Elements of a Budget

Salaries and wages are the compensation paid to project personnel, including faculty, staff, and research assistants. They are one of the largest components of most research administration proposal budgets.

Who Should Be Included?

Include all salaries and wages of USC personnel who will be spending full or part time on the project. For key personnel, provide the name, title, amount of time on the project, rate of pay, and the total amount to be paid to each individual under the award. Non-USC personnel should not be included in the salary line and should be included as either consultant/contractor/vendors or subrecipients depending on their role in the project.

Percentage of Effort:

Salaries of exempt employees should be expressed in terms of a percentage of total effort, rather than as hourly or daily rates.  It is generally not permitted for faculty members to allocate to sponsored projects 100 percent, or virtually 100 percent, of their total university effort.

Effort reporting and certification is required, not just by USC policy but also by the federal government, under Uniform Guidance 2 CFR 200 Subpart E1. Effort certification demonstrates that salary charged to a sponsored project reasonably reflects effort performed on the project for the time period being certified and is overseen by the Office of Financial Analysis.  For more information on effort reporting, please visit the Basics of Effort Reporting.

PI Effort:

For any faculty listed in the PI role a percentage of effort must be included as they are responsible for the technical, administrative, and financial oversight of the agreement (with the exception of fellowship awards where the faculty member is serving as the mentor, equipment grants, and any grants/contracts where the sponsor includes clear guidance that PI salary is not allowed). 

Graduate RA and Postdoctoral Scholars Salary:

The university sets minimum compensation levels for graduate research assistants and postdoctoral scholars. These minimum salaries for graduate assistants and minimum salaries for postdoctoral scholars are updated annually each spring.

Clerical and Administrative Salary:

If the proposal will be submitted to a federal agency, salaries and benefits for administrative and clerical staff may not be requested unless the project requires more than the usual level of administrative or clerical support because of its size or complexity. Such projects may be center or program projects, projects that entail assembling and managing large teams of investigators, projects that involve extensive data accumulation and analysis, projects that require making travel and meeting arrangements for large numbers of participants, and projects that require extensive work involving project-specific regulatory protocols. If clerical or administrative salaries are requested, they should be carefully justified in the budget narrative. The practice of including a specified fraction of pooled salaries for clerical or administrative staff is not allowed under federal guidelines.

NIH Salary Cap:

The NIH salary cap is a limit on the amount of salary that can be charged to NIH grants, contracts, and cooperative agreements. It sets a maximum annual rate that can be reimbursed for an individual’s salary from NIH funds. This cap is adjusted periodically and applies to the portion of an individual’s salary funded by NIH grants. Any portion of salary exceeding the cap must be paid using non-federal funds.

Fringe benefit rates cover expenses such as worker’s compensation, unemployment compensation, health plans, retirement plans, social security, Medicare, and separation leave for university employees.

Each year, the Office of Financial Analysis uses estimated costs to calculate the rates for charging fringe benefits to budgets for the next fiscal year. New rates are then proposed to the Department of Health and Human Services, for approval. These rates are known as the preliminary fringe benefit rates. The approved rates are effective July 1 of each year and can be found on the Department of Contracts and Grant’s  Rates at a Glance page.

Budgeting Fringe Benefits:

Fringe benefits should be considered a direct cost item and represent the pooled cost of employee benefits divided by the total salaries in each University employee class. Proposals should be budgeted using only approved fringe rates rather than basing out-years on projected rates.

Materials and supplies are consumable supplies such as lab supplies, glassware, chemicals, computer supplies, etc. These may be listed under one general heading on a proposal budget with an explanation of the types of items to be purchased. If the cost is substantial, the breakdown should be more detailed.

Budgeting Materials and Supplies:

• Only request supplies directly relevant (allocable) to the research plan. Please note, general office supplies are normally not directly allocable to one particular agreement and require additional justification to explain why they might be an exceptional need for this particular project.
  
  
• Explain in detail why specific supplies are needed.
  
  
• Budgeting should be based on actual experience or quotes (reasonableness).
  
  
• Use an inflation factor for future years (verify any sponsor limits).
  
