Who should work with OSP on budget development?
The Principal Investigator or designated project staff should work with OSP on budget development. Budget development often requires dealing with confidential information and the person working with OSP should be prepared to discuss such information. The signature of the Principal Investigator is the first one required on the university approval form and signifies agreement to the scope of work and budget. The Principal Investigator cannot delegate this approval to project staff.
The Principal Investigator (PI) is the person who is responsible for the substantive and financial development, management, and oversight of a sponsored program. The PI writes the proposal, develops the budget, seeks university approval for the project, carries out the substantive work if the grant is awarded, manages the grant budget and writes any technical reports.
Who can be a Principal Investigator?
The Principal Investigator must be a member of the full-time faculty, professional, or senior staff, or be an administrative officer of the University. Depending on the nature of the proposal, individuals with other University appointments may serve as Principal Investigators with the approval of the Provost and that individual's department head.
Any exceptions must have the written approval of the Dean of the unit and the Vice Provost for Graduate Studies and Research. On rare occasions, it may be in the best interest of the University to have an individual who is not an employee of the university serve as the Principal Investigator on a university proposal. All such exceptions to policy should be discussed by the Dean of the unit with the Vice Provost for Graduate Studies and Research well in advance of a proposal submission.
Generally, yes. Please consult with your OSP staff member if you plan to be away from campus during the period of this grant.
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
- Put the budget into an Excel spreadsheet following university formatting
- Complete 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 attachment for the budget checklist.
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.
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 grant budget that covers more than one academic year allow for salary increases even if I don't know what my salary will be?
Proposal budgets that cover multiple years are required to budget for annual salary increases. The annual salary increase figure used by OSP is 5% 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 during the months of June, July, and August.
What do fringe benefits include?
Full–time University faculty and regular staff working on sponsored projects are eligible for University benefits. FICA is withheld from the salaries of all employees paid through the University payroll system, including part–time staff. Exceptions are graduate students in assistantship or fellowship categories. The employer's portion of FICA and retirement (TIAA–CREF) are charged to sponsors as direct costs. The University and the employee share coverage for other benefits according to the options available at the time of hiring.
Indirect costs, also known as Facilities and Administration (F&A) or overhead costs, are expenses not directly attributable to any one project and incurred by the University for its facilities and 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 a small portion of these costs through the inclusion of indirect costs in proposal budgets. All universities have indirect rates.
If the sponsor has a written policy limiting the amount of indirect costs that may be recovered, the university will honor that policy. In many cases, it is expected that the Principal Investigator will recover as many administrative costs as possible through direct costing of items such as rent and administrative support. Consult with your Dean's office for guidance on these costs.
The Indirect Costs rate is calculated on a Modified Total Direct Cost (MTDC) basis, which means that not every budget item incurs 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
What budget items are excluded from the indirect cost base?
The Modified Total Direct Costs (MTDC) basis excludes assessment of indirect costs on:
- capital expenditures
- space rental
- subgrants or subcontracts after the first $25,000
- Participant support - defined as pass-through costs to support program participation directly attributable to an individual who is not an employee of AU or a consultant providing a service (such as those attending a training program)
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.
AU honors any written sponsor prohibition on recovery of indirect costs. Some private organizations and some government programs stipulate in their guidelines that they only allow a small percentage of indirect costs to be included on their grant budgets. In these cases, the budget can be developed according to these guidelines. If the sponsor has no written prohibition, full indirect costs must be included. The sponsor has the option to include less indirect costs in the legal award and the university has the right to decide if they want to accept less than full 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. Contact your OSP staff member for assistance with calculating cost-share for the proposal budgets.
Cost-share may also be contributed by the partners on a project. This is called third party cost-share. Even though the cost-share is offered by a third party, once it is listed on the AU budget, it becomes the responsibility of AU to document and report on it. To document third party cost-share for the proposal, AU will require a letter listing the cost-share and information about how the costs were derived. This letter must be signed by someone with the authority to commit the organization. At the award stage, the subcontract issued to an organization will include provisions for certifying and reporting on cost-share offered by the third party. Cost-share contributions from third parties are limited to organizations because they have formal tracking mechanisms. Individuals who are not employed by AU may not commit cost-share resources for an AU budget. As with AU cost-share, third party cost-share should not be included unless it is mandated by the sponsor.
Cost-share is part of the proposal budget and appears in either a separate AU column or a separate column listed as "Other" for third party cost-share. Once an award is made, it is the responsibility of the School or College to track the cost-share. Consult with the Office of the Controller on the procedure for cost-share tracking.