Contracts & Grants: Direct Costs
This is a general list of allowable costs. The PI must review the funding opportunity as sponsors may impose additional restrictions regarding allowability.
Include the following information for each employee listed in the budget:
1. Name and Payroll Title of the employee
2. Monthly or annual salary. Include applicable salary escalation rate for academic employees as well as estimated salary merit increases annually for staff. Projected increases should be between 3%-5%, or, if known by PI, based on planned merit, step and/or promotion increases.
Minimum Effort Requirements: PIs and Co-PIs are required to commit a minimum of 1% effort for federally funded awards up to $25,000 and a minimum of 2% effort for awards of $25,000 or more. This applies to projects with flow through as well as direct federal funding. PIs should also ascertain whether the sponsor requires a minimum level of effort that may be in excess of the minimum specified by ANR policy.
3. Include applicable Composite Fringe Benefit Rate. See Chart L. More information regarding Composite Fringe Benefit Rates is below.
Note regarding Leave Accrual: According to our federally negotiated rate agreement, leave accrual is part of the salary of each eligible employee, and is never allowable as a separate direct charge. Salaries and Fringe benefits should not be padded to add Leave Accrual costs.
Example of How to Calculate Salaries & Benefits:
Salary Example $70,000 (annual salary) x 10% (effort: your time commitment that will be charged to the project to the project). Benefits Example: $7,000 (project salary) x 55.3 (Composite Benefit Rate) = $3,871. If your budget period crosses multiple UC fiscal years (July 1st to June 30th) then be sure to use split rates for the portion of work to be performed under each fiscal year.
Composite Fringe Benefit information
A Composite Benefit Rate is an average of all eligible benefits (except tuition and fee remission, leave accrual and General and Employment Liability-GAEL) applicable to an employee based on which employee rate group they are assigned (based on their UC payroll title). The calculation for Composite Benefit Rates is: applicable composite rate multiplied by gross salary. This calculation does not affect individual employees’ benefit eligibility or personal benefit deductions (reflected on employees’ earning statements) in any way. It only impacts what is being charged to your contract and grant award or operating fund accounts for employee benefits. All employee benefit charges for employees paid from ANR Chart L and UC Davis Charts 3 and S accounts will post using Composite Benefit Rates. ANR composite rates (chart L) are different than those used by UC Davis for its employees (charts 3 and S). This should be taken into account when preparing budgets that include the participation of UC Davis staff, or when asked for budget figures when participating in UC Davis projects. These rates apply to all employees paid through the UC Davis campus financial system. They do not apply to staff at Office of the President, or those on the Berkeley or Riverside campuses. Click here to Learn More.
ANR Salary Recovery Policy
It is the policy of ANR to allow the inclusion of academic salary in grant application budgets. Principal Investigators and Co-Principal Investigators are encouraged to recover reasonable and appropriate salary support from grants and contracts proportionate to the function of the time and effort devoted to the project. All reimbursements for academic effort must be planned in the budget at the proposal stage. No retroactive application of salary and benefits recovery is allowed.
In recovering salary and benefits costs under sponsored projects, the principles of good faith and fair dealing require that proposals present a realistic estimate of the amount of time to be devoted to the project by University academics.
Salary recovery for individual proposed projects shall be approved through the normal submission mechanism, with the responsible principal investigator recommending (and administrator approving) a reasonable amount of effort to be charged to each extramural sponsored project. The maximum level of salary recovery will be affected by such things as matching commitments and funding source. In general, the maximum level of salary recovery should not exceed 30 percent of total contract/grant activity of the principal investigator.
All released salary funds should be expended on a current basis. Any carry forward of funds is subject to ANR’s salary savings policy which allows the salary savings funds earned any time in FY Year 1 to be carried forward to June 30th of FY Year 3 before being returned to central ANR funds. The Business Operations Center (BOC), the CE Specialists’ Campuses, the Statewide Programs’ Business Officers, or other next-level administrative unit will conduct periodic reviews of accounts to ensure the funds are expended appropriately and in a timely fashion. Note that fringe benefits, while budgeted and charged to sponsored projects, will not be available for distribution.
If an extension is needed to expend these funds (i.e., saving up for a large piece of equipment), please contact the BOC or your Statewide Programs Business Officer (or other Business Officer with which you work) about the request and why the extension is needed.
Equipment is defined by the federal government and the University as tangible, nonexpendable property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit (including tax, shipping, and installation). Estimated cost should include sales tax, shipping, and assembly, if necessary.
- When the terms of an award set a lower dollar threshold for equipment—$1,000, for example—the PI’s administrative unit must track it as if it fell under the University’s definition of equipment. (See UCOP Management and Control of University Equipment Policy, Business and Finance Bulletin BUS-29,http://policy.ucop.edu/doc/3220477/BFB-BUS-29.)
- If a piece of purchased equipment or maintenance costs will benefit more than one sponsored agreement or activity, the cost must be allocated to the various projects and activities proportionally based on the benefit directly received by each.
- If the equipment purchase is to be made within 60 days of the award end date, a justification must be submitted to the BOC or unit Business Manager for coordination, review, and approval by the OCG prior to purchase. Maintenance and repair costs to keep project-specific equipment—whether pre-existing or purchased with project funds—in operating condition are allowable within the timeframe of the project’s performance period.
