Office of the Vice President for Research: Guide for Principal Investigators

BUDGET CATEGORIES

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The University of New Mexico (as well as most other large universities) is subject to several provisions of the federal Cost Accounting Standards (CAS). One of the provisions requires that project costs be estimated, accumulated, and reported consistently. Also, costs must be reported in the same, or more, detail as proposed. As an example, faculty salary during the academic year cannot be shown on a proposal as an hourly rate because faculty are paid for percent effort and not by the hour using timesheet input. During the summer, nine-month faculty are paid a daily rate, therefore summer salary cannot be shown as percent effort but by number of days. The contract and grant administrator at Pre-Award should be advised if UNM procedures conflict with the agency’s request for financial data. This conflict is usually resolved with the contract and grant administrator explaining to the sponsor the rationale for the budget format needing to be in compliance with CAS. The following categories are typically found in proposal budgets and are usually shown in the budget and on the Proposal Data Sheet in the order presented below.

Personnel
Principal Investigator (PI) is a UNM employee qualified to manage the proposed project with the approval of the unit head. If more than one PI is assigned to the project, each is designated as co-PI.

Multi-PI – only to be used when the funding sponsor allows multiple principal investigators, who share full PI responsibilities. Some NIH programs allow Multi-PIs, who can be UNM employees and external subcontract PIs (http://grants2.nih.gov/grants/multi_pi). The sponsor requires a leadership plan to be submitted with the proposal which outline the administrative and financial responsibilities. Three preapproved leadership examples are online (http://hsc.unm.edu/financialservices/preaward/electronic.shtml). As shown in the sample leadership plan, you may specify that the awards be issues as separate but linking award documents, which will eliminate the need for a subcontract. Multi-PI projects that encompass main and HSC campuses will be jointly recorded in both databases.

Research Faculty is an individual engaged primarily in research activities and has credentials similar to those held by instructional faculty. Research professors are generally funded from sponsored projects and typically hold non-tenured appointments.

Other Faculty is an individual, other than a PI, who is a member of the University faculty and who will participate in the proposed project.

Postdoctoral Associate or Fellow is an individual who holds a doctoral degree, is not a member of the faculty of the University, and is not designated as PI.

Other Professional is a person who may or may not hold a doctoral degree and is not reported as a PI, faculty member, research associate, or student. Examples are professional technicians, veterinarians, systems experts, computer programmers, and other research scientists and engineers. These staff positions are exempt and paid monthly.

Research Assistant (RA) is a graduate student working on a project in a research capacity, who holds at least a bachelor's degree, is enrolled in a degree program leading to an advanced degree, and whose research will lead directly to the completion of the thesis, dissertation, or degree requirements.

Project Assistant (PA) is a graduate student who holds at least a bachelor’s degree, is enrolled in a degree program leading to an advanced degree, and is employed to work on a research or other project performing research or other work required by a research grant, contract, or other funding source that is not necessarily directly related to degree requirements.

Pre-Baccalaureate Student is a student enrolled in a degree program (part-time or full-time) leading to a bachelor's degree.

Other Personnel may include staff such as technicians and machinists. These positions are non-exempt and paid bi-weekly. Only under limited circumstances is clerical and administrative support allowed. See OMB-Circular A-21, F.6.b.

Any personnel category for which funds are requested should indicate the number of persons expected to receive support from a resulting award and, where called for in the budget, the full-time equivalent (FTE – calculated as the percentage of a person’s normal full-time effort). It is often appropriate to include each individual’s rate of pay so the agency may confirm the amount of remuneration proposed. It is important to coordinate employment requirements through the department/unit administrator and through the appropriate employee data center as early as possible and to plan them well in advance. There are currently eight employee data centers at the University:

  1. Faculty Contracts Office for all faculty, post doctoral fellows, and campus community education instructors (except School of Medicine).
  2. School of Medicine Academic Affairs for School of Medicine faculty.
  3. Human Resources for all University staff.
  4. Office of Graduate Medical Education for house staff.
  5. Office of Graduate Studies for graduate research assistants and project assistants.
  6. College of Education for a specialized group of education interns.
  7. Continuing Education for temporary, non-credit instructors employed by the division of Continuing Education.
  8. Work Study/Student Employment (a division of Student Financial Aid) for all undergraduate employees.

