Budget Components

Per 2 CFR §200.412 there are two primary components that make up a budget: Direct Costs and Indirect Costs. The total cost of federally sponsored research includes a combination of both, direct and facilities and administrative (F&A) costs.  Both types of expenditures are key to UNM’s ability to conduct cutting-edge research.

Direct Costs

A Direct Cost is any cost that can be specifically identified with a particular project, program, or activity and that is charged directly to an award. Direct Costs include, but are not limited to:

• Salary and Fringe Benefits
• Tuition
  ק200.466 Scholarships and student aid costs

  (a) Costs of scholarships, fellowships, and other programs of student aid at IHEs are allowable only when the purpose of the Federal award is to provide training to selected participants and the charge is approved by the Federal awarding agency. However, tuition remission and other forms of compensation paid as, or in lieu of, wages to students performing necessary work are allowable provided that:

  (1) The individual is conducting activities necessary to the Federal award;

  (2) Tuition remission and other support are provided in accordance with established policy of the IHE and consistently provided in a like manner to students in return for similar activities conducted under Federal awards as well as other activities; and

  (3) During the academic period, the student is enrolled in an advanced degree program at a non-Federal entity or affiliated institution and the activities of the student in relation to the Federal award are related to the degree program;

  (4) The tuition or other payments are reasonable compensation for the work performed and are conditioned explicitly upon the performance of necessary work; and

  (5) It is the IHE's practice to similarly compensate students under Federal awards as well as other activities.

  (b) Charges for tuition remission and other forms of compensation paid to students as, or in lieu of, salaries and wages must be subject to the reporting requirements in §200.430 Compensation—personal services, and must be treated as direct or indirect cost in accordance with the actual work being performed. Tuition remission may be charged on an average rate basis. See also §200.431 Compensation—fringe benefits.

• Equipment
  ק200.439 Equipment and other capital expenditures

  (a) See §§200.13 Capital expenditures, 200.33 Equipment, 200.89 Special purpose equipment, 200.48 General purpose equipment, 200.2 Acquisition cost, and 200.12 Capital assets.

  (b) The following rules of allowability must apply to equipment and other capital expenditures:

  (1) Capital expenditures for general purpose equipment, buildings, and land are unallowable as direct charges, except with the prior written approval of the Federal awarding agency or pass-through entity.

  (2) Capital expenditures for special purpose equipment are allowable as direct costs, provided that items with a unit cost of $5,000 or more have the prior written approval of the Federal awarding agency or pass-through entity.

  (3) Capital expenditures for improvements to land, buildings, or equipment which materially increase their value or useful life are unallowable as a direct cost except with the prior written approval of the Federal awarding agency, or pass-through entity. See §200.436 Depreciation, for rules on the allowability of depreciation on buildings, capital improvements, and equipment. See also §200.465 Rental costs of real property and equipment.

  (4) When approved as a direct charge pursuant to paragraphs (b)(1) through (3) of this section, capital expenditures will be charged in the period in which the expenditure is incurred, or as otherwise determined appropriate and negotiated with the Federal awarding agency.

  (5) The unamortized portion of any equipment written off as a result of a change in capitalization levels may be recovered by continuing to claim the otherwise allowable depreciation on the equipment, or by amortizing the amount to be written off over a period of years negotiated with the Federal cognizant agency for indirect cost.

  (6) Cost of equipment disposal. If the non-Federal entity is instructed by the Federal awarding agency to otherwise dispose of or transfer the equipment the costs of such disposal or transfer are allowable.

  (7) Equipment and other capital expenditures are unallowable as indirect costs. See §200.436 Depreciation.

• Subawards
• Travel
  ק200.474 Travel costs

  (a) General. Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business of the non-Federal entity. Such costs may be charged on an actual cost basis, on a per diem or mileage basis in lieu of actual costs incurred, or on a combination of the two, provided the method used is applied to an entire trip and not to selected days of the trip, and results in charges consistent with those normally allowed in like circumstances in the non-Federal entity's non-federally-funded activities and in accordance with non-Federal entity's written travel reimbursement policies. Notwithstanding the provisions of §200.444 General costs of government, travel costs of officials covered by that section are allowable with the prior written approval of the Federal awarding agency or pass-through entity when they are specifically related to the Federal award.

