Understanding the Language of Budget Talk When you haven't worked with budgets for grant proposals, the most confusing thing about the process is understanding what terms mean. Below are some commonly used budget terms and their definitions:
Authorized Signature refers to those persons at the University authorized by the Board of Trustees to officially commit the University to contracts and to accept awards. Two people can sign in this space: The President or Vice President for Finance and Administration. In federal proposals, the authorizing signature is also a certification that the University is in compliance with all federal regulations.
Fringe Benefits is a term that incorporates all the "extras" an employee receives besides salary. These include things like the University's portion of Social Security taxes, health insurance, sick leave, retirement, workers comp, etc.
Direct Costs refers to items that are specific to the project and can be itemized. The largest direct cost in most project budgets is salaries and wages plus fringe benefits, or sometimes equipment.
Indirect Costs refers to overhead costs that cannot reasonably be accounted for directly and that the University incurs as a result of the project. You may see this same idea called "facility and administrative (F&A) cost rates." For example, lighting, classroom use, computer use (PCs), janitorial services, library use, central administrative activities, and so on would be almost impossible to realistically attribute a dollar amount to for any given project.
Allowable
Costs refers to what the funding agency will pay
for as direct costs to the project. For example, the federal
government will never pay for alcoholic beverages as part
of costs. There are lots of other things of more importance
that the government and some private funding sources will
not pay for. OMB
Circulars A-110 "Uniform Administrative Requirements
for Grants and Agreements" and A-21
"Cost Principles for Educational Institutions"
try to detail the process for determining allowable costs
(if these links are broken, try OMB's
main circulars page). The catch is that the rules try
to allow flexibility according to an institution's internal
policies, so sometimes allowable costs are very grey. Furthermore,
the federal government takes the position that an institution
has screened all proposals for allowable costs and that the
budget submitted follows federal regulations. It is very important
that PDs understand the basic requirements covering allowable
costs and work with the Director of Academic Research and
Sponsored Projects and the comptroller to ensure compliance.
Matching Funds terminology enjoys some confusion of meaning. It's safe to think of matching funds in two categories: cash and in-kind. If the grant requires (or you wish to negotiate with the University) a cash contribution to the project, you must secure the agreement of the University's Executive Council to provide these non-budgeted monies. In-kind funds are the most common type of institutional contribution to grant projects at St. Mary's. These may take the form of redesignated salaries or wages, use of certain facilities without charge, or other goods and services the University has already included in its budget for regular operations or is willing to divert to the grant project. For example, deans may allow a faculty member to use 25% release time to work on a particular project without requesting funds from the project for the salary. That percent of the faculty member's salary, then, is included under "in-kind" contributions to the project. The funding source is not asked to pay for the portion of time the faculty member works on the project.
Budget Narrative/Explanation refers to a detailed description of the use of funds requested in the budget. This narrative is a good place for the proposal writer to clarify exactly how the money will be spent.
