Budget Development

Cost considerations are critical throughout the life cycle of a grant. It is imperative to the successful implementation of a project that proposal budgets are developed in compliance with sponsor and PSU requirements and with adequate calculations to ensure sufficient funding to carry out the project.

Practical Considerations: Helping the PI understand the costing requirements for certain types of expenses and how transactions are processed at PSU enables the PI to more quickly and efficiently incur expenses for their projects and minimizes frustration from unrealistic expectations regarding their ability to incur certain types of expenses.

Adherence to the Cost Accounting Standards (CAS) as required by OMB Circular A-21 begins with the proposal budget which requires consistency in estimating, accumulating and reporting costs.

The fact that a cost requested in a budget is awarded, as requested, does not ensure a determination of allowability. The organization is responsible for presenting costs consistently and must not include costs associated with their F&A rate as direct costs.

        - NIH Grants Policy Statement

Cost Categories
It is important that costs are listed in the agencies’ budget categories according to the agencies’ definition of the category – not PSU or PI’s definition of that category.   

General Budget Categories

Practical Considerations

Adherence to CAS

(Salaries & Wages)
  • A basic understanding of PSU’s employment policies and how various types of work is classified at PSU helps to
    • identify salary costs/ranges and
    • avoid over/ under-budgeting for fringe benefits
  • Appropriate/consistent inflation factor
  • Appropriateness of clerical salaries as a direct cost (A-21 Exhibit C)
  • Consistency in estimating costs for personnel effort charged to projects
Fringe Benefits
  • The fringe rate should correspond to the salary/wage classification
  • Fee Remission – shows in Banner as fringe but typically listed in agency budget as “other”
  • Fringe rates/calculations should be consistently applied to the appropriate salary/wage classification across grant
  • PSU/OUS employees? (see PSU policy)
  • Is the work employment, consulting, or subcontract?
Guidelines for Determining Subrecipient or Vendor Relationship

  • Is the work consulting (vendor relationship) or subcontract?
  • Proposal should include cost proposal and validation of F&A rate for subcontractor
  • Federal awards use MTDC base (calculate F&A on first $25K of each subcontract)

  • Are the costs calculated using OUS rates for per diem, mileage, etc.?
  • Foreign Travel – many agencies have separate rules for foreign travel
  • Are the costs based on OUS travel requirements?
  • ONLY Items that have a unit cost of $5,000+ and useful life of one year can be listed in this category
  • “Minor Equipment” should be listed in the materials and supplies category of the budget
  • Is general purpose minor office equipment appropriate (printers, laptops, etc.) as a direct charge according to CAS and agency policy?
Materials & Supplies
  • Are general purpose office supplies appropriate according to CAS?
Participant Support
  • Is participant support clearly identified in budget?
  • Participant support can be in the form of stipends, scholarships, travel, reimbursement for supplies
  • Many agencies have restrictions on rebudgeting from this category
  • See agency ((NSF, USDE, NIH) definitions of participant support
  • Participant support transactions must be accounted for as participant support using appropriate OUS account codes. Click here for participant support form. 


Research Subject Incentives
  • Need to be specifically identified on proposal budget

  • Needs to be specifically described in the proposal budget

Memberships and Subscriptions
  • Coming Soon
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  • Basic phone line charges are typically considered to be indirect costs and should require justification as a direct charge
F&A (Indirect)
  • PIs need to make sure they correctly categorize items in categories excluded from MTDC base
  • MTDC defined in rate agreement excludes:
    • >$25K of each subcontract
    • equipment & other capital expenses, patient care, tuition remission, rental of off-site, facilities, scholarships & fellowships
  • Should be using predetermined rates for out years if applicable
  • Are we following our own policy for application of F&A rates to projects based on funding type?
  • Need to consistently apply F&A bases appropriately based on PSU policy