Personnel actions, such as hiring, termination, and transfers, require paperwork in accordance with government regulations and University policies. Employment matters for the aforementioned personnel should be directed to the respective employee data center as listed above.

 

Salary: Faculty
The budget should clearly denote which of the following types of payments are proposed for each faculty member.

Release Time is a percentage of a nine-month (or 12-month when appropriate) faculty member’s time paid for by a contract or grant to allow the faculty member to be released from teaching duties. For example, depending on the college, 25% of a nine-month salary would release a faculty member from teaching one course in each semester. Release time must be coordinated through the appropriate department/unit administrator. It may be listed in the proposal budget as in this example:

John Doe, 25% FTE, $42,000/9 mo., $10,500

Note: A Leave of Absence should not be requested if salary payments will be through UNM. This is considered release time.

Summer Salary. Faculty on nine-month academic year (195 days) contracts who have a grant or contract may work up to 65 days during the summer, if summer salary is budgeted in the proposal. (Note: NSF allows only 43.33 days.) The guidelines are mailed to all faculty members each spring. Summer salary should be shown in the proposal budget as in this example:

Jane Doe, 15 days summer salary, $42,000/195 days, $215.38/day, $3,231(rounded to the nearest dollar)

Twelve-month and Research Faculty Time. Salaries for twelve-month and research faculty should be shown as a percent of time equal to the amount of time to be devoted to the contract or grant, as shown in this example:

Jane Johns, 10% FTE, $45,000/yr., $4,500

Note: Twelve-month faculty are not eligible for summer research.

Sabbatical Salary. Normally, a faculty member approved for sabbatical (for an academic year) who will be paid 67% of their salary by the University can request the additional 1/3 salary in the proposal budget. This must also be coordinated with the department chair and dean, so the additional 1/3 is reflected correctly in the sabbatical request and can be paid by using a Non-Standard Payment form. PIs should work with their department/unit administrator and the Faculty Contracts Office when planning a sabbatical leave.

Extra Compensation. Research, public service, and instruction are normally considered part of a faculty member’s contracted responsibilities, and as such, extra compensation is usually not part of a proposal budget. OMB Circular A-21 Cost Principles for Educational Institutions specifically states that “charges for work performed on sponsored agreements during all or any portion of such period are allowable at the base salary rate.” It goes on to state, “In no event will charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. This principle applies to all members of all faculty at an institution. Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his regular departmental load, any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically provided for in the agreement or approved in writing by the sponsoring agency.”

To summarize, federal contracts and grants (including any federal flow-through funds) do not allow payment of extra compensation to faculty members unless it is for consulting across departmental lines or within the same department if it involves a separate or remote operation, the work is in addition to a regular departmental load, and is approved in writing by the funding agency. A faculty member cannot be a consultant on his/her own contract or grant. Any employee of UNM must be paid through the University Payroll Department.

For non-federal funds and when allowable with federal funds, the University policy on consulting in the Faculty Handbook allows main campus, nine month faculty members the equivalent of one day per week during the academic year, for a maximum of 39 days.

For HSC faculty on 12 month contracts, the maximum that can be approved is 52 working days per year. The consulting must be pre-approved by the department chair, in accordance with the Faculty Handbook. Additionally for School of Medicine faculty, the policy on Outside Professional Activities must be followed.

Extra compensation must be clearly shown in the proposal budget, as in the following example:

Jane Doe, 10 days extra compensation @ $230.26/day ($44,900/195 days) $2,303(rounded to the nearest dollar)

In addition to the above detail in the proposal budget, the PI is required to obtain specific prior written approval from his/her Department Chair, the College Dean and the Office of the Vice President for Research. This form can be located at http://research.unm.edu/forms/Extra_comp_form_092002.pdf. The contracting or grant officer (person who can legally sign the contract or grant, not a program or technical officer) must also approve the use of Extra Compensation before payment can be issued to an individual at UNM. The PI should work with Pre-Award to obtain agency approval. The PI may also want to get verbal concurrence from the program officer at the funding agency prior to contacting the contracting or grant officer.

