Overview of Costs for Project Budgets (Budget and Costing Guide)

Although cost principles specifically apply to federally sponsored agreements, the Office of Management and Budget (OMB) Uniform Guidance (UG) (2 CFR 200) (Cost Principles for Educational Institutions) is commonly used to describe the cost principles for all sponsored agreements at Cornell. The tests for appropriateness under these principles are: 

• Reasonableness: A cost may be considered reasonable if the nature of the expenditure and the amount involved reflects the action that a prudent person would take under the circumstances. 
• Allocability: A cost is allocable if it is beneficial to the project. 
• Consistency: Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or facilities and administrative (F&A) costs. The method used to estimate, record, and report costs must be consistent. 
• Allowability: Costs must be allowed in accordance with UG 2 CFR §200.403 Factors affecting allowability of costs, or the terms of the sponsored agreement. 
• Conformity: All costs charged to sponsored agreements should conform to these principles and any specific conditions stated in the agreement.

Direct costs are costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity; or can be directly assigned to such activities relatively easily with a high degree of accuracy. F&A costs are costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project, an instructional activity, or any other institutional activity. 

At Cornell direct costs relate to the primary functions or cost objectives of instruction and department research, organized research, and public service. F&A costs consist of expenses relating to the support of the primary functions, including academic administration; University Library operations; plant operations; administrative salaries and expenses of offices such as the President, Provost, Vice Provosts, Human Resources, and Supply Management Services; grant and contract administration and accounting; general expenses including insurance, taxes, and campus security; and depreciation for use of buildings and equipment. 

The Uniform Guidance (UG) at 2 CFR §200.413 Direct costs, states the salaries and wages of administrative and clerical staff, and non-salary items such as postage for routine correspondence, local telephone calls (including equipment), and routine office supplies should normally be treated as F&A costs and are only appropriate if the purpose of such is for the sole direct benefit of the project. These costs qualify as direct costs when the nature of the performed work constitutes a major program or activity and the costs are specifically identified and justified in the proposal's budget or budget justification section. The costs must be easily identified to the project with a high degree of accuracy. 

Consultation with SPS is required to determine if the necessary characteristics exist to create a major program. The examples below are illustrative of what characteristics are included in a major program: 

• Large, complex programs, such as environmental or engineering research centers, and other agreements that entail assembling and managing teams of investigators from numerous institutions. 
• Projects involving extensive data collection, analysis and entry, surveying, tabulation, cataloging, searching literature, and reporting. 
• Projects that require coordinating travel and meeting arrangements for a large number of participants, such as conferences or seminars. 
• Projects where the principal focus is the preparation and production of manuals, large reports, books or monographs (excluding routine progress and technical reports). 
• Projects that are geographically inaccessible to normal department administrative services, such as sea-going research vessels, radio astronomy projects, and other remote field sites. 
• Individual projects requiring project-specific database management; individualized graphics or manuscript preparation; human or animal protocol; institutional review board preparations and/or other project-specific regulatory protocols; and multiple project-related investigator coordination and communications.

Expenditures for which Cornell may not, by regulation, request reimbursement, either in whole or in part, from the federal government are considered nonrecoverable (unallowable).  The Uniform Guidance (UG), in section 2 CFR §200.403 Factors affecting allowability of costs, establishes guidelines on what is an allowable cost on a federally funded project. When preparing a budget the following costs are nonrecoverable and should be excluded: 

• Advertising or public relations: Expenditures to promote the University are nonrecoverable. This includes non-technical newsletters, department publications, and advertising in excess of what is ordinary and necessary. Advertising for the disposal of surplus materials or for employment positions is allowable. 
• Alcoholic beverages 
• Alumni activities 
• Bad debts 
• Commencement and convocation costs 
• Donations or contributions 
• Development/fundraising costs 
• Employee morale available only to a select group of employees (e.g., subsidizing coffee for a department) are nonrecoverable. Only costs that are institution-wide are recoverable (e.g., the Employee Day football game and picnic). A department's expenditures incurred for the benefit of their staff are nonrecoverable. However, staff development conferences to which specific staff from a department attend are recoverable. 
• Entertainment costs: Costs of entertainment (e.g., tickets to shows or sporting events, meals, lodging, rentals, transportation, and gratuities) are nonrecoverable. 

