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REFERENCE GUIDE TO CREATING BUDGETS
from
ODU Research Foundation's Office of Pre-award Services

The following information will assist you in creating your own budgets and/or will give you a more concise understanding as to how budgets are created by the Office of Pre-award Services. Included in this material are the formulas with which the Research Foundation calculates salaries and wages, indirect costs, and fringe benefit rates. In addition, a list of frequently asked questions pertaining to facilities and administrative costs is provided.

Salaries and Wages
Faculty
Graduate Research Assistants
Full-time Foundation Employees
Postdoctoral Associates
Other Full-time and Part-time Employees
Fringe Benefit Rates
Facilities and Administrative Costs (Indirect Costs)
Permanent Equipment
Subcontracts/Sub-grants
ODU Research Foundation Pre-award Services

SALARIES AND WAGES Top

Faculty Top
Most faculty members are on a ten-month contract with a nine-month performance-period. Others are on contracts of differing lengths, e.g., 12 months or 11 months. The nine-month performance period is from August 16 through May 15. In computing salaries for proposal budgets, the following computations are to be used. Amounts charged per project period are calculated as follows: base salary divided by 9 equals rate per month. Rate per month times number of months in period times percent effort in period equals charge per period. The percent increase in salary for nine-month faculty is decided annually and is effective each August 16 of the project's duration. Currently, we are utilizing a rate of 5 percent.

Please Note: Sponsored activities may not result in employees receiving compensation at a rate in excess of their contracted salary rate. This restriction is also applicable to summer salary pay rates.

Graduate Research Assistants Top
Graduate Research Assistant wages are based on a 9-month (academic year) performance period during which the GRA may devote up to 50-percent effort to research and or sponsored programs. The wage rate for the effort to be devoted during the summer period is prorated based on the rate in effect for the academic year. The maximum that can be paid in the summer for full-time work is calculated by multiplying the academic year base amount by two-thirds or dividing the academic year rate by 9, multiplying by 2 and then multiplying by 3. Wage rates for GRAs are determined individually for each department. Please check with your department chair for the most current rates.

Please Note: Full-time graduate work is defined as nine credit hours per semester and six credit hours during the summer for both masters and doctoral students. Also, Graduate Research Assistants are not allowed to work more than 20 hours per week during the academic year unless a special exemption is obtained from the Associate Vice President for Research, Economic Development, and Graduate Studies.

Full-time Foundation Employees Top
(Research Scientists, Other Professionals)
Research Scientist is a professional level assignment and must be recruited for following the same procedures as for other regular positions at the Research Foundation. All full-time positions in the research scientist series are entitled to the full complement of benefits available to regular full-time Foundation employees. Individuals in this category are primarily grant/contract-supported personnel. Salaries for these positions are established by the Human Resources Manager in consultation with the principal investigator. The usual performance period is 12 months. The effective date for any increase is the anniversary date of the project year.

Please Note: Full-time graduate work is defined as nine credit hours per semester and six credit hours during the summer for both masters and doctoral students. Also, Graduate Research Assistants are not allowed to work more than 20 hours per week during the academic year unless a special exemption is obtained from the Associate Vice President for Research, Economic Development, and Graduate Studies.

Postdoctoral Associates Top
This classification of employee recently has completed the doctoral degree and has been appointed by a department to a training assignment. This assignment is only for a limited term, approximately one to two years, and is not intended to be a permanent or continuing position. As this is an academic appointment, the salary is based on competitive salaries in the academic setting and set by the individual department. While the primary employment activity for this position is research and research-related tasks, some teaching assignments may be allowed. This class of employee is entitled only to health and dental coverage. FICA and unemployment insurance also must be budgeted for this position.

Other Full-time and Part-time Foundation Employees Top
(Technical, Clerical, Etc.)
Wages for these positions vary with requirements. These positions normally are budgeted for on an hourly basis. Contact the Human Resources Manager for current hourly and salary rates.

FRINGE BENEFIT RATES Top

  • Faculty Academic Year Salary: 26 percent

  • Faculty Summer Salary: 7.65 percent and 1 percent of first $7,000

  • Graduate Research Assistant: 7.65 percent on only summer portion of salary

  • Undergraduate Assistant: 7.65 percent and 1 percent of first $7,000

  • Postdoctoral Associate: 7.65 percent and 1 percent of first $7,000 and applicable health insurance premiums

  • Other Categories: Check with the Research Foundation's Pre-award Services department
FACILITIES AND ADMINISTRATIVE COSTS (INDIRECT COSTS) Top

The University's indirect cost rate agreement is negotiated with the Department of Health and Human Services and is dated September 5, 1997. The rates listed below are valid through June 30, 2000 when the agreement is scheduled to be amended.

Rates are applied to total modified direct costs (TMDC). TMDC is the sum of all budget categories except: equipment in excess of $2,000; individual sub-contracts in excess of $25,000; and participant support costs of any dollar value.

