How are proposal budgets developed?
The Principal Investigator or designated project staff works with their assigned OSP staff member to develop the proposal budget. Budget development often requires obtaining confidential information thus OSP will work with the PI's academic/business unit to obtain and verify confidential information.
Assuming a reasonable length of time between budget development and submission, you can expect that your assigned OSP staff member will:
Review the guidelines and make you aware of any special budgetary requirements
Assist in developing a budget that matches the scope of work
Work with you to develop reasonable cost estimates for items like travel or the purchase of equipment
Develop any budget forms or particular sponsor budget formatting requirements
Obtain necessary pre-approvals for budgets over $250K or budgets of any amount going to an international address
Provide you with institutional information for the budget narrative
If you are interested in getting a jump start on developing your budget, see the proposal budget template (forthcoming).
Course releases are a matter of workload in the Schools and Colleges. Course releases must be individually negotiated with the Dean or Department Chair. Once the course release has been agreed upon, OSP can help price the course release(s) for the sponsor budget with guidance from the academic unit.
For full-time employees of the University, salary will be calculated according to whether you are paid for nine months or twelve months of effort. For those who are not employees or who are part-time employees, alert your assigned OSP staff person who will help develop a rate that conforms to University and sponsor guidelines. In addition to the University's requirements, salary is calculated in a manner that is prescribed by the potential sponsor. Generally, sponsors require salary to be calculated using the institutional base annual salary multiplied by their proposed level of effort. For additional questions regarding calculating salary, please contact your assigned OSP staff member.
For federal awards, may I request salary in excess of the percentages associated with my academic year salary?
No. Federal government regulations are explicit about not allowing a higher level of compensation for a grant than that which you receive from the University. Federal regulations also do not allow overload situations in which you may work more than a 100% level of effort.
AU faculty members are considered 12 month employees who fulfill their obligations to the University over a period of nine months from September through May. Faculty with these nine month appointments may make up to 3 months of additional salary during the months of June, July, and August, provided sponsor guidelines allow it. The effort expended on the project must match the time period so the work must take place during the summer months.
Can a multi-year grant cover my salary for subsequent years even if I don't know what my salary will be for those subsequent years?
Proposal budgets that cover multiple years are required to budget for annual salary increases. The general annual salary increase figure used by OSP is 3% per year. This increase is for budgeting purposes only. It does not guarantee this increase.
Can I use my established consultant salary instead of my university salary on a federal grant budget?
No. Your submission of a proposal through the university indicates that you are submitting as a university employee rather than a private practitioner. As such, all budgets represent your compensation through the university as well as compliance with AU Human Resources and Payroll rules and regulations.
The approved fringe benefit rate is 26.5% for full–time employees and faculty during the academic year. It is 8% for part–time employees, student employees, and faculty with nine month appointments who are expected to perform sponsored-related work during the months of June, July, and August.
Full–time University faculty and regular staff working on sponsored projects are eligible for University benefits. Fringe benefits include FICA, retirement, disability insurance, life insurance, tuition remission, TIAA/CREF, workers' compensation, unemployment insurance and health insurance.
Indirect costs (F&A costs) are expenses incurred by the University for use of its facilities and administrative services. Indirect costs are not profit, but are real costs to the University to support sponsored activities. Examples include building maintenance and operation, utilities, libraries, computer services and other facilities, payroll, accounting, purchasing, research administration, departmental administration, personnel services, and general administration. The University attempts to recover all of these costs, in accordance with guidelines in the Office of Management and Budget Circulars, through the inclusion of indirect costs in proposal budgets.
Indirect costs must be included in the budget of every proposal. The University uses separate indirect cost rates for sponsored projects on and off campus. The University and the U.S. Department of Health and Human Services (DHHS), which is its cognizant federal agency for indirect rate negotiation, have agreed on the current negotiated indirect cost rate for federal contracts and grants in specified fiscal years. An equivalent rate must be applied to projects that are funded by private and nonfederal sources, pursuant to the agreement with DHHS and the Office of Management and Budget (OMB), Circulars A-21 and A-110.