  (b) Lodging and subsistence. Costs incurred by employees and officers for travel, including costs of lodging, other subsistence, and incidental expenses, must be considered reasonable and otherwise allowable only to the extent such costs do not exceed charges normally allowed by the non-Federal entity in its regular operations as the result of the non-Federal entity's written travel policy. In addition, if these costs are charged directly to the Federal award documentation must justify that:

  (1) Participation of the individual is necessary to the Federal award; and

  (2) The costs are reasonable and consistent with non-Federal entity's established travel policy.

  (c)(1) Temporary dependent care costs (as dependent is defined in 26 U.S.C. 152) above and beyond regular dependent care that directly results from travel to conferences is allowable provided that:

  (i) The costs are a direct result of the individual's travel for the Federal award;

  (ii) The costs are consistent with the non-Federal entity's documented travel policy for all entity travel; and

  (iii) Are only temporary during the travel period.

  (2) Travel costs for dependents are unallowable, except for travel of duration of six months or more with prior approval of the Federal awarding agency. See also §200.432 Conferences.

  (d) In the absence of an acceptable, written non-Federal entity policy regarding travel costs, the rates and amounts established under 5 U.S.C. 5701-11, (“Travel and Subsistence Expenses; Mileage Allowances”), or by the Administrator of General Services, or by the President (or his or her designee) pursuant to any provisions of such subchapter must apply to travel under Federal awards (48 CFR 31.205-46(a)).

  (e) Commercial air travel. (1) Airfare costs in excess of the basic least expensive unrestricted accommodations class offered by commercial airlines are unallowable except when such accommodations would:

  (i) Require circuitous routing;

  (ii) Require travel during unreasonable hours;

  (iii) Excessively prolong travel;

  (iv) Result in additional costs that would offset the transportation savings; or

  (v) Offer accommodations not reasonably adequate for the traveler's medical needs. The non-Federal entity must justify and document these conditions on a case-by-case basis in order for the use of first-class or business-class airfare to be allowable in such cases.

  (2) Unless a pattern of avoidance is detected, the Federal Government will generally not question a non-Federal entity's determinations that customary standard airfare or other discount airfare is unavailable for specific trips if the non-Federal entity can demonstrate that such airfare was not available in the specific case.

  (f) Air travel by other than commercial carrier. Costs of travel by non-Federal entity-owned, -leased, or -chartered aircraft include the cost of lease, charter, operation (including personnel costs), maintenance, depreciation, insurance, and other related costs. The portion of such costs that exceeds the cost of airfare as provided for in paragraph (d) of this section, is unallowable.

• Participant Costs
  ק200.75 Participant support costs

  Participant support costs means direct costs that support participants (see definition for Participant in § 200.1) and their involvement in a Federal award, such as stipends, subsistence allowances, travel allowances, registration fees, temporary dependent care, and per diem paid directly to or on behalf of participants

• Participant Incentives
  ×Participant Incentives

  Payments to human subjects as incentive to participate in a research project.

• Materials and Supplies
  ק200.453 Materials and supplies costs, including costs of computing devices

  (a) Costs incurred for materials, supplies, and fabricated parts necessary to carry out a Federal award are allowable.

  (b) Purchased materials and supplies must be charged at their actual prices, net of applicable credits. Withdrawals from general stores or stockrooms must be charged at their actual net cost under any recognized method of pricing inventory withdrawals, consistently applied. Incoming transportation charges are a proper part of materials and supplies costs.

  (c) Materials and supplies used for the performance of a Federal award may be charged as direct costs. In the specific case of computing devices, charging as direct costs is allowable for devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award.

  (d) Where federally-donated or furnished materials are used in performing the Federal award, such materials will be used without charge.