  • On campus rate: 42 percent of MTDC

  • Off campus rate: 26 percent of MTDC

  • Instruction rate: 51 percent of MTDC
PERMANENT EQUIPMENT Top

Permanent equipment is defined as an item of property that has an acquisition cost of $2,000 or more and an expected service life of two years or more. Acquisition cost is inclusive of shipping and installation charges. Allowable items will ordinarily be limited to scientific equipment and apparatus. In general, the Federal government will not pay for general purpose equipment.

SUB-CONTRACTS/SUB-GRANTS Top

A sub-contract/sub-grant is issued for a portion of a project that will be performed, in its entirety, independently by another institution. This work must be related directly to the specific project. A sub-contract/sub-grant is not issued for routine procurement of goods and services from a vendor for use by the prime grantee or contractor or sub-grantee/sub-contractor. Characteristics of a vendor include such items as: providing goods and services within normal business operations; providing similar goods and services to many different purchasers; and operating in a competitive environment.

A proposal from the sub-contractor, which has been signed by an authorized official, is required. Sub-contracts must be shown in the proposal so that there is a clear delineation of the work to be performed by each organization. There also must be a complete budget (including indirect costs) for each sub-contract proposed to be issued. Upon award to the Foundation of the grant or con-tract, we will negotiate a sub-contract/sub-grant agreement with the sub-contractor institution.

Indirect costs are applied to the first $25,000 of each sub-contract/sub-grant included in a proposed budget.

FACILITIES AND ADMINISTRATIVE COSTS

1. WHAT ARE INDIRECT COSTS?

The term indirect costs--now called Facilities and Administrative (F&A) Costs--are those costs associated with maintaining the infrastructure of the University that supports its research, public service and instructional functions.

  • F&A costs are real costs that are incurred for common or joint objectives and therefore cannot be readily identified to a particular activity or project. Examples include library costs, utility costs, the costs of operating and maintaining the University's buildings and grounds, and the costs of administering sponsored projects.

  • F&A costs are built into a proposal budget or contract price quote as an integral part of the proposal.

2. WHAT F&A COSTS ARE NOT?

  • F&A costs are not discretionary.

  • F&A costs are not taken out of a grant or contract; they are built into it.

  • F&A costs are not a tax.

  • F&A costs are not transaction costs.

  • F&A costs are not the operating costs of a department or college.

  • F&A costs are not total reimbursement for the University's costs or for the University's total investment in support of research, public service and instructional sponsored projects.

3. HOW ARE F&A COSTS DERIVED?

  • The procedure for calculating F&A costs is prescribed for all universities by the federal Office of Management and Budget (OMB).

  • The U.S. Department of Health and Human Services is the agency that audits this process at Old Dominion University, and it is with DHHS that the Research Foundation negotiates and signs the F&A rate agreement.

  • Costs that are treated as F&A costs must be treated consistently as such.

  • The University's Office of Administration and Finance and the Research Foundation work together to determine what the University's F&A costs are and to present the documentation to the government.

4. WHO GETS THE F&A COSTS?

The F&A costs incurred by both the University and the Foundation in performing externally funded projects are recovered by the Research Foundation. These recoveries are intended to reimburse the Foundation for its costs associated with sponsored program administration and to reimburse the University for equipment, building, utility, library, and other costs also incurred in support of externally funded projects. The University has chosen to use part of these recoveries to supports its research infrastructure as well as to meet other obligations. The following formula is used to allocate the F&A recoveries. All recoveries are pooled. The actual F&A recovery rate averages about 20 percent of the funds managed by the Foundation. The Foundation's budget is funded from the recoveries as well as AMRL's operating budget, the required return of F&A recoveries to the state (approximately 12 percent), and support for the University's Office of Research, Economic Development, and Graduate Studies. The remainder of the recoveries are allocated to the colleges (80 percent) and to the Office of Academic Affairs (20 percent), effective January 1, 1998.

5. WHAT ARE UN-RECOVERED F&A COSTS?

As noted above, the actual F&A recovery rate averages approximately 20 percent of direct costs. The University's negotiated F&A rates are currently 42 percent on campus and 26 percent off campus. Un-recovered F&A costs are the difference between our negotiated rate and the actual amount recovered. Un-recovered F&A costs represent a forfeiture that must be paid from other sources within the University. When the University accepts a grant or contract that does not reimburse F&A costs at the proper rate, the difference is called "un-recovered."

6. WHY DO SOME SPONSORS NOT PAY F&A COSTS?

  • Private, non-profit, charitable organizations that sponsor university projects state that their intention is to help support the programs they fund, but not to pay all of the costs. Thus, they leverage their funding with other sources of support. They typically limit the amount that they will allow in a grant for certain cost categories (e.g., salaries, travel, F&A costs, or equipment).

  • Grant and cooperative programs from government agencies (federal, state and local) establish funding limits in much the same way and for many of the same reasons as do private, non-profit organizations. However, when the government enters into contracts it is expected that the full (direct and indirect) costs will be paid.
CONTACT Top

Contact the Research Foundation's Pre-award Services department at (757) 683-4293 if you have questions regarding budget preparation or budget policies.

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