Skip to main content

Budget Procedures and Rates Information

Template for Proposal Budgets

Facilities and Administrative Cost Rate (IDC rate)

The University of Houston has negotiated a four-year, pre-determined indirect cost (IDC) rate plan with our cognizant federal agency, the U.S. Department of Health and Human Services. The resulting rates are effective immediately and are retroactively applicable as of September 1, 2019. The off-campus rate will remain unchanged at 26%, but the on-campus rates will be adjusted according the following schedule:

  • FY2019-FY2020 = 53%
  • FY2021-FY2023 = 55%

Current UH Negotiated F&A Rates

Effective Period Type of Activity On Campus Off Campus
09/01/2019–08/31/2020 Organized Research 53% 26%
Other Sponsored Activities 31% 26%
09/01/2020-08/31/2023 Organized Research 55% 26%
Other Sponsored Activities 33% 26%

For more, refer to the Division of Research memo on the rate change or view the rate agreement approved by Department of Health and Human Services and the UH Office of the General Counsel.

*Provisional rate

Fringe Benefit Rates

Proposals submitted by the University of Houston to an external sponsor should include an amount estimated to be the actual costs for fringe benefits.

Use the Template for Proposal Budgets to estimate all salaries included in a proposal budget for each person. Actual fringe benefits are charged to the sponsored project at the time the salary cost is incurred and are based on the salary, selected benefits package and other variables applicable to the individual employee.

The fringe benefits identified in the UH F&A Rate Agreement (PDF) include FICA Life Insurance, Retirement Health Insurance, and Worker's Compensation Unemployment Insurance. The following description should be used in a proposal budget justification:

“Sponsored awards are responsible for the actual fringe benefit costs incurred by each employee working on the project. Fringe benefit costs have been estimated based on historical data. However, actual costs for fringe benefits are charged (billed) to the sponsored project at the time the cost is incurred, based on salary, selected benefits package and other variables applicable to the individual employee.”

Proposal Budget Basics

*Note: Budgeting for project needs is the responsibility of the PI with the assistance of the BRS/Department Research Administrator (RA) assigned to his/her unit.

When a budget is required by the sponsor, the budget should reflect the best estimate of the costs requested to conduct the work outlined in other sections of the proposal. Because proposal budgets are only estimates of what the project will cost in the future, and rates and costs do vary over time, the principal investigator (PI) should be aware that future budget adjustments may be necessary during the life of the award, and such adjustments may require sponsor approval obtained through OCG.

The PI should build a budget that considers the likelihood of future changes budget categories, rates, and conditions. The PI should monitor project costs and make internal budget adjustments (with sponsor approval if required) to stay within the project budget approved by the sponsor. Note: If a funding deficit results from (a) international currency fluctuations or (b) project expenditures exceeding the amount of the award, the PI may wish to work through their RA to request additional funding from the sponsor. If the sponsor does not provide additional funding, any deficit that results will be cleared by the campus deficit reduction policy.

Budget Categories

Cost Categories

Proposal budgets generally include two basic categories of costs: direct costs of the proposed project and facilities and administrative (F&A or indirect) costs. Both are real costs. Direct costs plus F&A costs equal total costs. Reminder: the sponsor’s cost categories may be different than those used by the University necessitating an adjustment between cost categories at the post award stage.

Direct Costs

Direct costs are incurred in the performance of the project and must be directly attributable to the project and must be considered reasonable, allocable, and allowable. Direct costs include categories such as salaries, fringe benefits and annual increases, graduate student fees and tuition, consultant costs, equipment, supplies, travel, subagreements, alterations or renovations, and other costs. It is the responsibility of the PI, with the assistance of the DBA to determine which of these categories is appropriate for each cost associated with the project.

