Budget Preparation

Research Office

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Proposal Development

Budget Preparation

The Office of Sponsored Programs is responsible for reviewing the budget portion of proposals. Each proposal budget will be reviewed and approved by OSP before submission. For budget questions contact: Joanne Lee.

Budgeting Basics

When developing your proposal budget, create a budget that covers all costs of the proposal and stays within the sponsor and Montana Tech/Montana University System guidelines. Make sure to identify all costs associated and any funding restrictions by the sponsor.

Here are some budgeting basics to help with developing your proposal budget. Every project and sponsor is different, so make sure to consult the program guidelines when developing your budget. If you do not  know where to start, contact OSP for assistance in starting your budget development.

  • Salary/Wages: A major budget category on most sponsored program budgets is personnel expenses (salary and fringe benefits). Proposal budgets should accurately represent the amount of direct research effort personnel are committing to the project. Compensation on sponsored programs must not exceed an employee’s authorized base rate of pay at Montana Tech.
    • Academic Year (AY): Most faculty members are employed by Montana Tech on a nine-month appointment. In order to request AY funds, a buyout of academic responsibility must be budgeted by the project and approved by the department head. For example, the buyout could relieve the faculty member from teaching one course, which would be budgeted as a percent of time.
    • Summer Salary: For faculty with nine-month appointments, most sponsors permit compensation during the summer. Montana Tech allows nine-month faculty to budget up to three months of summer salary. However, some sponsors restrict the amount of summer salary allowed to be requested.
    • Calendar Year (CY): Some research positions and administrative positions at Montana Tech are on 12-month appointments/employment. Salary can be budgeted for these positions to buy out the percentage of their time to be spent on the project.
    • Students: The typical undergrad hourly rate is $11.  If you want to employ a graduate research assistant you must budget a stipend of $6,120 per semester and $8,160 for the summer plus tuition. A PhD student should be budgeted at $7,920 per semester and $10,560 for the summer stipend plus tuition.
  • Fringe Benefits: Salary and wages must have associated fringe benefits in the budget. Benefits are a direct cost estimate as a percentage of salary. Fringe rates include retirement, worker’s compensation, FICA, FUTA, leave assessment and insurance. View the current fringe rates.
  • Equipment: Equipment includes tangible property exceeding $5,000 and having more than one year of useful life. Acquisition cost for equipment, for example, means the net invoice price of the equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Ancillary charges such as taxes, duty, and protective in transit insurance, freight, and installation are included in the acquisition cost. Equipment rental, maintenance, or repair costs should be listed under other direct costs/operation.
  • Travel: Travel costs related to the project can be to present project results, meet with collaborators or sponsors, or enable data collection. Travel should be itemized by trip and include transportation costs, per diem, hotel, registration fees, and number of travel days. Make sure to identify domestic and foreign travel separately. View travel rates.
  • Participant Support: Participants are individuals the project is intended to benefit. Tuition payments on behalf of a graduate research assistant doing research for the project are participant costs, but the student’s assistantship stipend would be listed as a personnel expense. Other participant support can be books or travel/lodging/meals/stipend for summer programs. For projects such as, undergraduate research programs or teacher training, with the primary purpose of benefitting participants, the participant stipends are also participant costs.
  • Contracted Services: Contracted services are purchased services provided by independent contractor or vendor to perform a specific objective of the project. The services provided are typically within their normal business operations and operate in a competitive environment where they provide similar goods or services to many different purchasers. You are paying for a service, not collaborating together.
  • Subawards: Subawards are used with the subrecipient is functioning as a co-investigator or partner on the project (i.e. they are involved in a creative way designing and/or conducting the sponsored activity.) Prior to proposal submission, all subawards required to submit a line item budget, scope of work for the portion of the project they will conduct, and a signed letter of collaboration on letter head at a minimum.
  • Other direct costs include:
  • Materials and Supplies: May include lab supplies, teaching aids, and office supplies;
  • Publication Costs: Anticipated cost of publishing the results of the research, including page charges, poster production, and reprint costs;
  • Consultants: Personnel who provide professional service for a fixed period of time and are not Montana Tech employees. Consultants should be budgeted only where on-campus expertise does not exist or is not readily available. This may include fees and travel expenses. The use and payment of consultants is often restricted; therefore, discuss it with OSP, Joanne Lee.
  • Photocopying, telephone costs, mailings, equipment maintenance, rental and/or lease.
  • Space rental and renovation as appropriate;
  • Hazardous Waste Disposal Costs (Contact the Montana Tech Office of Environmental Safety and Health).
  • Total direct costs: These are all of the costs being budgeted to the project.
  • Facilities and Administrative Costs (F&A): F&A, also known as IDC or overhead, includes all activities essential to support sponsored projects that cannot be directly charged to a specific grant or contract.
  • Total Requested Funds: The sum of total direct costs and F&A.