 

Salary: Staff
Salaries for exempt staff employees should be shown as a percent of time equal to the amount of time to be devoted to the contract or grant.

Mary Smith, 50% FTE, $30,000/yr., $15,000

As exempt employees, UNM policies do not usually allow for payment of overtime or extra compensation. See the UNM Business Policies and Procedures Manual for additional information.

Salaries for non-exempt staff employees should be shown as number of hours at the employee’s hourly rate.

John Jones, 100% FTE, 2080 hours @ $10.94/hr., $22,755

If overtime is anticipated and necessary for the timely completion of the project, it should be clearly stated in the proposal. Some funding agencies assume all employees are exempt employees, not subject to overtime premium pay, unless they approve otherwise. Review the funding agency contractual language.

Overtime for the person in the previous example would be shown as follows:

John Jones, 100 hours overtime @ $16.41/hr., $1,641

 

Salary: Students
For graduate research assistants, salaries are usually shown as a percent of time, and graduate project assistants and other (primarily undergraduate) students are usually shown as number of hours (maximum 700 hours/academic year, maximum 520 hours/summer and in rare cases, maximum 160 hours/between fall and spring semester).

Research Assistant, $1,200/mo. (50% FTE), 6 months, $7,200

Project Assistant or Undergraduate Student, 500 hours @ $7/hr., $3,500

Assistantship Workload. During the Fall and Spring semesters the typical workload for students who hold assistantships is 20 hours per week (.50 or 50% FTE). A student may not be appointed for more than 30 hours per week or 75% FTE as a Teaching Assistant (TA)/TA Special, Graduate Assistant (GA)/GA Special, Teaching Associate, Research Assistant (RA) or Project Assistant (PA) alone or in any combination.

Note: The Bureau of Citizenship and Immigration Services (BCIS) regulations limit international students on J-1 and F-1 visas to appointments of no more than 20 hours per week or 50% FTE. The rule that allows graduate students to work 30 hours per week does not relieve international students or the University of the responsibility for complying with BCIS regulations.

During the summer session continuing assistantship recipients (including international students) may be employed up to 40 hours per week or 100% FTE provided they are not enrolled. However, entering graduate students awarded an assistantship during the summer session must be enrolled in a minimum of 3 hours of course work which applies to their graduate degree and may not exceed 75% FTE or 30 hours per week. Assistantship recipients who are not enrolled for both summer sessions are required to pay Federal FICA tax (Social Security and Medicare) for that summer session in which they were not enrolled.

Assistantship recipients may concurrently hold a student employment or work-study position provided the combined FTE does not exceed 75% FTE (50% FTE for international students) during the Fall and Spring semester and 100% FTE during the Summer session. Assistantship recipients may not concurrently hold a University of New Mexico staff position.

Research Assistant (RA) and Project Assistant (PA) Tuition and Health Insurance. In-state tuition and health insurance should be included for RAs and PAs working on sponsored projects at least 25% FTE for at least half the semester and enrolled for at least 6 credit hours. The University waives the out-of-state portion of the tuition for RAs and PAs, provided the eligibility criteria listed above is met.

Since tuition is considered additional compensation to the RA or PA, the tuition amount will appear on the student payroll record. Depending on the Internal Revenue Service (IRS) regulations, the tuition amount may be taxable to the student. Departments and units are given the option to increase the RA or PA salary amount to compensate for the additional taxes on the tuition (estimated at 16% of the tuition amount).

There is no fringe benefit expense related to the tuition portion of the salary. The budget items for RA/PA salary and tuition should be shown separately.

The health insurance should be included as a fixed amount per year per RA/PA in the fringe benefit category. See guidelines at the OVPR web site.