Note: Business meals (those necessary to carry out the unit's mission) are recoverable with proper documentation and justification. All attendees who claim federal reimbursement must have contributed to the business purpose. Proper documentation includes the date, location, food costs (with an itemization of any alcoholic beverages), attendees, and business purpose. This documentation is also required for Internal Revenue Service purposes. When the number of attendees is large, it is sufficient to name the group rather than each participant (e.g., Engineering faculty). 

• Excessive employment recruitment costs (e.g., color advertisements) 
• Fines and penalties 
• Goods or services for personal use (including gifts) 
• Housing and personal living expenses 
• Investment management costs 
• Lobbying costs 
• Memberships (including airline clubs) 
• Moving costs (if the employee resigns within 12 months) 
• Student activity costs (those activities normally directed by students) 
• Travel costs in excess of commercial coach airfare. Costs in excess of the lowest available commercial coach fare are normally nonrecoverable. Exceptions may be granted if unreasonable travel arrangements would result when traveling coach, if the upgrade would decrease the cost, or if it is required to meet the medical needs of the traveler. In order for excess airfare costs to be recoverable the institution must justify and document, on a case-by-case basis, the applicable condition(s), and when required, obtain the sponsor's approval. 
• Trustee travel 

Cost sharing or matching is defined as the portion of project costs not paid by the sponsor. All contributions, including cash and third party in-kind, are acceptable as cost-sharing contributions when they are: 

• Verifiable (documented) 
• Not included as contributions for any other project 
• Necessary and reasonable to accomplish the project's objectives 
• Allowable under UG 2 CFR §200.403 Factors affecting allowability of costs
• Not paid for by the sponsor under another award 
• Provided for and stated in the approved award 

The Cost Sharing Allowability Matrix shows the allowability of cost sharing by source of funds. 

In addition, federal awards must conform to other provisions as stated in Uniform Guidance (UG) (2 CFR 200) (Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations: Uniform Administrative Requirements) or in the sponsored agreement. 

Examples of cost-sharing include: the percentage of personnel effort to be expended on the project; associated employee benefits; Graduate Research Assistant tuition; communications; equipment; supplies; and the associated F&A costs. Unrecovered F&A costs (the difference between the full, allowable F&A costs calculated at the current negotiated rate and the F&A costs reimbursed by the sponsor) may be included as part of the cost-sharing or commitment (prior authorization is required by some sponsors). Program income earned under an award may not count as cost sharing unless authorized by the sponsor. 

Items not generally allowed for cost sharing under federal regulations are: 

• F&A costs in excess of the 26 percent administrative cap 
• Salary dollars in excess of regulatory caps 
• Costs incurred prior to the award 
• Cost overruns 

Many sponsors require cost sharing in the proposal budget or indicate that it is recommended. When cost sharing is recommended it usually means that it will be a factor during proposal evaluation. Cost sharing requirements may be in the form of a specific ratio or stated percentage. The source and categories of the proposed cost sharing commitment should be clearly cited in the budget justification. 

When preparing a proposal that incorporates cost sharing it is important to remember that any promised cost becomes part of the project cost; the cost must be tracked, and is subject to audit. Every effort should be made to limit commitments, particularly when not required by the sponsor. 

After award acceptance, failure to comply with the cost sharing commitment may result in a loss of funding. Regular tracking of contributions is strongly encouraged, and will prevent under- or over- contribution. Over-contributing might preclude the use of those funds on other projects. Cost sharing should be treated in accordance with Cornell's Cost Sharing Policy.

Some sponsored projects may generate income. Program income includes: income from fees for services performed; the sale of commodities or items fabricated under an award; license fees; royalties on patents and copyrights; and interest on loans made with award funds. Interest earned on advances of federal funds is not program income. Except when otherwise provided in federal awarding agency regulations or the terms and conditions of the award, program income does not include the receipt of principal on loans, rebates, credits, discounts, or interest earned on any part thereof. Program income should be treated in accordance with Cornell's Program Income policy. 

Some sponsors require a projection of program income and its intended use at the proposal stage. Calculation of program income should be based on historical information and best projections.

Solicitations are used to communicate sponsor requirements to prospective contractors. (For a complete description of the various proposal types, please refer to the Additional Things to Consider when Preparing a Proposal page.). A solicitation is a full statement of the work to be performed and may include the requirements of the proposed agreement, including terms and conditions. A proposal is an offer that can be accepted by the sponsor to create a binding agreement either following negotiations or without discussion. 