Salaries and Wages

For each project participant, list the:

  • Name (or “To Be Named” for an unfilled position)
  • Role on Project
  • Nature of the position (e.g., nine month or 12 month appointment, summer faculty)
  • monthly salary
  • Seniority Pay date (date first started at the university)
  • Retirement
  • Insurance
  • Number of months per year and/or percentage of effort

For multiple-year budgets, include:

  • Projected cost of living increases, specifying the period to which they apply, with an explanation of the basis for calculating the rates
  • Projected merit increases, specifying the period to which they apply, with an explanation of the basis for calculating the rates

Resources for Salaries and Wages

Fringe Benefits

1. Composite Fringe Benefit Rates

The University has negotiated composite fringe benefit rates with its cognizant federal agency (DHHS). For budgeting purposes, the PI should use the composite rates along with the projections provided for out years for planning purposes, only (e.g., multi-year budgeting, financial aid planning, contract and grant proposal submissions, etc.). Note rates projected are subject to change. If future approved composite fringe benefit rates are higher or lower than the projected rates budgeted at the proposal stage, PIs will need to re-budget accordingly

Current employees are subject to the following standard expenses:

FICA - Social Security

6.20%

FICA - Medicare

1.45%

Unemployment/Workers Compensation Insurance

0.55% / 0.45%

Terminal Vacation Pool (vacation-eligible only)

0.50%

ERS Employer Insurance Benefit Contribution

1.00%

Resources for Composite Fringe Benefits

2. Graduate Student Fees and Tuition

Graduate Tuition Fellowship (GTF)

The Graduate Tuition Fellowship administered by the Graduate School covers the cost of in-state tuition and mandatory fees for the following students:

  • Doctor of Philosophy (Ph.D.)
  • Doctor of Musical Arts (DMA)
  • Master of Fine Arts (MFA)

Note: Students must be full-time enrollment of nine (9) credit hours per term (fall and spring)

Non GTF

For all other types of Graduate Students, budget must include full tuition and fees.

*Note: Graduate student fees and tuition are not subject to indirect cost (F&A).

**PhD and Master of Fine Arts Students will have tuition covered by GTFs and reimbursed by a 5% fringe “tax” that will be paid into a GTF pool.  Other types of graduate students will still need tuition covered by the sponsor.

Resources for Fees and Tuition

Consultant Costs

Consultant fees may generally be paid only to individuals not employed by the campus or other UH system who can provide special knowledge or advice necessary for the project. For each individual, specify the name, daily rate of pay, and number of days each consultant will be paid. Documentation supporting the reasonableness of the pay rate should be provided. Any costs of travel and per diem should be specified. All consultant costs are subject to the applicable indirect cost rate associated with the sponsored agreement.

Equipment

The University defines equipment as items that cost at least $5,000 and have a life expectancy of at least one year. These items should be included as equipment in the budget and excluded from MTDC.

  • List each item individually and describe as completely as possible.
  • Provide current prices with sources noted. Original vendor pricing information should be retained.
  • Explain any inflationary factors that have been used to estimate anticipated increases.
  • If equipment is to be fabricated rather than purchased, itemize the individual component parts and estimated labor costs, explain the basis for calculations, and retain supporting documentation. If title of the fabricated equipment is retained by UC, no indirect cost applies but California taxes do; if title goes to the sponsor, then full indirect cost applies.

Resources for Equipment

Supplies

Supplies are expendable items under $5,000, specifically related to the project.

  • List by specific categories of cost (e.g., chemicals, glassware, survey forms, small electronic components) with an estimate of the cost of each category.
  • Explain how estimates were derived. Historical costs can be the basis of budget estimates for ongoing projects or in cases where similar work has been performed on another project.

Other Direct Costs

Always follow agency guidelines on direct costs in proposal budgets. Typical categories of other direct costs are listed below. On federally sponsored projects, postage, local telephone costs, and memberships cannot be charged unless they are specifically approved by the agency.

  • Stipend charges are allowable for projects with a training component and fellowships. For the UH campus, all individual grants for student fellowships are considered a fellowship and have no indirect cost applied. All individual grants for postdoctoral or faculty fellowships from federal agencies are considered research funding, and the research indirect cost rate is applied.
  • Publication/documentation/dissemination costs. This category includes expenses for publication in established journals. Costs for publication of a book, monograph, or other publication usually cannot be charged without prior approval from the sponsor.
  • Meeting costs, participant costs.
  • Computer usage rates.
  • Allowable telecommunications charges.
  • Equipment maintenance. Charges should be based on maintenance agreements.
  • Equipment rental. Charges may be included as rental costs if the cost of equipment rental is required for the project.
  • Rental costs. When projects are conducted in rental space not owned by the University, the off-campus indirect cost rates apply, and the rental charges must appear on the proposal budget.
  • Service agreements. Service agreements generally result in delivery of a product and may be issued to either individuals or companies. They are sometimes included in the cost of equipment purchase.