 

Salary: Postdoctoral Fellows
Guidelines are in a memo from OVPR concerning the Hiring and Paying of Postdoctoral Fellows. If a postdoctoral fellow is included on a project, the salary should be budgeted as follows:

Mary Monet, Postdoctoral Fellow, 12 months, $2,500/mo., $30,000

 

Fringe Benefits
Employee fringe benefits are real, direct costs that must be included in any budget that includes personnel.

They are identifiable costs applied in direct support of employee salaries. Fringe benefit rates are applied to all University salaries and wages listed in the proposal and should appear as a separate line item in the proposal budget. The principal elements that comprise University fringe benefits are: FICA, Medicare, Retirement, Group Insurance, Worker's Compensation, Unemployment Compensation, Tuition Remission, and other University benefits. When the established University employee fringe benefit rates change, the new rates are announced via email alert and online (http://research.unm.edu for main and branch campuses or http://hsc.unm.edu/financialservices/preaward for the Health Sciences Center). Please see the “Frequently Required Information” page of this document for the rates for different types of employees at time of publication.

 

Materials and Services
This category includes most expendable items and miscellaneous expenses used exclusively for and directly allocable to the project, such as lab supplies, books, chemicals, glassware, long-distance phone calls, subscriptions, photocopying, maintenance agreements, non-capital equipment less than $5,000, etc. UNM policies and procedures related to procurement of materials and services can be found in the UNM Business Policies and Procedures Manual.

 

Travel: Domestic and Foreign
Travel costs are frequently necessary to complete a project. Costs include registration fees, airfare or mileage, hotel, per diem for meals, ground transportation, and miscellaneous expenses related to travel to conferences, fieldwork, etc. Budget the costs based upon actual travel plans. Rates used must conform to the UNM Business Policies and Procedures Manual. Some agencies require specific written authorization for a particular trip, even if it is included in the proposal budget. Special conditions may also be required for obtaining agency approval for foreign travel. Requests for prior approval should be routed through Pre-Award. This may require notice 60-90 days before the departure date. Domestic and foreign travel should be budgeted separately in the proposal and on the PDS or the HSC Award Budget Sheet (ABS). Many federal agencies, such as the National Science Foundation (NSF), require that air travel be on U.S. air carriers regardless of the costs involved. Some exceptions exist, but PIs should check agency regulations before deviating from this rule.

 

Equipment
UNM capitalizes equipment having a unit cost of over $5,000 or more and a useful life of at least one year. Many agencies have proposal guidelines that specify the amount of detail needed for budgets that include equipment. Most agencies will not fund what they consider to be general purpose equipment such as desks, chairs, shelves, file cabinets, or office computers. They may also have regulations concerning ownership and disposal of equipment purchased under contracts and grants. Equipment may have to be returned to the funding agency at the end of the project. If the equipment is to be returned, it may be necessary to budget shipping costs in the proposal budget. Equipment costs are excluded from facilities and administrative costs calculations if the award will include the full federally negotiated F&A rate.

 

Consultants/Independent Contractors
In compliance with Internal Revenue Service and Department of Labor regulations, consultants are non-UNM entities or person(s) licensed to do business in the state of New Mexico as evidenced by a number of criteria, including a New Mexico gross receipts tax number and the fact that they offer their services to the general public. Costs for an independent contractor may include New Mexico gross receipts tax, and the tax should be included as a part of the costs in the budget.

 

Consultants: Determined to be UNM Employees
If a consultant is not determined to be an independent contractor, the consultant must be hired as an employee of the University of New Mexico. Persons who are already UNM employees cannot be categorized as consultants in a proposal for budget purposes. They should be shown as employees with fringe benefits including a description of the work they will perform in the proposal narrative or budget explanation.

 

Honorarium
If a non-UNM person will be paid a one-time token payment not commensurate with services rendered, the non-UNM person can be paid an honorarium according to the UNM Business Policies and Procedures Manual (http://www.unm.edu/~ubppm/ubppmanual/2170.htm).