Special consideration should be given to a solicitation's terms and conditions. It is important to provide your Grant and Contract Officer (GCO) with a copy of the solicitation at least 10 business days prior to the proposal deadline. There may be budgetary requirements and/or limitations such as total project cost, percentage of effort, equipment needs, explicitly restricted budget categories, required travel, F&A cost limitations, period of performance, or cost-sharing. Adhering to the solicitation's guidelines is crucial, as a specific budget format and level of budgetary detail and/or justification may be required.

A cost-reimbursement agreement provides payment for allowable costs incurred in the performance of the agreement, to the extent prescribed, and establishes estimates of total cost for the purpose of obligating funds and establishing ceilings that Cornell may not exceed. A cost-reimbursement agreement is used when the uncertainties of performance are such that costs cannot be estimated with enough certainty to permit use of a fixed price agreement. 

Fixed price agreements set a firm price for the sponsor for which the contractor (e.g., Cornell) bears full responsibility. A definite price is agreed upon before the award, and the price remains fixed for the life of the agreement and is not subject to further adjustment. Fixed price agreements are generally used when reasonably definite specifications, either functional or detailed, are available and when fair and reasonable prices can be estimated and established. Such agreements are usually more restrictive in nature than cost reimbursement agreements, and are tied to a specific task-oriented work statement. Because an absolute limit is imposed on spending, special care is needed when preparing the budget to ensure that the University is in the best possible position to fulfill its proposed obligations. It is especially important to ensure that all reasonable costs are included, since the sponsor is unlikely to reimburse any additional or unforeseen expenditures.

When working with a federal prime sponsor and the contract or any resultant modifications to the contract are expected to exceed $500,000 ($1 million for construction projects), Cornell is required to submit a subcontracting plan. A small and small disadvantaged business subcontracting plan is a method by which Cornell separately addresses the requirements (in terms of participation and goals) of subcontracting to small, small disadvantaged, and women-owned businesses. Samples and assistance in preparing a subcontracting plan can be obtained from your GCO.

When submitting to a State sponsor Cornell is required, to the extent possible, to utilize women- and minority-owned businesses as subcontractors.

Compensation for personal services covers all amounts currently paid or accrued by the institution for employee services rendered during the project period. The budget should reflect the estimated percentage of effort (versus hours or months) for professional staff and faculty who will work on the project. Overtime pay eligible staff may be budgeted by providing estimated hours. Salary increases that overlap Cornell fiscal years should be built into the budget. Future years should reflect anticipated increases based on Cornell's salary improvement program. New positions should be budgeted in accordance with the compensation levels and job classifications published by the Office of Human Resources. 

The costing detail should include names, titles, and percentage of effort. It is not necessary to provide names for other than senior personnel. Part-time employees should be identified as either students or non-students. Percentage of effort for nine-month faculty should be shown separately from summer support. The proposed compensation must be in accordance with sponsor limitations and documentation requirements thereof (e.g., NIH salary cap, NIH limitation on graduate student compensation, NSF limitation on the number of months of summer salary.) 

• Academic Year Salary
  Faculty or senior extension associates previously budgeted on University general-purpose or New York State funds may budget a portion of their academic year salary directly to sponsored projects. The salary charged to an agreement during the period of the individual's full-time appointment should not be considered as extra compensation.
   

  Salary recovery for a Contract College employee cannot be charged to a New York State-sponsored agreement. Figures should be based on a percentage of estimated effort and budgeted at current salary levels plus reasonable annual increases.

• Summer Salary
  Faculty on nine-month appointments may receive additional salary during the summer months up to a maximum of three-ninths of their academic year salary. Summer salary is compensation for work, during the summer, on the particular sponsored agreement. Summer salary funded by the National Science Foundation (NSF) for faculty on a nine-month appointment is limited to two-ninths of their regular academic year salary. This limit includes summer salary received from all NSF-funded agreements. The individual must be working on the project while receiving summer salary. Vacation during this period is unallowable. Additionally, nine-month faculty hired to teach full-time during Cornell Summer Session are ineligible to receive additional salary from sponsored agreements during the time (e.g., three, six, or eight weeks) they are teaching. Summer salary is based on the individual's salary for the new Cornell fiscal year.