Travel

Specify for each trip:

  • Purpose and destination (if known)
  • Number of individuals traveling
  • Mode and cost of transportation (e.g., airfare, mileage reimbursement)
  • Number of days of per diem and the per diem rate

Resources for Travel

Participant Support

Resources for Participant Support

Human Subjects Compensation

Resources for Human Subjects Compensation

Subcontracts

Subagreements with Collaborators

Before a sponsor’s funds can flow from UH to another entity, it is necessary to determine if the participating entity is a “contractor” or a “subrecipient.” It is necessary to correctly categorize subrecipients and contractors at the proposal stage to ensure the correct base for calculating indirect costs (F&A) is used. 

Contractor: A contractor provides similar goods or services to a number of entities. The services of a contractor are repetitive in nature, and a contractor’s goods are commonly available to many customers. A contractor therefore requires little, if any, instruction as to how to go about producing the good or service. A contactor is paid when the service or product is accepted by the customer/client. A contractor engages in “work for hire” and thus should not have copyrights and/or other intellectual property rights related to any materials, inventions, works of authorship, software, information and data conceived or developed by UH in the performance of the project. 

Subrecipient: A subrecipient relationship exists when an outside entity performs a significant portion of the scope of work or objectives of the award received by UH. A contractor may carry out an important “task” in support of the project, but a subrecipient must meet performance targets that are tied to UH’s program objectives. A subrecipient also has the latitude to make policy and organizational decisions governing how it carries out a program, i.e., programmatic decision-making. This involves constructing a plan or method of action; executing this plan with available human and financial resources; evaluating the outcomes/results; revising the plan, strategies, and tactics as necessary; and reporting the results. A subrecipient is a true partner and as such may assert copyrights and/or other intellectual property rights related to the work performed.

A subrecipient, unlike a contractor, also is held responsible for compliance with applicable sponsor requirements, program statutes, regulations, rules, policies (including local policies), and guidance. A subrecipient must submit a comprehensive closeout package at the end of the agreement. A contractor is only required to provide an invoice.

Subaward/Subcontractor costs. The following chart illustrates these relationships:

Type of Recipient

Negotiated F&A Rate

Lesser F&A Rate

Subrecipient

Charged on the first $25k of sub

Charged on all subaward costs

Contractor

Charged on all contractor costs

Charged on all contractor costs

Distinguishing a Subaward from a Subcontract

Two types of transactions are typically received by OCG: Awards and Contracts.

“Award” means financial assistance (grants, cooperative agreements) that provides support or stimulation to accomplish a public purpose.

“Contract” means a contractual agreement to procure goods and/or services for the direct benefit or use of the Sponsor.

Under an “Award” of financial assistance UH may issue a “subaward” to any entity that is needed as a collaborator on the project. However, when UH receives a “Contract” and wants to provide project funds to a collaborating entity the appropriate transaction is a “subcontract.” Note: Sponsor approval may be assumed if a subrecipient is named in the UH proposal, depending on sponsor requirements. Subcontracts may require additional prior written approval of the sponsor.

Facilities and Administration Costs (F&A / IDC)

Indirect costs are budgeted in accordance with the University of Houston’s current federally negotiated rate agreement, dated 12/17/2019.  The F&A rate for FY2021 (55%) is applied to modified total direct costs.  Modified total direct costs do not include equipment, participant costs, tuition remission, and subcontracts over $25,000.

The Modified Total Direct Cost (MTDC) base is used when the federally negotiated rates are applied. It is derived by excluding certain costs from the direct cost total. At UH, MTDC excludes equipment and fabrication of equipment, capital expenditures, charges for patient care, tuition remission, rental costs of off-site facilities, scholarship, and fellowships, as well as the amount of each subaward over $25,000. Not all sponsoring agencies may apply all of these categories to the MTDC; check the specific agency guidelines for instructions on budget calculation.

The Total Direct Cost (TDC) base includes all of the direct costs being charged to the sponsor. Nothing is excluded from the base prior to calculating the indirect costs (F&A). This base is typically used when a sponsor declines to pay Berkeley’s federally approved indirect cost/F&A rate and an F&A waiver is granted by the University.

The Total Cost (TC) base is used when the sponsor states that only a certain percentage of Total Project Costs can be charged for indirect (F&A) costs.