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Grant Process-Budget


The key proposal component driving activities and outcomes is the budget. Always refer to the agency guidelines to determine what activities and costs are eligible according to the sponsor. Only those costs that are approved may be requested.

Most federal agencies include budget forms as a part of their application package. OSRP is available to assist in preparing the final budget. OSRP staff will review the budget to ensure that it is aligned with sponsor and university guidelines.

Indirect Cost (ICR)

  • Direct Cost vs. Indirect Cost

Charges to a grant can be categorized as either direct costs or indirect cost recovery (ICR) charges.

Direct costs are defined as the charges to a project or program that can be easily identified with the immediate operation of the grant (i.e. project personnel, supplies, equipment, travel and consultants). Direct costs to a sponsored program are as described by the RFP and the guidelines of the funding agency.

Indirect cost recovery (ICR), also called Facilities and Administrative (F&A) costs, pay for charges that are not specifically attributed to an individual project. Indirect charges are defined as costs that are incurred for common or joint objectives. Indirect costs reimburse the college or university for services to the grant such as: accounting services; salaries not reimbursed by the project, such as clerical and administrative involvement; computer laboratory fees; the institution's infrastructure; office supplies; postage; local telephone charges; photocopying; and facility upkeep. If all or a portion of the ICR are not recoverable from the sponsor, the university is contributing to the cost of the project. ICR costs do not disappear simply because a sponsor refuses to pay for them; the university must pay these actual costs from other sources.

An important point to consider is that ICR costs are not recovered from sponsoring agencies until the direct costs have been incurred, the ICR rate is recognized by sponsors, and the university has the legal basis upon which the university can make claims for reimbursement. The current ICR rate has been negotiated with the federal government through the Department of Health and Human Services at no more than 33.0 percent for on-campus activities and 20.0 percent for off-campus activities. Refer to the Negotiated Rate Agreement document on file in OSRP for any clarification as to which rate would apply for your project.

How is the ICR Cost Rate Determined?


Cost Sharing and Cash Match Distribution Policy

Cost Sharing Defined

The portion of the total sponsored project’s costs that are paid from sources other than the funds provided by the sponsor constitutes cost sharing. If required by the sponsor as a condition of the award, cost sharing is said to be mandatory committed. On the other hand, if cost sharing is not required by the sponsor and is voluntarily pledged, it is noted as voluntary committed.

“Cost-Sharing, “In-kind”, and “Matching” may be distinguished by some funding agencies; however, all terms refer generally to costs not charged to the sponsor. Cash contributions, contributed time, and in–kind services are examples as well. Federal regulations governing cost sharing are found in OMB Circular A-110 with the relevant part discussed in Subpart C, Section 23.  The cost sharing and cash match distribution policy at Metropolitan State University of Denver (MSU) is herein defined as follows:

Use of Cost Sharing at MSCD

Because of the significant financial impact of cost sharing in general, and cash match specifically, efforts will be made to allocate resources in a manner that encourages maximum participation and accessibility across campus units.  MSU will provide cost sharing under the following conditions:

  • Cost sharing is mandated by agency guidelines
  • The program announcement requires cost sharing
  • The competitive nature of the project is enhanced by cost sharing
  • Priority will be given to those projects that generate negotiated facilities and administrative costs (ICR)

Cash Match Distribution and Use

A cash match may be provided by MSU to leverage federal and state awards. A cash match may not be used as a supplemental award or to provide additional funding, should the funding agency reduce the award in subsequent years. Requests for a cash match will be submitted through the Office of Sponsored Research and Programs as a part of the proposal transmittal process. The completed transmittal form will designate the amount requested, including annual requests for multi-year projects. The amount of the cash match shall not exceed the lesser of:

  • 10% of the project’s modified total direct costs
  • 10% of the allocated cash match fund

The Vice President for Institutional Advancement will have final approval on the award of a cash match.

As of July 2009, the cash match fund is established at $200,000.

Creating the Budget

A budget template is available under FORMS that may be utilized by investigators to prepare a project budget. The form is in a Microsoft Excel worksheet format to allow the PI to enter their individual budget items in a pre-formated form.

Faculty Release Time/Summer Month Calculations

It is not unusual in a federal or state project to find that the proportion of faculty time supported by a sponsor is limited. In proposing a project with grant funds, the principal investigator must select a workable and fundable methodology, including the amount of time that is available to work on a project as a faculty member. If the principal investigator is a faculty member, check with the respective Chair and Dean to ensure that proposed workload is feasible.

The Temporary Policy on Extra Duty Pay and Related Matters, adopted December 2008, provides for Faculty Reassigned Time, Summer Work, and Extra Duty Pay, including Grants and Contracts, and states:

Faculty members can request reassigned time (up to 25 percent in the absence of extraordinary circumstances) during the academic year to work on such state-funded projects as may be available, or work on activities funded by public or private grants or contracts. Reassigned time applications must be approved by the faculty member’s Chair, Dean, and the Provost. Requests for grant funded reassigned time must also be approved at the time the grant is submitted.