  
• Any equipment with a cost of $5K or greater should be budgeted as equipment and not as a supply.

The breakdown should be more detailed when the total supplies cost is substantial. Where large amounts of supplies or expensive items are budgeted, specify items, and justify their necessity. For proposals requesting federal funding, general office supplies are ordinarily considered part of indirect costs and should not be included in the direct cost budget unless the nature of the project requires more than minimal expenditures and is easily justifiable.

Equipment is defined by the University as an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

Budgeting Equipment:

• Estimate the cost of equipment using an appropriate cost estimation method (such as vendor quotes or catalog prices).
  
  
• Equipment should be listed individually by description and estimated cost, including tax, and should be adequately justified.

Proposed equipment expenses must be project specific. Do not propose general purpose equipment (e.g., computers, typewriters, etc.), without clearly describing the project specific need for such equipment in the budget justification.

Travel costs usually include travel associated with fieldwork and attendance at scientific meetings for the purpose of presenting project findings and/or results. All associated travel costs must benefit the proposed project and be justified by the scope of the project. When international travel is included, please make sure to indicate yes to international travel in Cayuse SP.

Budgeting Travel:

• Unless otherwise stated by the sponsor, domestic travel is travel among any of the 50 United States, its possessions and territories, and Canada.
  
  
• Foreign travel is classified as travel outside the areas listed above.
  
  
• In budgeting for foreign travel, keep in mind that for federally funded projects, the government requires the use of U.S. air carriers, regardless of cost or convenience.

Communication costs usually include telephone, courier, fax, or postage costs associated with the project. Depending on the significance of communications costs and the preferences of the proposer and the sponsor, this category is sometimes included in the “other direct costs” category.

Please note, postage or local telephone costs are normally not directly allocable to one agreement and require additional justification to explain why they might be an exceptional need for this particular project.

Publication costs include costs associated with the publication and dissemination of research results. Costs often include printing, distribution, promotion, mailing, general handling, and page charges for professional publications.

Budgeting Publication Costs:

• Budget the anticipated cost of publishing the results of the research, keeping in mind that page charges may vary from journal to journal.
  
  
• Consider both page charges and reprint costs.

Consultants are individuals outside of the university, whose expertise and skills will add value to the project.

It is important to ensure that consultants have been correctly identified and that they should not be considered subrecipients.  In accordance with 2 CFR 200, a consultant is an individual or firm providing professional advice or services for a fee, typically on a temporary or non-continuous basis. In contrast, a subrecipient is an organization that receives federal funds through a pass-through entity to carry out a portion of a federal award’s programmatic activities, and thus is subject to compliance requirements similar to those of the pass-through entity. The key distinction lies in the level of control and responsibility assumed by each party: consultants provide services under the direction and control of the recipient, while subrecipients are responsible for programmatic decisions and are treated as if they were the direct recipient of federal funds. 

For more information, please visit the Subawards page.

Budgeting Consultants:

• Whenever possible, identify in the budget the proposed consultant by name, indicate the number of days of work, and rate. Some sponsors may require documentation/letters of support to be included from consultants.
  
  
• Consultant services should be justified, and information should be furnished on each consultant’s expertise, primary organizational affiliation, compensation rate, and number of days or percent of time contemplated.
  
  
• Some agencies limit the daily rate that may be paid to consultants. The daily rate should not exceed the rate that the consultant customarily receives for similar work.

A subaward is when a portion of USC’s sponsored project is passed through to another entity in order to complete a portion of the sponsored project’s scope of work. A subaward must include a clearly defined, intellectually significant scope of work to be performed by the subrecipient’s personnel, using its own facilities and resources.

The subrecipient takes full responsibility for adhering to the terms and conditions of the subaward including those flowed down from USC’s sponsor and assumes creative and intellectual responsibility and leadership as well as financial management for performing and fulfilling the subrecipient’s scope of work within the subrecipient’s approved budget.  

Budgeting Subawards:

• Include the subaward’s costs (direct and indirect costs) in the budget as a single line item.
  
  
• Ensure that all the Subrecipient’s costs are allowable and consistent with the prime sponsor guidance.
  