Sabbatical Supplements
Faculty who take a nine-month sabbatical at half pay may wish to recover all or a portion of the remaining amount of their salary from a sponsored project. Some sponsors will provide academic year supplements to cover all or part of the salary lost during a sabbatical. Endowed sabbatical salaries bear no F&A and employee benefits are charged at the minimum rate. Contract College sabbatical supplements bear neither F&A nor benefits. Note that living allowances for long-term visits (i.e., in excess of 60 days) such as sabbaticals are treated as taxable payments through payroll and are subject to benefit charges as a job-related allowance. 

Emeritus Faculty Salary
Emeritus salaries are based on their last regular salary plus reasonable annual increases. 

Visiting Academics
If the visiting academic is a faculty member at another college or university, the appointment should be made at the same professorial level they currently hold. Visiting Fellow should be used if the individual does not currently hold a professorial title. Budgeting for visiting academics should be consistent with departmental appointments and based on the rank of the visitor, plus reasonable annual increases. 

Other Professionals
Individuals included in this category are research and extension associates, technicians, computer programmers and analysts, and academic or extension support aides or specialists. These positions should be budgeted at current salary levels plus reasonable annual increases. Figures should be based on a percentage of estimated effort. 

Administrative/Clerical Staff
Staff responsible for providing coordination and support in the areas of administration, secretarial, personnel, business and/or facilities of an office, department, program, or unit are considered administrative/clerical staff. Direct charging of administrative/clerical salaries on federally supported sponsored agreements is restricted by the Uniform Guidance (UG) (see Question 2 under Budget Considerations).

The UG states that the salaries of administrative/clerical staff "should normally be treated as F&A costs," and that the "direct charging of these costs may be appropriate where a major project or activity explicitly budgets for administrative or clerical services and the individuals involved can be specifically identified with the project or activity."

If a principal investigator (PI) budgets administrative/clerical salaries, they must be separately itemized with a justification detailing the job duties so they are easily identifiable and assignable to the project with a high degree of accuracy. These positions should be budgeted at current salary levels plus reasonable annual increases. Budget figures should be based on a percentage of estimated effort.

Graduate Research Assistant (GRA) Support
A GRA is a graduate student who is providing a service to a research effort and is receiving financial support for that thesis or other degree-related work. Payments are made in accordance with pre-established work levels for work performed. Stipend levels are based on the standards established by the Graduate School. Individual Colleges, departments, or fields may establish certain maximums that the student can earn. The tuition portion includes tuition remission and other forms of compensation paid as, or in lieu of, wages. University policy states graduate students receiving full funding from Cornell shall also receive health insurance. Where multiple funding sources are used, the stipend, tuition, and health insurance must be allocated in a similar fashion.

The minimum and maximum academic year stipend that may be received and the full academic year and per semester tuition rates for both the endowed and contract colleges is published annually by the Graduate School. The following are links for stipend, tuition, and health insurance rates.

All graduate students are charged full tuition. GRAs on sponsored agreements are appointed through the HR system (Workday) with the tuition component paid through the Student Financial System. Cornell funds a portion of tuition in an amount equal to that provided by the grant or contract, regardless of funding source. This will normally result in 50% of the tuition charged to the grant/contract and one-half funded by Cornell.

Proposal budgets should request 50% tuition as the cost per GRA. The amount budgeted for a GRA includes stipend, tuition and health insurance. The stipend should be listed under the salary and wage category and does not incur employee benefits. The tuition and health insurance should be listed under other direct costs and the total should be excluded from MTDC and is not subject to F&A on MTDC-based awards. Departments may choose to show the other half of the tuition cost as institutional cost-sharing. However, once cost-sharing is committed, the obligation must be met in full, even if a graduate student is not appointed to the agreement. Tuition budgets for less than full time assistantships should be prorated across the academic year.

Note that some USDA sources do not permit the charging of tuition, and in such cases the tuition must be paid with institutional funds.

Student Wages
Undergraduate students are budgeted at an hourly rate based on their level of expertise and prior experience. These wages are established by Student Employment Services and are excluded from the employee benefits calculation.