 

Student Costs
Student costs are normally seen only in training projects or fellowships and are very rarely seen on research or public service projects. Regular student costs such as salaries, fringe benefits, etc., should be shown under the appropriate subcodes. The types of costs included in this category are student stipends, tuition (in-state and out-of-state), housing, travel, insurance, books, and supplies. These must be listed separately in the proposal budget and are excluded from the F&A cost calculations. (There are some exceptions with the US Department of Education.)

 

Participant Costs
Participant costs include payment to participants in workshops, surveys, studies, etc. Participant costs are usually small fixed amounts to compensate participants for their efforts. These costs are included in the calculation of F&A.

In NSF grant proposals, participant costs usually refer to researchers or scientists outside of the proposing institution who may be attending a conference, or to participants in a foreign collaboration. The directive is online: http://www.nsf.gov/pubs/gpg/nsf04_23/2.jsp#IIC2fii. There are also proposals in which UNM is providing technical assistance or training to individuals from foreign countries, and these individuals have expenses similar to student costs. In both of these situations, the participant costs are excluded from the F&A calculations, the former by NSF guidelines and the latter by UNM decision.

 

Patient Care Costs
Patient care costs include the costs of routine and ancillary services provided by hospitals to individuals, including patients and volunteers, participating in research programs. “Routine services” include the regular room services, minor medical and surgical supplies, and the use of equipment and facilities for which a separate charge is not customarily made. “Ancillary services” are those special services for which charges are customarily made in addition to routine services, e.g. x-ray, operating room, laboratory, pharmacy, blood bank, and pathology.

The following otherwise allowable costs are not classified as research patient care costs: items of personal expense reimbursement, such as patient travel; consulting physician fees; and any other direct payments to individuals, including inpatients, outpatients, subjects, volunteers, and donors. Such costs should be included in the “other expenses” category of the proposal budget.

 

Tuition
Tuition is an allowable cost in two circumstances. First, tuition must be included for all Research Assistants and Project Assistants working at least half of a semester at at least 10 hours per week. This tuition must be included as additional compensation (see information under Salary: Students) and is excluded in the F&A calculation. Secondly, tuition may be allowable by the sponsor for participants in training projects (see information under Student Costs). This tuition is also excluded from the F&A calculation.

 

Space Rent
There are two ways to budget rent for UNM departments or units located in space that is leased or rented by the University:

1. Charge the full on-campus F&A cost rate and then use the amount returned to pay the rent. This method should be carefully reviewed, if selected, to ensure that sufficient funds will be available to pay the rent.

2. Charge the contract or grant directly for the rent, utilities, and other occupancy costs. The contract or grant would be charged the off-campus F&A rate, and the space rent would be excluded from the F&A base. This method should be reviewed by the Controller if multiple contracts and grants exist, to be certain that rent and other costs are apportioned correctly.

 

Subawards
If some work to be done under a contract or grant will be performed by another institution or a private company, those costs related to the other institution should be included in the budget as a subaward. Each subaward will show on the UNM budget as a single line item, and the PI must attach a separate budget page for each subaward. This should be in the same format as the full budget. To ensure that the subawardee has obtained official institutional endorsement, the proposal should contain a letter of commitment signed by the subawardee, principal investigator, and the institutional representative. The UNM Business Policies and Procedures Manual outlines procedures for setting up a subaward and provides guidance for distinguishing between a subaward and a regular procurement of services. If subawards have special security requirements contact the Industrial Security Office for assistance. If a subaward is in excess of $500,000, contact Pre-Award to see if a Subcontracting Plan will be required to be submitted with the proposal. The first $25,000 of each subaward is included in the F&A calculation if the award will include the full federally negotiated F&A rate; otherwise, for non-federal awards, the full amount of the subaward is included in the F&A calculation.

