Support for Faculty Research

Typical budget components are as follows. In some cases, links are provided to the pertinent sections of the MSU Contract & Grants Administration (CGA) website or other websites with source information.

Salary

For non-hourly MSU employees, salary costs are based on each person’s percent effort to be spent on the project or for hourly employees the number of hours per project period. (This is found in the MSU Budget Builder.)

• Project start date: It is important to consider when the project will start as the current salaries will most likely change between the time the proposal is submitted and when the funding would begin.
• Salary Projections: Salary is now projected with a 2% annual increase (it used to be 3%).
• Summer Salary: For Academic Year (9 month) appointments (versus Annual 12 month appointments), consider the 9 months of the school year as separate from the summer. For summer, think about how many months and what percent effort will be for each month

Fringe Benefits

Faculty and Staff fringe benefits are projected using what is called the “Specific Identification” (SI) method. Under SI, fringe costs are based on average actual costs and individual participation in retirement. This yields a much closer estimate of fringe costs and is the standard now used. The CGA website explains the different types of personnel fringe benefits rates on their website.

Travel: Helpful resources for projecting reimbursable costs

• M&IE: This is the acronym for Meals & Incidental Expenses. The Federal Government defines Incidental expenses as:
  • Fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others on ships, and hotel servants in foreign countries.
  • Transportation between places of lodging or business and places where meals are taken, if suitable meals cannot be obtained at the temporary duty site.
  • Mailing costs associated with filing travel vouchers and payment of Government charge card billings.
• Domestic:
  • Meals: MSU’s Domestic per diem meal rates can be found here.
  • Lodging: While MSU does not limit lodging costs like the Federal Government, the Government’s per diem lodging rates can be a useful planning tool.
  • Airfare: costs must be at the lowest available fare.
• Foreign: The following US State Department site covers both Lodging and M&IE

Supplies

Per MSU Federal Cost Policy there are two categories of Supplies. This is taken directly from the CGA website.

• “Project Supplies are items such as chemicals, lab notebooks, beakers etc. that can be identified as directly benefiting a sponsored agreement. Project Supplies are allowable as direct charges with appropriate documentation.”
• “Office Supplies are items such as pens, pencils, wall clocks, chairs, office furniture, calendars, waste cans, paper punches, business cards, University letterhead, staplers, archive boxes, computers, printers and printer cartridges used for an office or for many projects, etc. that would likely be used for non-federal project purposes. Office Supplies may not be charged to federal agreements without the approval of the agency.”

The resources required to undertake a sponsored project are determined by accumulating the associated direct as well as the F&A or indirect costs.

• Direct costs are those costs that can be specifically identified with a sponsored project, such as salaries, project travel, project supplies, etc.
• Facilities and Administrative (F&A) costs or Indirect Costs (IDC) are incurred for common or joint objectives, and therefore cannot be readily identified with a particular sponsored project. To overlook such costs within the area of sponsored projects would inaccurately attribute applicable facilities and administrative costs to other activities of the University. In 2006, the federal government (MSU’s largest sponsor of research) decided to change the name from indirect costs (or overhead), to better clarify what it was designed to cover. Hence the term Facilities and Administrative costs (F&A) was born.

The F&A rate represents the proportion that F&A costs are to direct costs, and is the basis for recovering those costs from grants and contracts. The F&A rate is negotiated periodically by Contract & Grant Administration and MSU's cognizant federal agency, i.e., the US Department of Health and Human Services (DHHS). The negotiation process is subject to a detailed review by federal auditors.

Current Facilities and Administrative Cost Rates

The rates, which are charged against all direct costs except equipment, the amounts in excess of the first $25,000 of each subcontract, and graduate tuition & fees, (see MTDC definition below) can be found here on the Office of Sponsored Programs CGA website. You will find:

• Current Rates
• General Information
• F&A Waiver/Reduction Protocol

Applying for an F&A/IDC Waiver

Under certain circumstances it may be possible to request and be allowed a waiver of the current established F&A/IDC rate. Under certain circumstances it may be possible to request and be allowed a waiver of the current established F&A/IDC rate. Please contact the pre-award support staff at the College for more information.

Subcontracts

Michigan State University both issues and receives subcontracts. MSU issues a subcontract when a portion of the scope of work (SOW) will be performed by another entity and that entity will retain rights to their intellectual property. The subcontract outlines the work to be done, how much will be paid to the partner institution over what time period, invoicing requirements, and any special terms and conditions such as an advance of funds.

Subcontract vs Consultant

Which do you use when?

• Subcontract is used if the relationship is ongoing rather than a one-time event
• Consultant is used if it is a one-time event, such as a review, analysis, etc.

What needs to be done at the proposal stage:

• Subcontracts need
  • Scope of work: a list of the subcontractor's tasks and deliverables
  • Institutional commitment: a letter from the subcontractor stating that they are willing to commit to the project if funded
  • Budget: include the subcontractor's F&A if applicable
  • Budget justification
  • Subrecipient Commitment Form with COI assurances
• Consulting agreements need
  • Letter providing details about services to be provided
  • Rate schedule: specify hourly rate
  • Administrative support costs as shown in the budget

Introduction

The budget is the financial expression of the project and should accurately reflect the costs of the proposed research/education/service program. The budget justification provides the sponsor agency and reviewers of the application with information such as why costs are programmatically necessary and how they are calculated. Reviewers will analyze the financial data to determine if the proposed costs are allocable to the program, allowable under federal cost principles or non-federal sponsor guidelines (whichever is applicable), reasonable, and treated consistently by the institution and similar organizations.

When the University receives an award, the approved budget items become part of the agreement between the University and the sponsor. Only those costs that are included in the budget or re-budgeted costs allowed by the sponsor should be directly charged to the award. If the cost requires prior institutional and/or sponsor approval after the award is made, the approval must be secured before the cost is incurred. Therefore, it is important to develop a budget that will enable the PI to fulfill all of the programmatic requirements of the project.

A budget and budget justification must be provided for:

• ALL proposed direct costs
• Proposed cost share
• Estimated program income, including projected revenue and expenditures
• Facilities and Administration (F&A or Indirect Costs)

Funding Sources

One of the first steps in developing a budget is a determination of the original source of funding: federal/federal flow through, state and local government, private, etc. The Office of Research, College of Public Health (COPH), will assist grant writers in identifying the source of funding. 

• Federal/Federal Flow-Through
  If the funding source is federal in origin, budgets must comply with the sponsor agency budget guidance and OMB Circular A-21, Cost Principles for Educational Institutions. Additional information is provided throughout this document to assist grant writers in determining if items of cost are normally treated as direct costs or F&A. In addition, definitions are provided at the end of this document for the following terms: direct costs, F&A costs, allocable, reasonable, consistent treatment.
• Non-Federal Sources
  Budgets developed for non-federal funding sources must comply with the sponsor agency budget guidance and University guidelines.