  - directly benefitting the grant-supported project or activity
• Publication Costs
  ק200.461 Publication and printing costs

  (a) Publication costs for electronic and print media, including distribution, promotion, and general handling are allowable. If these costs are not identifiable with a particular cost objective, they should be allocated as indirect costs to all benefiting activities of the non-Federal entity.

  (b) Page charges for professional journal publications are allowable where:

  (1) The publications report work supported by the Federal Government; and

  (2) The charges are levied impartially on all items published by the journal, whether or not under a Federal award.

  (3) The non-Federal entity may charge the Federal award before closeout for the costs of publication or sharing of research results if the costs are not incurred during the period of performance of the Federal award.

• Consultants

While these are all Direct Costs, some of these items are also considered Modified Costs, which are explained in detail below.

Indirect Costs - Facilities & Administrative (F&A) Costs

Indirect Costs are those incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular project or activity. Examples of Indirect Cost would be the administration of payroll and benefits, building utility and maintenance costs and safety, security and other government-mandated expenses. Indirect Costs are "reimbursements" to UNM. UNM incurs very real expenses associated with being able to support sponsored projects and Indirect Costs are meant to reimburse these expenses. Various grant makers and sponsors use the following terms interchangeable, to mean Indirect Costs: Facilities & Administrative Costs and Overhead.

UNM must follow its federally negotiated rates when applicable. UNM currently has federal negotiated rates as well as non-federal New Mexico public sponsor rates.

The UNM Federally Negotiated Rate Agreement contains the following rates:

• • Organized Research - Includes, sponsored research and University research. Activities include research training and development.
  • Instruction - This includes teaching and training activities (this excludes research training). Some examples would be: Curriculum development projects, projects involving UNM students who receive academic credit, general support for writing instructional materials.
  • Other Sponsored Programs - Projects that are not instruction or organized research. Examples include health service projects and community service program, providing technical assistance, or organizing and conducting workshops that involve the community.
  • Off-Campus - Research that is conducted in facilities that are not owned by UNM and otherwise paid for by UNM. Use of off-campus rates requires prior approval from OSP. The exception request process can be found here.
  • Research DOD Contracts - DoD project that is awarded as a contract
  • Off-Campus Research DoD Contract - DoD project that is awarded as a contract and taking place off-campus.
  • Intergovernmental Personnel Act (IPA)

*If the sponsor is non-federal and it is not listed under the NM Public Sponsor rate agreement, please review the OSP Guidance to obtain applicable F&A rate on proposals to non-federal sponsors

Applicability of a Reduced F&A Rate

If an F&A rate is less than the standard rate per the UNM Federally Negotiated Rate Agreement, Indirect Costs are charged to Total Direct Costs (TDC). This must be consistently applied, unless otherwise prohibited by the sponsor in a published solicitation or sponsor policy.

The following are examples of how this will apply:

• As noted on the New Mexico Public Sponsor memo, when applying a reduced rate of 20%, F&A is calculated on TDCs

Click here for more information on Indirect Cost recovery

Modified Direct Costs

Per the UNM Federally Negotiated Rate Agreement, Modified Direct Costs consist of all direct salaries, wages, fringe benefits, materials and supplies, services, travel and up to the first $25,000 of each subaward. The following are EXCLUDED from the Modified Total Direct costs:

• Tuition
• Scholarships and Fellowships
• Rental Costs - Rental agreement needs to be provided to OSP prior to proposal submission. Off Campus Rate would apply in this instance. Prior is needed.
• Equipment - Must have a unit cost greater than $5,000. A quote is required for all proposed equipment in a budget and it must be submitted to OSP along with the Streamlyne proposal record. 
  Fabricated Equipment- When the project is complete, all of the components must be permanently and intrinsically attached to each other to result in one standalone capital equipment item.
• Capital Expenditures
• Subawards - F&A is charged on the first $25,000 of each subaward. The remaining amount would count towards the total modified direct costs
• Participant Costs - please note the difference between Participant Support vs. Participant Incentives. Click here for more information on Participant Support

For questions regarding indirect rates on non-competitive agreements, please contact ospappointment@unm.edu