Equipment is not:
- Items that cost less than $5,000
- Repair/replacement components for equipment
- Individual Computers/ computer software
All of these should be placed in the Supplies and Expenses category
- Meal costs incurred during the course of travel generally are allowable.
- Food purchased for demonstrations or approved activities may be allowable if specifically identified in the proposal budget and approved by the sponsoring agency.
Not Allowable: Food (e.g. meals and refreshments for meetings) is generally not allowable as a charge to a sponsored project unless specifically identified in the proposal budget and approved by the sponsoring agency.
Travel are costs associated with the required travel for each employee working on the project or program. The following aspects of each trip should be outlined on the budget justification:
- The specific destination, if known, of each trip.
- The purpose of the trip: who? where? why? and what is the purpose?
Before charging travel to an extramural project, PIs and their administrative staff should review all relevant travel policies- sponsor, program, federal, University, and ANR- and follow the most restrictive policy, noting any special requirements such as pre-trip approval.
Allowable: If memberships are required for attendance at a professional technical meeting related to the funded project, the membership cost may be allowable, provided it was specifically budgeted and justified in the project proposal.
Not Allowable: Memberships and subscriptions are normally considered to be indirect costs because their benefit to research and academic endeavors generally cannot be specifically assigned to individual awards.
Salaries and wages of administrative and clerical staff in general should not be direct charged to a project. However, administrative costs may be charged if all of the following conditions are met:
- Administrative or clerical services are integral to a project or activity;
- Individuals involved can be specifically identified with the project or activity;
- Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and
- The costs are not also recovered as indirect costs.
Such expenses must be identified in the proposal budget and supported by a written justification as to how the expense is above and beyond what normally would be provided as administrative support to the project.
Directly charging such costs to a contract or grant may be appropriate when the project requires an extensive amount of administrative or an amount of clerical support significantly greater than what is routinely provided by the administrative unit. The costs must be attributable to the project and the circumstances must be justified in the project proposal to the satisfaction of the awarding agency.
The following types of administrative and clerical activities are considered indirect costs. They should not be charged to sponsored projects because they cannot easily be directly identified with specific projects
- Administration and support services that span multiple administrative unit activities
- Contracts and grants analysis
- Personnel functions
- Accounting and budgeting functions
- Routine travel planning
- Processing and tracking of routine purchase orders
Supplies and expenses are generally required based on the scope of the project.
- Equipment items that have an acquisition cost of less than 5,000 dollars
- Repair parts or replacement components for equipment items.
- Computing devices that are under $5,000, are an allowable cost provided that the device is essential and allocable, but not solely dedicated, to the performance of the project.
-Prior Approval on federal awards is not required, however, we still have to follow same practices for determining and documenting allocability.
-The machines are essential and allocable to the project in that they are necessary to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or “peripherals”) for printing, transmitting and receiving, or storing electronic information.
-The project does not have reasonable access to other devices or equipment that can achieve the same purpose; devices may not be purchased for reasons of convenience or preference.
- Vendor or Consultant Agreements (See Subrecipient section below)
Items in this category should not include miscellaneous or departmental general supplies. General-purpose computers, computer supplies, software, and office supplies are normally considered indirect costs.
Each of these miscellaneous costs should be listed separately and include sufficient detail.
- Publication expenses may be charged to a Federal Award after the period of performance but before the end of the 90-day closeout period. This includes 1) publication costs for electronic and print media, including distribution, promotion, and general handling provided these costs are identifiable to a particular cost objective and 2) page charges for professional journal publications provided the publications report work supported by the federal government and the charges are levied impartially on all items published by the journal.
- Printing costs
- Subawards (See Subrecipient page)
- Recharge activities: Costs of approved University rate and recharge activities and service centers are allowable as direct costs to a sponsored project where such costs are required under the scope of the project. All usage must be accounted for and services must be charged to all users based on actual usage, using uniform, nondiscriminatory rates. The rates must be based on the direct costs of providing the services. Rates must be approved within University policies and appropriately revised based upon review of the actual direct expenses and charges to users.
- GAEL. The University of California, Office of the President (UCOP) assesses each campus, and ANR, to fund the University’s self-insurance program for general liability (GL), Auto Liability (AL), Auto Physical Damage (APD), and Employment Practices Liability (EPL). Together, this assessment is referred to as “GAEL.”
On Federal funds, Participant support costs are defined as direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects. Participant support costs do not include expenses incurred to incentivize or enable research subjects to participate in studies, such as gift cards, stipends, dependent care costs, parking fees and transportation. Participant support costs are not routinely allowed on research projects.
A participant is a Non-UC employee who is receiving, not providing, a service or training opportunity from a workshop, conference, seminar, symposium or other short-term instructional or information sharing activity funded by the federal award. Attendance at the conference or training is for their own benefit, not the benefit of the project. A participant is not the provider of a service or training such as a collaborator on a project who is contributing to the project deliverables. Participants do not perform work or services for the project or program.
Federal guidelines require prior approval of the Federal Agency in order to incur Participant Support Costs under federally sponsored awards. In addition, awarded projects that include funds budgeted for Participant Support costs require prior approval prior to transferring those funds to another expense category.