. Additional assistance and information is available from the Office of Grant Services (ext. 3380).
When preparing a budget, you must make sure the costs are allowable. According to the Rule of Allowability, all costs must be related to the specific activities supported by the grant. n allowable cost must pass all four tests of allowability; otherwise it is unallowable.
Four Tests of Allowability
(As defined by OMB Circular A-21 - applicable to federal grants.) The cost must:
- Be reasonable: "A cost may be considered if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.
- Be allocable: "A cost is allocable...if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship. Subject to the foregoing, a cost is allocable to a sponsored agreement if:
- it is incurred solely to advance the work under the sponsored agreement;
- it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods; or
- it is necessary to the overall operation of the institution and, in light of the principles provided in this Circular, is deemed to be assignable in part to sponsored projects."
- Be consistently treated: "A cost is consistently treated if the sponsored agreement is treated in the same manner as would costs charged to other institutional activities. This means that generally accepted accounting principles appropriate to the circumstances must be applied."
- Conform to any limitation or exclusions in the sponsored agreement: "Conforming costs refers to special restrictions placed on the grant award. A cost may pass the first three tests but remain unallowable simply because the sponsored agreement says it is."
Questions regarding Allowable vs. Unallowable Costs should be directed to the Office of Grant Services (ext. 3380).
Standardized Rates for Proposal Budgets
- Faculty/Administrative Staff: Calculate all salaries using current, accurate figures. If you have a nine-month appointment, monthly calculations should be based on 1/9 of your annual salary. Use the same formula to calculate summer stipends (one month of summer salary should be based on 1/9 of your annual salary). For projects that begin in the current fiscal year, use your current salary. For projects beginning in the next fiscal year, include a 3% increase to your current salary and for each additional year.
Faculty cannot be paid for more than 100% of their time and effort for teaching, research and service activities. This means that if a faculty member receives a stipend for grant activity that takes place during the academic year, he or she must obtain release time from teaching responsibilities to equal the amount of time and effort expended on the grant.
- Support Staff: Calculate salaries using current, accurate figures. Contact Human Resources (ext. 3638) to obtain current rates for different support staff classifications.
- Graduate Students: Graduate Student Assistants must be paid at least minimum wage and tuition remission. The number of credits of tuition remission given to the student depends upon the type of work and expected number of hours per week. The value of the tuition remission depends upon the cost per credit, which varies by graduate program. Project directors can contact the Office of Graduate Services (ext. 3360) to find out current tuition rates as well as examples of how many credits of remission have been given to students in similar positions.
- Undergraduate Student Workers: Wages for student workers can be set by the project eirector. The typical range is between minimum wage and a few dollars higher. For help with determining appropriate student wages, contact the On-campus Employment Coordinator in the Career Services Center (ext. 4880).
During the summer, students can work up to 40 hours/week for up to 14 weeks. During the academic year, students can work up to 20 hours/week for up to 16 weeks per semester. More typically, students should be expected to work 10 hours/week.
Fringe benefits should be budgeted for all university personnel who will be paid all or in part from grant funds. Matching salaries shown to the funding source in actual dollar amounts as evidence of institutional support should also include fringe benefit calculations. Current fringe benefit rates are:
- Faculty and Administrative Staff: 25%, Academic Year; 10% Summer (faculty) and overload
- Support Staff: 33%
- Students: 1%, When enrolled in classes; 10% Summer (if not enrolled in classes)
Consultants should be limited to those off-campus individuals needed to complete a specific component of a project. The use of consultants is dependent upon a funding source’s guidelines. Some funding sources may not allow compensation to consultants or may stipulate a cap on the amount of compensation to be paid to a consultant.
Flight costs can be obtained from the University’s travel agent, AAA Travel (763-8848). If you drive, using your private vehicle, refer to the Financial Administration's website for current reimbursement rates. University travel policies are available from the Controller’s Office (ext. 3434).
As defined by Xavier University, capital equipment has a purchase price of $1,000 or more and a useful life of one year or more. Capital equipment must be purchased under the object codes for capital items, 6xxx.
To obtain current prices for computer equipment, software and instructional materials (these may be available with an academic discount), contact Purchasing (ext. 3676).
Indirect costs are real costs to the University for conducting the project but are costs that cannot be computed or detailed. Examples of indirect costs include utilities, building use, libraries, and general clerical support.
Whenever indirect costs are permitted by the funding source, University policy requires that they be applied. Funding sources may have different policies regarding indirect costs. If the maximum indirect cost rate is allowed (usually true of federal funding sources), the project budget should include an indirect cost rate of 47% of salaries and wages, excluding fringe benefits. Please contact the Office of Grant Services for clarification regarding the application of indirect cost rates.
Any waiver to including indirect costs (when indirect costs are allowed) or using a lower indirect cost rate than allowed must be requested in writing and sent to the Office of Grant Services.
Cost Sharing (Cash or In-Kind)
Institutional cost-sharing is often used to document the University’s commitment to the proposed project. Xavier University has limited funds for matching or cost-sharing on proposed budgets. Therefore, if the funding source requires matching by the University, this should be discussed with the Office of Grant Services as soon as possible in the development of a proposal. In-kind contributions must comply with federal and some private funding source regulations in the same manner as actual cash expenditure (i.e. they must be documented and auditable).
General Budget Items
- Postage: Contact mailing services (ext. 3558) for current postal rates.
- Xerox: Budget $.055 per copy. Copy cards can be purchased for $27.50 for 500 copies or $55 for 1,000 copies.
- Telephone: Contact ext. 4851for installation and most recent rates.
- Printing: Contact printing services (ext. 3431) for cost estimates.