Budgeting: Consultants

Consultants / Service Agreements

Whenever grant funds are used to pay a third party (individual or organization) outside of the college, these costs should be included in the grant budget under the Consultants / Contractual category. The following are some key points to keep in mind when preparing budgets that involve consultants or contractual expenses.

COMPENSATION LIMITS: Many factors will influence the amount of compensation to be budgeted for consultants and contractual expenses. Many funding agencies limit compensation; be sure to check the guidelines carefully.

In addition, some funding agencies /programs SPECIFY RESTRICTIONS on the amount or percentage of grant funds that can be used to pay contractors / consultants (e.g., they may stipulate that no more than X% of grant funds can be “passed through” to a 3rd party). It is important to be aware of these guidelines when planning a project and assembling a budget.

Note that Administrative Rule 7.02.002 requires ACC to enter into a Service Agreement (a written contract) prior to the performance with an Independent Contractor. If payment is expected to exceed $1,000 per engagement. ACC’s Administrative Council sets forth specific processes and forms for these engagements.

Types of Service Agreements:

Consultants (6518)–independent contractors possessing specialized knowledge, experience, expertise and professional qualifications who are assigned to investigate a problem or project and provide counsel, review, analysis or advice in formulating or implementing improvements in programs or services. Consultants typically provide a written report of some kind.

Professional Services (6581)– Provided by independent contractors with highly specialized technical skills which the District does not have available through internal personnel sources. Professional services are those generally provided by architects, attorneys, and auditors. Service agreements that do not meet the definition of Consultants or Honoraria should be classified as Professional Services.

Honoraria (6519)– Provided to individuals or groups who conduct work that directly supports the District’s instructional programs. These funds would generally be available for guest lecturers, guest speakers, or artistic performances. Does not usually include travel expenses; these expenses are generally covered by the honoraria amount.

As the Purchasing website suggests

“Plan Ahead.”