Temporary Personnel
A temporary appointment is a term of employment of at least 20 hours per week and less than six consecutive months. Temporary personnel is budgeted by hourly rates that are consistent with the minimum salary levels established by the Office of Human Resource Services and appropriate to the required level of work and experience.

Employee benefits are part of real employment costs and must be included in a budget. Benefit rates are calculated annually and take effect each July 1. These charges may not be waived. Benefits for salaries and wages in the current fiscal year should be calculated at the current rate. Benefits based on salary estimates for future years or for single year projects that overlap Cornell's fiscal year should be calculated at projected rates. Current and projected benefit rate information is available here or may be obtained from your GCO. 

For the contract colleges student salaries and wages and sabbatic salaries are exempt from benefit costs. Employee benefits for contract college employees are not calculated on salaries and wages proposed to State (nonfederal flow-through) sponsors. For the endowed colleges the following rate structure is in effect for the categories shown under "Examples." 

NOTE: When an emeritus professor is appointed with a professorial title, full benefits are charged. 

The level of costing detail required at proposal submission consists of the amount of salaries and wages, any exclusions, and the corresponding benefit rate(s). Current rate information can be obtained from your GCO or OSP's Web site. 

Note: Employee benefits are charged at the rate in effect at the time of the salary obligation, whether or not the benefits are budgeted at that rate.

The capitalization threshold for all equipment for all university operations with a useful life of two years or more is $5,000. This means that an item with a unit cost of $5,000 or more and a useful life of two years or more will be considered capital equipment. Items not meeting these criteria are considered consumable supplies. The capitalization threshold for computer software is $100,000.

Equipment is subdivided into two classifications: special purpose and general purpose. As a rule, special purpose equipment is considered to be that which is necessary and is strictly limited for use by the research, medical, scientific or other technical activities of a project, and is unlikely to be available within the University. 

General purpose equipment is that for which potential use is not limited to research, medical, scientific or other technical activities. Examples of general purpose equipment include office equipment and furnishings, air conditioning equipment, reproduction and printing equipment, motor vehicles, and data processing equipment. Expenditures for general purpose equipment, buildings, and land are unallowable as direct charges by the federal government and most other sponsors, except where the equipment is primarily for the sole benefit of the project and the expenditure has advance approval from the sponsor. 

The budget justification page should contain estimates and justification for all equipment needed to perform the scope of work. Such detail should include the necessity and suitability of the equipment, description, unit cost, and any quoted discount. Estimates should be based on either catalog or telephone quotes, historical cost, engineering estimates, or prior experience. Assistance in matters of price, quality and delivery may be obtained from Supply Management Services. Equipment is excluded from the base upon which full F&A costs are calculated and is not subject to the F&A rate. 

Some sponsors will require certification as to the nonavailability or nonexistence on campus of the proposed equipment. After written confirmation from the unit, the GCO will add a statement to the proposal transmittal letter stating such nonavailability.

Equipment that is constructed by combining or assembling modular components and/or materials into one identifiable unit is referred to as fabricated equipment. Typically such equipment is made or designed in-house for a specific purpose. In order to be capitalized, the finished product must have a unit cost of $5,000 or more and a life expectancy of more than one year. Shop labor charges related to equipment fabrication by an on-campus shop qualify for inclusion in the capitalized cost and are therefore exempt from F&A cost recovery if: 

The shop occupies a permanent location and is equipped to provide an ongoing service to a broad spectrum of users; Serves the general research community rather than a single research group or department; Has a billing system for user charges approved by the University Controller; and Shop personnel report to and receive work assignments from a non-academic supervisor. 

Shops currently meeting these qualifications are: Laboratory of Atomic and Solid State Physics, Cornell Center for Materials Research, Cornell Laboratory for Accelerator-Based Sciences and Education, and Chemistry and Chemical Biology. Other labor costs associated with equipment fabrication are not excluded from F&A cost if the equipment is not fabricated in these Cornell shops. Facilities and administrative costs: F&A costs are calculated on the above components at the full rate. 

The budget justification page should include the necessity and suitability of the equipment, a description, and the unit cost.