  
• Ensure that the Subrecipient’s F&A rate is consistent with sponsor restrictions.

• A Subaward Proposal Package is required for each named subawardee prior to submission of the Proposal.

For more information on outgoing subawards please see our Subawards page.

The patient care costs budget category is to be used only for the cost of routine and ancillary medical services for patients enrolled in a clinical study that are performed in a hospital or clinical facility on an inpatient or outpatient basis.

The National Institutes of Health (NIH) Grants Policy states that routine and ancillary research patient care costs provided by hospitals to individuals, including patients and volunteers, participating in research programs are allowable costs. “Routine services” include the regular room services, minor medical and surgical supplies, and the use of equipment and facilities for which a separate charge is not customarily made. “Ancillary services” are those special services for which charges customarily are made in addition to routine services, e.g., X-ray, operating room, laboratory, pharmacy, blood bank, and pathology.

• Patient care costs should not include such costs as consulting physician fees or patient travel, parking, lodging, subsistence, or donor/volunteer fees. These costs may be requested under the “Other Expense” category.
  
  
• In the event an award is made or it is likely that an award will be made you will want to work with the Clinical Trials Office (CTO) to ensure an Medicare Coverage Analysis (MCA) is conducted. This can be initiated through the Oncore System which is overseen by CTO and will usually be required prior to award set-up.

An MCA is a requirement for all clinical studies in which there are tests, procedures and interventions that are associated with research, and an MCA is required for studies that use hospital resources. Examples of hospital resources include use of clinic rooms, pathology services, and more. MCAs are performed for all clinical research studies, irrespective of their funding source. The MCA must be completed for such studies prior to contracting and prior to enrollment of study participants. During an MCA, the CTO coverage analyst will review the protocol for any clinical services to determine which can be reimbursed by Medicare or as part of Standard of Care (SOC).

For more information on Clinical Research please visit the Guide to Clinical Research.

Other direct costs not included in the categories indicated above and that directly benefit the proposed project, can be included in the Other Direct Costs category of the budget.

Examples include, but are not limited to:

• Off-Site Facility Rental: such charges are exempt from F&A recovery.
• Research Subject Payments
• Vendor Services
• Animal Care Costs
• Repair and Equipment Maintenance
• Speaker Fees
• Data Management & Sharing Costs

Indirect or F&A costs are those costs incurred in the general support and management of the proposed activities which cannot be readily determined by direct measurement. USC’s negotiated F&A rates can be found at our Rates at a Glance page.

Examples of indirect costs include, but are not limited to:

• General administration, including such functions as accounting, personnel, payroll, and other administrative functions.
• Research Administration
• Department Administration
• Plant operation and maintenance, including utilities, janitorial services, routine maintenance, and repairs.
• Depreciation and use allowance.
• Libraries

Indirect costs are usually expressed as a percentage of Modified Total Direct Costs (MTDC). MTDC are total direct costs excluding the costs of equipment, patient care, tuition and fees, and that portion of each subcontract exceeding $25,000. Indirect costs must be requested at the approved rate unless a sponsor has a published policy restricting the payment of indirect costs. Any exceptions must be included in the Cayuse SP system at proposal stage and specifically approved by the appropriate Dean/Director.

On vs. Off Campus (F&A)

The difference between on-campus and off-campus Facilities and Administrative (F&A) rates lies in the indirect costs associated with conducting research or other sponsored activities. On-campus F&A rates apply when the sponsored project activities occur in facilities owned or leased by the institution, typically involving a higher rate to cover overhead costs like utilities, maintenance, and administrative support. In contrast, off-campus F&A rates are used when the sponsored project activities take place in facilities not owned or leased by the institution, resulting in lower indirect cost rates due to reduced overhead expenses. Properly applying the appropriate rate ensures accurate budgeting and compliance with sponsor guidelines.

Please ensure that the location where the work is performed is correctly identified in the Cayuse SP system.

USC buildings that are considered Off Campus:  Off Campus Buildings List

Please note, that working remotely does not qualify as “Off Campus” work.

See visit our cost sharing page for an in-depth explanation of cost sharing.