Budgets

 

A proposal budget is a section of the proposal that represents and/or reflects the Principal Investigator's best estimate of the actual costs for conducting the scope of work. It is imperative to pay attention to any sponsor specific instructions, guidelines and/or requirements when preparing budgets. The application may also include specific budget forms that may be required for submission of the proposal.  

 
There are two types of costs that are included in a budget: Direct Costs and Indirect Costs. When added together, the final figure is known as the Total Cost.

 

Direct Costs

 

Direct costs are costs that can easily be identified with the project and can be directly charged to the project. Examples of direct costs include:


  • Salaries
  • Fringe Benefits
  • Tuition Remission
  • Consultants
  • Equipment
  • Supplies and Materials 
  • Travel
  • Subawards

Direct costs for federal contracts and grants should be prepared in accordance with guidelines incorporated in Uniform Guidance.

 

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Indirect Costs/ Facilities & Administrative Costs

 

Indirect costs are those costs that are not specifically identifiable to any one project or program, but are considered a valid expense of conducting research. These costs are often referred to as Facilities and Administrative (F&A) costs, or overhead. Examples of indirect costs include:

 

  • Building use
  • Equipment depreciation
  • Operation and maintenance of UCLA facilities
  • Student services
  • Departmental administration
  • Administrative Support Offices

For proposals to the Federal Government, UCLA has a negotiated F&A cost rate agreement with the U.S. Department of Health and Human Services (DHHS). These rates are recognized by all other federal agencies.

 

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Which Rate Should I Apply?

 

The rate that is applied to the budget is often dependent on the type, or even location, of the project that is being conducted. For example, there is one rate for activities that are taking place at an on campus location, which is campus space that is owned by UCLA, and a different rate for activities that are taking place at an off campus location, which is campus space either leased by UCLA or not owned by UCLA.


It is important to refer to the rate agreement when developing your budget in order to apply the correct rate. For the various federally negotiated rates, please see UCLA’s most current rate agreement.

 

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Do These Rates Apply to Non-Profit Sponsors?

 

For nonprofit sponsors, UC policy requires that the full cost of work- both direct and F&A costs be requested; however, it is often the case that the sponsor has a written policy limiting the indirect costs. In instances where the PI requests to lower or waive the indirect cost rate or where sponsor guidlines caps their indirect cost rate at a rate lower than UCLA's federally negotiated rate please contact OCGA. Questions regarding F&A cost waivers should be directed to OCGA staff during the proposal preparation process.

 

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Applying the Federally Negotiated Rate

 

For proposal budgets to federal agencies, indirect costs are not assessed on every type of direct cost contained in the proposal budget. There are specific direct costs that are excluded from the assessment of the indirect costs. These exclusions are:

 

  • Patient Care Costs
  • Student fee remission1
  • Rental Costs of off-site Facilities
  • Scholarships and Fellowships
  • The portion in excess of the first $25,000 of each subgrant and subcontract issued by UCLA to an outside entity/organization
  • The entire amount of any subgrant or subcontract to other UC campuses
  • Equipment2 and Capital Equipment

The remaining direct costs that do have indirect costs assessed are collectively known as the Modified Total Direct Costs (MTDC) base. These costs often include:

 

  • Salaries and Wages
  • Fringe Benefits
  • Materials and Supplies
  • Services
  • Travel
  • The first $25,000 of each subgrant and subcontract that is issued by UCLA to an outside entity/organization

 

Note: (1) Tuition and fee rates are determined and managed by the UCLA Graduate Division. (2) Equipment is defined as an individual item that costs at least $5,000 and has a life expectancy of at least one year. Items that cost less than the $5,000 threshold or that will be consumed quickly are considered as supply items. These items that cost under $5,000 will have F&A costs assessed.

 

Additional information needed when preparing salaries include knowing the number of months per year that the salary is being requested for and the percentage of effort that each employee will expend on the project or program. These two items, when multiplied together, are then referred to as person months. A helpful tool when developing budgets is the NIH Percent-of-Time and Effort to Months conversion chart. 

 

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Page Last Updated: June 22, 2017