Some sponsors, particularly some foundations, have specific written policies that preclude or restrict indirect costs. Some agencies limit indirect costs for instructional (or training) programs. Pursuant to approval of the Provost, the Director of OSP will honor sponsor policy, or limitations on indirect cost however any sponsor's policy or restriction is required to be provided in writing. Requests to waive indirect costs should be submitted in writing from the PI/PD and submitted to OSP for initial review. After initial review, the Vice Provost for Research/Dean of Graduate Studies will submit the request to the Provost for final decision.
The F&A (Indirect Cost) rate is calculated on a Modified Total Direct Cost (MTDC) basis, which means that not every budget item incurs indirect costs. Please see below for budget items that are excluded from indirect costs.
Indirect costs are divided into on and off campus rates. The current rates are:
- 43% - On-campus indirect rate
- 19% - Off-campus indirect rate
AU's negotiated rate assesses indirect costs on a Modified Total Direct Cost (MTDC) basis. Per OMB Circular A-21, MTDC excludes indirect costs on the following:
- Equipment Costs:
- Rent, Alterations and Renovations:
- Tuition Remission:
-Direct-cost expenses for tuition and fee remissions (including graduate student health insurance) for University students.
- Scholarships and Fellowships:
- Subawards/Subcontracts in Excess of $25,000:
- Participant Support Costs:
How do the federal agencies know the amount of indirect costs that American University is permitted to charge?
American University has a negotiated Indirect Cost Rate Agreement with the US Department of Health and Human Services. The current rate became effective May 1, 2012 and is through April 30, 2016. The rate is provisional after that time until it is renegotiated. The indirect rate assesses indirect costs on a Modified Total Direct Cost (MTDC) basis. The rate agreement is available on the general accounting page.
Yes, however, AU honors any written sponsor prohibition on recovery of indirect costs. Some private organizations and some government programs stipulate in their guidelines that they allow a percentage of indirect costs or no indirect costs to be included in the grant proposal budget. In these cases, the budget should be developed according to these guidelines. If the sponsor has no written prohibition or restriction, full indirect costs must be included. The sponsor has the option to include less indirect costs in the resulting award and the university has the right to decide if they want to accept less than indirect costs on such projects.
Indirect costs are derived from the costs associated with administration and facilities maintained by the institution. AU's rate is competitive for the size and type of institution that it is. If you are interested in reviewing the indirect rates of other institutions, most post them on their web sites.
Occasionally, sponsors require the University to make a contribution to a project's total cost needs. This is known as cost-sharing. Cost-share can include donated faculty time, remitted tuition, or the assistance of a graduate student. Cost-sharing must have the advance concurrence of the teaching unit head and School/College Dean since their budgets are usually affected. Each School or College has the authority to cost-share new expenses, and to commit existing "on-budget" resources for sponsored projects. OSP has no resources for direct cost-share or tuition remission.
Since cost sharing can be examined and/or audited by the sponsor organizations, the budget proposal should include the dollar value of all such services.
As the tracking of cost-share is an administrative task handled in the schools and colleges, it is strongly discouraged unless the sponsor makes it a requirement of the proposal budget. See AU's cost-share policy here.
Contact your assigned OSP staff member for assistance with calculating cost-share for the proposal budgets.
Yes. Cost-share may also be contributed by collaborative partners on a project. This is called third party or in-kind cost-share. All proposed cost-share, regardless of resources provided by third-parties, becomes the responsibility of AU to document and report if listed in the AU budget. To document third party (in-kind) cost-share for the proposal, AU will require a written statement and a budget (if applicable) listing the proposed cost-share and information about how the costs were derived. The written statement must be signed by someone with the authority to commit the organization. At the award stage, the subcontract issued to a third-party will include provisions for certifying and reporting on their proposed cost-share.
Cost-share is recorded via the proposal budget. If and once an award is issued, it is the responsibility of the School or College to track the proposed cost-share to ensure all costs and commitments are met. Grants and Contracts Accounting (GCA) will report on cost-share and can provide guidance for tracking cost-share.