Budget Preparation
When preparing a budget, there are many things to know such as:
- The budget is a key element of most grant proposals.
- It serves as a blueprint for spending the project's funds.
- It helps reviewers to determine how the project will be conducted.
- Proposal budgets provide a picture of how the project will be structured and managed.
- It can reveal whether the proposed project has been carefully planned and may ultimately be feasible.
It is imperative to show that the proposed budget is reasonable and allowable based on the sponsor's guidelines and the University's policies regarding budget costs. When planning a proposal budget, a justification should be submitted as well to thoroughly explain each budget line item and why it is relevant to the proposed project. Budgets should be prepared for the entire proposed project and direct/indirect costs must be accounted for. The following budget categories are typically included in the development of a proposal budget:
Total cost of a sponsored agreement is comprised of the allowable direct costs plus the allocable portion of the allowable Facilities and Administrative (F&A) Costs.
Direct costs are those costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy.
Facilities and Administrative (F&A) costs are those that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. F&A costs are synonymous with “Indirect or Overhead Costs”. F&A costs are calculated by multiplying MTDC by the Institutional Negotiated Federal Rate.
Modified Total Direct Costs (MTDC) is a subset of the direct costs per the university’s rate agreement, MTDC consists of all:
- Salaries and wages
- Fringe Benefits & Insurance Rates
- Travel
- Materials & Supplies
- Services
- Subawards – include up to the first $25,000 of each subaward
- Capital Equipment
- Charges for Patient Care
- Rental Cost of Off-Site Facilities
- The portion of each subaward and subcontract excess of $25,000
- Capital Expenditures
- Student Tuition Remission
- Scholarships and Fellowships
Salaries and Wages
The budget detail should include the title, name and percentage of time/number of months, summer or academic for each person listed on the budget. If a specific person is identified on the budget then their projected actual salary rate should be used.
If a specific technician, staff person, graduate student or other student worker has not been identified at the time of budget preparation, the salary amount for those categories should be consistent with those normally paid by the University.
Note: Secretarial/Clerical salaries are normally included in Facilities and Administrative (F&A) Costs as required by the Uniform Guidance. Inclusion as direct costs is not typically allowed but may be appropriate in certain situations.
Salary calculations
An annual escalation factor (most commonly 3%) is added to all salaries each September 1st. Maximum amount of time graduate students are allowed to work any month while attending class is 50%.
Level of Effort
Read the sponsor guidelines carefully to determine how to calculate personnel costs. Some sponsors guidelines may require budget information based on the “percent time” format while proposals submitted through Grants.gov Workspace using the SF424 R&R budget form require calculations based on “man months”.
Percent Time
Time commitments on proposed projects can be expressed as a percentage of an individual's time.
Man Months
Man months, or "person months", as they are commonly called, represent the total time commitment of an individual as complete monthly units. For example, if a person spends 50% of their time for 12 months, it is expressed as 6 man-months or person-months. NSF, NIH, ONR and USDA are just some of the sponsors that use this format.
Fringe Benefits and Insurance Rates
Fringe benefits are a direct cost to a sponsored project, and are clearly related to the salaries and wages to be paid. Each fiscal year, the Texas A&M University System publishes new fringe rates that have derived from the average population of all Texas A&M members, if a member’s values differ, the member could use the different amounts based upon their employee population.
Our budget template is updated annually to reflect the new rates each fiscal year. The principal investigator should use their specific fringe and insurance rates they currently have with their job, if known. If not sure, please use the standard fringe benefit rates below when calculating fringe benefits (unless you know th for sponsored agreement budgeting purposes. This will not impact reimbursements from sponsored agreements, as fringe benefits will continue to be reimbursed at the actual dollar amount expensed, rather than the budgeted amount.