Extra duty pay is available to the faculty member for non-teaching assignments only, and must also be approved in writing in advance by the Chair, Dean, and Provost. Extra duty pay must be approved as consistent with this policy and budget limitations by the university’s Controller or his or her delegate.  The recommendation for extra duty pay must specify:

  • The non-teaching assignment - this should include a specific description of the temporary extra work, the desired outcomes, and the time and effort reports required; documentary evidence that the work is not part of the employee’s regular and reassigned duties or previously planned professional development activities; that no other qualified employee is available to carry out the work as part of his or her normal work load (as required duties under the full time professional appointment); and evidence that the additional duties are not so burdensome as to interfere with the employee’s performance of regular duties including reassigned time
  • A termination date for the extra assignment not to exceed one (1) year
  • The amount of added salary to be paid and the market based data justifying that amount

Faculty members may use qualifying accomplishments that result from paid extra duty work as professional development and service accomplishments in their annual self evaluations, applications for tenure and promotion, and in post tenure review.

For non-teaching grant- and contract-funded work during the two week periods between the academic year and the summer semester, extra duty compensation will be calculated as follows:

  • For non-teaching grant work during this period - pay will be at the rate of 3.125 percent of the employee’s academic year base pay for each week of full time work
  • For teaching work funded by grants - summer salary will be established and paid at the same rate as University-funded teaching, that is, up to 25 percent of the previous academic year’s salary (for full time faculty who teach a full time summer load of eight or more credit hours)
  • For research work funded by grants - summer salary will be established and paid up to 30 percent of the academic year’s salary

The employee’s summer semester may combine teaching and non-teaching duties, but the amount of teaching duties will directly reduce the time available to compensate other grant-funded activities at the higher rate. For this calculation, one credit hour of teaching will equate to one full time week of non-teaching duties.

Extra duty pay in an aggregate amount over $500.00 in one semester will not be authorized or paid without a detailed contract, approved by all the above parties in advance, which describes the extra duty in detail and makes payment contingent upon timely submission of satisfactory, detailed time and effort reports and work product.


If a faculty member’s entrepreneurial effort results in a consulting contract or service contract, extra duty pay based on a percentage of net revenue earned (up to 30 percent) may be authorized, if the faculty member’s time commitments under the consulting contract is expected to be substantially above the time spent performing duties under existing university appointments. The percentage used to pay must demonstrably represent a reasonable market value for the faculty member’s contribution to the work. The total amount of such extra duty pay will not exceed 25 percent of the faculty member’s academic year salary. A written agreement or contract such as an Agreement for Hire Delivery of Training Seminars, Agreement of a Strategic Alliance, or Work Made for Hire Agreement must be established, attached to a request for extra duty pay, and approved by the Chair, the Dean, and the Provost before the work is performed.

To qualify for consideration, the consulting or service contract should demonstrably benefit student learning, faculty teaching and advising, community service, and other university educational initiatives. Six (6) percent of the gross revenues generated are allocated to the university to defray administrative expenses. After other expenses including participant compensation, net revenues generated will support such items as listed below:

  • Funding for student classroom, field, and laboratory experiences
  • Equipment and supplies supporting student activities and experiences
  • Scholarships for students
  • Student worker-study and lab technician positions
  • Recruiting new prospective students as well as new quality faculty
  • Faculty development and travel for professional development
  • Support for faculty service
  • Dues for professional organizations and subscriptions to professional journals
  • Administrative support for department offices and development
  • Administrative items such as computers, office supplies, printers, cameras, etc.

Recommendations for faculty reassigned time and extra duty pay on entrepreneurial contracts must specify:

  • The assignment - this should include a specific description of the temporary work, desired outcomes, time and effort reports required, documentation of evidence that the work is not part of the employee’s regular duties, and that no other qualified employee is available to carry out the work as part of his or her normal work load (all required duties as well as a minimum of 40 hours per week), and evidence that the additional duties are not so burdensome as to interfere with the employee’s performance of regular full time duties
  • A termination date for the assignment not to exceed one (1) year
  • The amount that is the source of pay within the unit’s budget

All agreements to work on grant- and contract-funded reassigned time and extra duty pay will incorporate the standards of time and effort reporting necessary to comply with the terms of the grant or contract.

Budget Categories

Typically, sponsored projects allow the grantee to request compensation for the following direct costs: personnel (salaries and wages); fringe benefits; equipment; materials and supplies; travel and other. Read guidelines carefully to determine what restrictions, if any, are placed on the categories, or if some line items are disallowed. The Budget Template in the FORMS section will guide the PI in completing each budget line entry. Contact OSRP with any questions regarding completing the budget template.

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