 

Facilities and Administrative Costs (F&A)
Definition. F&A costs are general operating costs incurred by the University in support of sponsored research, public service, and instruction. F&A costs are often misunderstood or incorrectly construed to be “profit" in the proposal budget. As is true for any organization that receives external support, these costs are real and necessary expenses for the University. F&A costs should be included as a separate line item in the budget of each proposal submitted to external funding agencies. These costs must be budgeted so the University can recover the true costs incurred by sponsored research, public service, and instruction projects.

F&A recovered through grants and contracts is unrestricted revenue to the University. For main campus, a portion of the estimated F&A recovered is budgeted each year by the Vice President for Research and Economic Development for administrative costs. Of the amount remaining, a percent is allocated by the Vice President for Research and Economic Development to the college, school, or center from which the successful proposal(s) originated. In the case of projects with multiple departments/units, the percent returned will be based on percents agreed to on the Proposal Data Sheet. These funds may be used by the dean of the college or school, or by the director of a center to support its general research activities. F&A costs recovered at the HSC is administered by the Office of the Executive Vice President for Health Sciences (OEVPHS). Half the recovered costs are allocated by the OEVPHS to the deans and the remainder is budgeted to cover administrative and research related costs for the Health Sciences Center.

Categories. The University submits financial data and proposals to the Department of Health and Human Services (DHHS) periodically in order to obtain a Federally Negotiated Facilities and Administrative Rate Agreement. This is negotiated with DHHS and is accepted by all federal agencies. UNM uses the rates prescribed by the negotiated agreement for all proposals submitted to outside funding sources (see exceptions below). There are different rates for research, public service/other, and instructional projects. Research projects, including research training, are those that ideally lead to advancement of knowledge, whose results can be submitted for scholarly publication, and/or be the topic of a presentation at a professional meeting. Instructional and training projects teach or train students, usually at the college level for credit. The public service/other category includes projects that are not research or instructional. Examples are operating clinics, providing technical assistance, or organizing and conducting workshops. The PI should contact Pre-Award if not sure which category is applicable to the specific project.

Rates are further differentiated according to whether the project is to take place on-campus or off-campus. On-campus rates should be used if University-owned or leased facilities will be used to perform the project. The off-campus rate cannot be used if University offices or facilities must be maintained on a full-time basis for staff who would otherwise not have space on campus. The PI should review any questions with Pre-Award.

Reduced F&A Costs. There are situations in which the University is unable to charge the full negotiated F&A rate. Not-for-profit foundations usually have written guidelines that state they will not pay F&A costs or that they will pay only a reduced amount. Federal agencies have special programs that mandate reduced F&A rates. For example, US Department of Education training grants allow only 8% of the modified total direct costs, and National Science Foundation REU (Research Experiences for Undergraduates) supplements allow only 25% of the student stipend amount. Projects with New Mexico state and local governments have traditionally been at a reduced rate. The University allows these proposals to be submitted, and the reduced F&A rates are accepted. However, the PI must submit a copy of the written application guidelines with the proposal to justify the rate. In the case of state agencies, OVPR has a list of rates to be used.

Waiver of F&A Costs. If the funding agency allows the University to charge its full F&A rate, but the PI wants to submit a proposal to a funding agency with no F&A costs or using a lower rate than that approved for the agency, the request must be routed through the department chair and dean or unit director to the Vice President for Research and Economic Development, or the HSC Vice President for Translational Research, the College of Nursing Dean, or the College of Pharmacy Dean, as appropriate. Very few exceptions to charging full F&A costs are made.

F&A Rate Calculations. The current base used to determine F&A costs is modified total direct costs (MTDC), which is total direct costs less equipment; space rental; subaward amounts in excess of the initial $25,000 per subaward; patient care costs; and student support costs. For a proposal budget, F&A costs are determined by applying the appropriate F&A rate to the base. For budgets to non-federal agencies that will not pay the full federally negotiated F&A rate, total direct costs (TDC) should be used to calculate the F&A for the project. Agencies often request a copy of the University's current negotiated F&A rate agreement. This document may be obtained from the OVPR or HSC Pre-Award web site. See UNM Business Policies and Procedures Manual, Policy #2425 – Recovery of Facilities and Administrative Costs.