Communication costs include telephone services, local and long distance telephone calls, postage (including services such as United Postal Service and Federal Express), and facsimiles. Large mailings of surveys or questionnaires must be identified and justified. These costs should be based on actual experience with an inflation factor built in for future years. On federally funded projects postage for routine correspondence and local telephone costs (equipment, installation, maintenance, line charges, facsimile lines), are treated as F&A costs and are appropriate to budget as direct costs only if the purpose of such is for the sole direct benefit of the project. Such costs must be explicitly budgeted, identified to the project, and justified. Shipment of project materials and deliverables are direct costs if incurred for the sole benefit of the project. Project-associated long distance telephone charges are considered direct costs. 

Certain data communications costs will be considered as F&A costs as follows: expenses associated with backbone/wireless services (e.g., the common infrastructure costs), and port fees, public and non-public. 

Note: It is recognized that a significant portion of the Wide Area Network (WAN) usage is related to and benefits academic activities such as instruction and organized research. Because of this and because WAN usage can be measured it may be apportioned to all benefiting activities, both direct and F&A, proportionate to the benefits provided. In situations where the benefit and apportionment is to a sponsored agreement, the direct charging of these services must be specifically budgeted and justified in the grant application or contract proposal and be approved (or not specifically disapproved) by the awarding agency.

The budget justification page should include a listing of the items and a justification and estimated cost for each.

Travel costs are classified as those expenses for transportation, lodging, subsistence and related items incurred by employees who are traveling on official University business. Unless otherwise stated by the sponsor, domestic travel is considered to be travel among any of the 50 United States, its possessions and territories, and Canada. Foreign travel is classified as travel outside these areas. During budget preparation, consideration should be given to expenses for attending professional meetings, field work travel and living allowances, consultation with experts, and meetings required by the sponsor. Travel expenses and requests should be clearly justified and reasonable. The budget should be based on historical data, Cornell's Travel Expenses policy, airline quotes from a travel agency, and sponsor guidelines. 

Travel in excess of commercial coach airfare is normally nonrecoverable. Foreign travel is a restricted category by most federal agencies and requires prior approval by the sponsor. When costs are charged to a federally sponsored agreement the use of U.S. flag carriers is required. 

The budget justification page should include the number of trips, the purpose and relationship to the project, and the estimated costs for each trip. For foreign travel the countries to be visited and the visit dates must also be included.

Lease and rental expenses for computers and peripheral equipment, general equipment, vehicles, land, buildings, offices and storage areas are included in this category. Lease and rental for space are excluded from the base from which F&A costs are calculated and is not subject to the F&A rate. Budgeting for lease and rental should be based on actual experience with an inflation factor built in for future years, or on actual lease agreements. Procurement and Payment Services or the Real Estate Department can provide assistance. 

The budget justification page should list the lease or rental item(s) and the estimated cost(s).

Repair and maintenance are categorized as costs incurred for the necessary maintenance, repair, or upkeep of property which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in efficient operating condition. Budgeting should be based on actual experience with an inflation factor built in for future years, or from the actual maintenance agreement(s). 

The budget justification page should include a list of the equipment to be maintained and the estimated costs. To qualify as a direct cost, maintenance costs must be for the sole benefit of the sponsored agreement.

Under this category professional services rendered by Cornell interdepartmental services (e.g., Cornell Business Services, Cornell Information Technologies), outside firms, companies, or individuals should be listed. For interdepartmental services budgets should reflect actual quotes based on current fee structures or anticipated use. Budgeting for external use of services should be based on actual quotes. Assistance in matters of price, quality, and delivery for external sources can be obtained from Procurement and Payment Services. Both internal departmental and interdepartmental computer charges must be based on accounting and expense systems developed in accordance with UG guidelines and Cornell's Recharge Entities policy. 

The budget justification page should include a list of the type of service(s), and the total estimated costs. 

Academic recharge operations and service centers may recover the cost of goods and services provided to internal and external users through rates or user fees. User fees should be designed to recover no more than the cost of the service provided, with adjustments based on prior experience. User fees must be calculated consistently for federal and nonfederal users. User fees may not be based on what others charge for similar services, or what Cornell thinks the market will bear. User fees should be based on UG guidelines and Cornell's Recharge Entities Policy. New user fees for service facilities must be submitted for review and approved by the Controller's Office prior to implementation. User fees for other service facilities must be submitted annually to the Controller's Office for review and approval. Current rates can be obtained by contacting the service provider. 

The budget justification page should include the rate schedule and calculation of the user fees. 