Facilities and Administration costs (F&A), also referred to as indirect costs (IDC) or overhead, are costs incurred for common or joint objectives and cannot be specifically identified with a particular sponsored project, instructional activity, or any other institutional activity.

Examples of IDC costs include:

  • General use office supplies;
  • Campus security;
  • Use of laboratory, office space, equipment, Internet, etc.;
  • Time spent by academic departments, deans, Research Office, OSP, HR, payroll, janitorial services, etc.;
  • Library Facilities

Montana Tech’s federally approved F&A rate: 33.5% MTDC

View the IDC rate agreement.

In compliance with Montana University System Board of Regent Policy 404 – Indirect Cost Recovery Rate, Montana Tech seeks to recover full IDC allowed by the sponsor. If the sponsor does not allow Montana Tech’s full negotiated IDC rate, Montana Tech will honor the reduced rate of the sponsor with appropriate documentation.

State of Montana IDC rates:

State-funded projects (not federal pass through funding)

  • Research: 25% of total direct costs
  • Training: 8% of total direct costs


Cost Share

Cost share (matching funds) is the portion of the project costs not paid by the sponsor. (CFR Title 2 part 200.30) The resources being cost shared must be quantifiable, trackable, and reported to the sponsor.

Montana Tech only allows are reports cost share when it is required by the sponsor. (Mandatory cost share)

Mandatory vs. Voluntary Cost Share

  • Voluntary Cost Share: Quantified resources offered in the proposal, not required by the sponsor. Federal sponsors cannot “encourage” cost share as part of review requirements.
  • Mandatory Cost Share: Quantified resources required by the sponsor in order to receive consideration for the proposal. Mandatory cost share must be tracked by Montana Tech as a part of the award and be reported to the sponsor. This requirement will be described in the application guidelines. If Montana Tech fails to provide the committed cost share, the sponsor can reduce its funding or require some reimbursement.

Common items used for cost share include:

  • Faculty time/effort;
  • Unrecovered F&A;
  • Contributed F&A;
  • In-Kind Contributions;
  • Graduate Tuition Waivers; and
  • Project-Related Travel.

Third Party Cost Share

Third Party Cost Share is the value of any services or resources provided by a “third party” (not Montana Tech and not the sponsor) in support of the project. Montana Tech requires a letter of collaboration from the third party stating the exact items being cost shared and the exact value of cost share. The letter must be signed by an authorized authority at the third party. Keep in mind, Montana Tech is still the responsible party for all cost share being provided in a proposal. If third party cost share does not come to fruition, Montana Tech is still responsible for providing that cost share amount.

Unrecovered F&A

Unrecovered F&A is the difference between the sponsor-allowed F&A rate and the Montana Tech F&A rate. If the sponsor has a lower rate, then this difference can be used as cost share.

Contributed F&A

Contributed F&A is the calculated F&A associated with any cash contributions by Montana Tech to the project. Cash contributions include faculty time/effort on the project or contributing funds (non-federal) being used to pay any cost shared items by Montana Tech.

Implied cost share and quantifying resources is not allowed by Montana Tech. This situation occurs when in the scope of work (or any proposal section other than budget/budget narrative) specifically states university support that can be quantified.

Example: Professor X will spend 10% of time on this project overseeing students. This is quantifiable due to being able to put a dollar amount on Professor X’s time. An acceptable statement would be: Professor X will direct all research activities associated with this project.

Example: Montana Tech will provide two work stations and computers in support of this project. A better way to state this is: Montana Tech will provide the computer resources and technical support for successful completion of this project.


Common Sponsor Budget Restrictions

PIs should closely review the sponsor guidelines for budget restrictions. Common restrictions are:

  • Allowable costs;
  • Required cost-sharing (match);
  • Limits on total amount requested;
  • Limits on total direct costs;
  • F&A restrictions; and
  • Required budget forms and/or budget format.