Fiscal Year 2024 Fringe Benefits for Budget Purposes
| Fringe Benefit | Rates |
| Employees Eligible for all Fringe Benefits (Full Time Faculty & Staff) TRS Employees | 19.7% of direct salaries & wages |
| Employees Eligible for all Fringe Benefits (Full Time Faculty & Staff) ORP Employees | 19.2% of direct salaries & wages |
| Employees Not Eligible for Group Insurance & Retirement (Part Time Staff) | 10.7% of direct salaries & wages |
| FICA Exempt Students Eligible for Group Insurance But Not Eligible for Retirement (Graduate & Undergraduate Students) | 3.0% of direct salaries & wages |
| FICA Exempt Students Not Eligible for Group Insurance & Retirement (Graduate & Undergraduate Students) | 3.0% of direct salaries & wages |
Fiscal Year 2024 Fixed Monthly Dollar Amount for Group (Medical & Basic Life) Insurance
| Classification of Employee | Fixed Monthly Insurance Amount |
| Faculty and Staff – Full Time (100%) | $1,033 |
| Faculty and Staff – Part Time (50% - 99.99%) | $503 |
| Insurance Eligible Student(s) | $282 |
| Combined (all employees) | $891 |
For more information regarding the TAMUS fringe and insurance rates, please view the fringe benefits letter for fiscal year 2024.
Capital Equipment is defined 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. Any major equipment purchase must be listed separately in the budget. Do not
forget to include any applicable shipping and handling as well as training and
installation costs.
The need for the equipment should be adequately justified on the budget explanation
page. General purpose equipment, such as computer equipment, is not eligible for
support unless primarily or exclusively used for project implementation.
Travel expenses must conform to the university’s Travel Guidelines in order to qualify
for reimbursement. According to the General Appropriations Act (GAA), state
employees are reimbursed for actual meal and lodging expenses for out-of-state travel
up to the maximum rates based on federal travel regulations. Federal travel regulations
are typically updated on October 1. Per Diem rates are posted on the General Services
Administration Web site (http://www.gsa.gov/).
Proposed travel should include number of trips planned, number of days per trip,
number of persons for each trip, conference name, location, purpose and cost.
Estimated travel costs should be broken into the following subcategories:
- Transportation (airfare, mileage and/or automobile rental expenses);
Subsistence (per diem and hotel expenses).
foreign travel separately, with prior approval from the sponsor usually and notify the
university’s compliance office regarding potential export control issues.
The Facilities & Administrative cost rate is a predetermined and calculated according to the F&A Cost Rate Agreement for the university with the Department of Health and Human Services (DHHS) (our cognizant federal audit agency) for use on all federal awards. These rates are used for all proposals except those sponsors that limit F&A.
Calculation of F&A Costs
Modified Total Direct Cost or MTDC consists of direct costs less capital equipment over $5,000, tuition, scholarships, fellowships, rental of off-campus facilities and that portion of each subaward in excess of $25,000. Applicable rate are listed below and apply to both Research and Instruction projects.
| TAMUK's Negotiated F&A Rates | On-Campus | Off-Campus |
| Research & Instruction | 38% | 13% |
Sometimes an F&A rate restriction is stated by a sponsor in a program’s guidelines. It’s important to carefully read the guidance/instructions for exceptions regarding F&A / indirect cost requirements. Use the following formula to calculate F&A costs when the sponsor requires or limits F&A as a percentage of total costs requested.
Indirect Cost Rate Distribution
All grants will have the indirect costs (IDC) divided in the following manner:
- 25% to the research investigator;
- 25% to the college and department of the research investigator (division determined by each college);
- 40% to the University to cover TAMUS research assessments;
- 10% to the Office of Research and Graduate Studies to support the University’s research initiatives.
Funds are allocated to separate indirect cost accounts.
Purpose of Indirect Costs
IDC are costs allowed by funding agencies to support the research conducted by Universities. The indirect costs must be used to support research. Faculty can use their IDC account to support their research programs. This can range from supporting students doing research or travel associated with your research.