Services of a consultant may be budgeted when the services are sufficiently special, temporary, or technical in nature that they cannot be performed satisfactorily by existing University personnel during the course of their assigned responsibilities. Consultants are independent contractors, not employees, therefore benefits are not charged. Travel and incidental expenses are included in the total consultant estimate and budgeted under this category. Curriculum vitæs and other specific information related to the consultant(s) should be maintained by the department. Designation of independent contractor status is governed by the Internal Revenue's Code of Common Law. Cornell may be subjected to significant institutional tax penalties should the individual be incorrectly classified as an independent contractor. Costs should be based on quotes from the consultant. See Cornell's Guidelines for Consulting Agreements. 

The budget justification page should include the justification, name, expertise, compensation rate, number of days of expected service, related travel expenses, and the estimated costs. 

Note: Some sponsors may not permit the use of consultants, or may restrict the daily reimbursement rate. 

Subcontracts are budgeted when a portion of the required effort needs to be provided by one or more other entities (third parties) which are made responsible for a discrete part of the project. When the portion of effort being performed by a third party constitutes a significant component of the sponsored project, then the third party will be required to provide the resources necessary to conduct that portion of the effort as an independent contractor. The cost(s) normally associated with third party effort could include any or all of the following: labor, employee benefits, materials and supplies, travel, equipment and other direct costs, and F&A costs. In addition, it is not uncommon for third party, commercial organizations to include costs such as labor overhead, material overhead, general and administrative expense, cost of money, and a profit or fee. 

The budget justification page should include a line itemization at the same level of detail as requested from the sponsor. F&A costs should be included and calculated using the subcontractor's current rate. A copy of the subcontractor's negotiated rate agreement, a statement of intent to participate, and a statement of work should be submitted along with the proposal budget. The reasons for selecting a particular subcontractor should be explained in the proposal. 

The subcontractor's costs are incorporated into the Cornell budget as a direct cost. When calculating the F&A costs the amount that exceeds $25,000 should be excluded from the base. The first $25,000 of each subcontract, regardless of the length of performance, is calculated at F&A rate effective on the overall award.

Supplies and materials are categorized as items actually used in the performance of the work, and all tangible property other than equipment. Incoming transportation charges (freight, bills of lading) are part of material cost. Reasonable amounts should be budgeted, and projects that anticipate using large amounts or expensive items should specify such items and justify their necessity. Budgeting should be based on actual experience with an inflation factor built in for future years. Assistance in matters of price, quality, and delivery can be obtained from Procurement and Payment Services. 

On federally funded projects routine office supplies should be treated as F&A costs and are only appropriate to budget as direct costs if the purpose is for the sole direct benefit of the project. These direct costs must be explicitly budgeted, specifically identified to the project, justified and approved by the sponsor. Laboratory supplies (chemicals, glassware, disposables), animals (purchase, shipping, housing, maintenance), research supplies and training materials (questionnaires, surveys) are considered direct costs. Care should be taken to explicitly describe all consumables included in a proposal budget. For example, computer forms should not be budgeted as office supplies. 

The budget justification page should include a list of the supplies and the estimated costs for each. The breakdown should be more detailed when the total supplies cost is substantial.

When hosting a conference or seminar, appropriate costs include meals, transportation, facilities rental, and other related items. When budgeting for a conference or seminar, some considerations are: 

Employee salaries and benefits: Salaries of professional personnel, editorial, clerical, and other staff are allowable in proportion to the time and effort devoted to the preparation and conduct of the event and summarizing its results. To the extent possible, costs should be based on actual salaries and benefit rates. 

Non-participants: Reasonable fees (in the form of honoraria), travel allowances, and per diem are allowable for cost of services (e.g., presenters) rendered by persons who are members of a particular profession or who possess a special skill and are not employees or participants. 

Facility rental: Rental of facilities and necessary equipment are allowable and budgets should be based on quotes from the service provider. 

Conference materials: Necessary expendable materials and supplies are allowable and estimates should be based on actual experience with an inflation factor built in for future years. 

Publications: Cost of publishing the proceedings are allowable only if approved by the sponsor. Projections should be based on actual experience with an inflation factor built in for future years. 

Facilities and administrative costs: F&A costs are calculated on the above components at the full negotiated rate. 

Participants: Participants are the individuals whose primary interest is as beneficiaries of the event. Participants may make formal presentations or give papers. If a participant is a federal employee, he or she may not be receiving compensation from other government sources while participating in the event. The following associated costs are excluded from the F&A cost base: 

Stipend: Participants may receive a stipend to help defray living expenses while participating in a conference. Allowances should be budgeted at a reasonable rate and are limited to the days of attendance plus actual travel time. 

Travel, per diem, or subsistence: Reasonable travel allowances related to the conference or training activity (e.g., field trips) may be budgeted. 

Registration fees: Registration fees are treated as program income to offset the costs of the event. Fees should be established based on total program costs including both the direct and F & A program costs and divided by the number of expected participants. A registration fee paid to or on behalf of a participant is treated as a direct participant cost. For disposition of program income, refer to the Cornell's Policy on Program Income. 

The budget justification page should include an itemization of the above categories and the estimated costs of each. See Appendix D for a sample budget format.

Publication costs consist of the documenting, preparing, publishing, disseminating, and sharing of project findings and supporting material. Budgeting should be based on actual experience with an inflation factor built-in for future years. Assistance may be obtained from Procurement Services or by contacting a publisher. 

The budget justification page should include the page charges, the number of pages, and the estimated cost.

The facilities and administrative cost rate is an accounting mechanism used by universities to recover real support costs that benefit sponsored projects but cannot readily be associated with specific projects. The university infrastructure supports programs by providing such items as the physical plant, libraries, some level of departmental and central administration, and sponsored programs administration. The process for recovery is a reimbursement of actual expenditures, calculated in accordance with 2 CFR §200.414 Indirect (F&A) costs of the Uniform Guidance (UG). The University is subject to government internal and external audit of supporting data for every year. The F & A cost rate is an average of all F&A costs incurred for all federal and non-federal funded projects. 

At Cornell, an F&A cost rate is applied to all restricted accounts for all awards regardless of whether they are categorized as a gift, grant, or contract. In practice, F&A cost is applied as follows: whenever a sponsor is the primary beneficiary, or receives specific deliverables expressed as either one or more of the four conditions shown in the top left box, it is appropriate that the sponsor pay for the full cost, both direct and F&A. If the award does not provide for any of these conditions, it is still appropriate to charge the full F&A cost. However, the recovery rate may be discounted, but never below ten percent of direct costs, excluding student wages or tuition. In this manner every project supports a portion of Cornell's infrastructure.

Application of Facilities and Administrative Cost Rates

Facilities and Administrative (F&A) Costs are applied as described in the table below for all awards, regardless of whether they are referred to by the sponsor as a Gift, Grant, or Contract.

Full Facilities and Administrative Cost Rates
The University negotiates F&A cost rates with its cognizant federal agency. Separate rates are negotiated for the endowed and contract divisions. These rates are further subdivided into on-campus, off-campus, and research and educational services.

Modified Total Direct Cost (MTDC)
The MTDC is the base upon which the F&A cost rate is calculated and applied. The MTDC represents total direct costs less certain modifiers. Modifiers are categories of direct costs, identified by object codes, which are excluded from the base and not subject to F&A costs. The list of modifiers include: GRA tuition, fees and health insurance, capital equipment (including fabricated equipment and lease/purchase agreements), lease and rental (real property), and subcontract expenditures in excess of $25,000.

On-campus versus Off-campus

Projects are normally budgeted as solely on-campus or solely off-campus. Some projects may, however, involve both. The definition of off-campus activity is that which is performed at a location that has neither the use nor aid of owned or leased University-operated facilities. A University-operated facility is one where Cornell is responsible for the costs of maintenance, custodial services, and utilities. In general, off-campus locations are at distances where reasonable access to or use of the University-owned or operated facilities is not feasible. Personnel are considered to be on-campus unless they are working off-campus for a continuous period of two months or longer. The two-month requirement does not apply to individuals on sabbatical. Costs generated by personnel working off-campus, including their travel to and from the off-campus location, can be budgeted as off-campus.

Research versus Educational Services
The research rate is used for all projects intended to produce research outcomes. The educational services rate is applied to expenditures for all activities that are part of Cornell's instruction program or other non-instruction services other than research. Activities such as community service programs and cooperative extension services are included in the educational service rate.

Current Facilities and Administrative Rate information is available here or may be obtained from your GCO.