All direct costs charged to sponsored projects awarded to the University of Texas must be allowable, allocable, necessary and reasonable for carrying out the objectives of the sponsored project as defined in Uniform Guidance (2 CFR 200). To be consistent in managing direct costs, the University extends these requirements to both federal and nonfederal sponsors. Uniform Guidance defines direct costs:
Direct Costs (e.g. salary, fringe benefits, and materials and supplies) can be identified specifically with a particular final cost objective or can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect (F&A) costs (200.413).
All costs charged to a sponsored project must be allowable, reasonable, and allocable (2 CFR 200 Subpart E—Cost Principles). A cost is not necessarily allowable just because it is proposed and not excluded from the award, or because it is invoiced and not excluded by the sponsor when reimbursed. Costs must meet the following criteria, and may be found unallowable even after award closeout.
Allowable: A direct cost is allowable when it is necessary for the project and meets the criteria for reasonable and allocable costs outlined here as well (200.403). An allowable direct cost must:
- Conform to the terms and conditions of the award itself;
- Be consistent with UT’s policies;
- Be treated consistently as a direct cost (as opposed to an indirect cost) when incurred for the same purpose in like circumstances;
- Not be included as a cost or cost share on another award;
- Be adequately documented.
Reasonable: A direct cost is reasonable when it does not exceed that which would be incurred by a prudent person (200.404). A reasonable direct cost must:
- Be ordinary and necessary for the proper and efficient performance of the award;
- Conform to the terms of the award, all applicable regulations, and sound business practices;
- Conform to market prices for comparable goods and services in the area;
- Be incurred with all responsibilities to the University, the public, and the sponsor having been considered;
- Be consistent with UT policies and practices.
Allocable: A cost is allocable to a particular award if the relative benefit of the goods or services can be assigned to that award. The cost must be incurred specifically for the award, and be charged to the award proportionally to the benefit the award received (200.405). See UT’s Cost Allocation page for more details on how to apply cost allocation methodologies.
Selected Items of Cost
Personal computers are allowable as a direct cost when they are essential and allocable to the project and should normally be listed under “Materials and Supplies” (§200.453). The budget justification should state why any computing devices are essential and allocable to the performance of the award. Inclusion in the budget justification is intended to enable the sponsor to review and concur with the need for the computing device, and prevent questions regarding allowability in the event of an audit.
Capitalized computer equipment (i.e. costing $5,000 or more) would be considered general purpose equipment, which is unallowable without prior approval.
Items included in the total value of a personal computer:
- CPU case with motherboard; memory chips; internal drives, including CD ROMs; various boards such as a network, modem, sound cards, etc.
- Monitor (if less than $5,000), keyboard, mouse (or other pointing device), PMICA cards
- Pre-installed operating system software (Windows, UNIX, Macintosh operating system, etc.) and pre-installed application software
Items that will not be considered for inclusion when calculating the total cost of a personal computer include additional software not pre-installed, external drives, scanners, external modems, printers and plotters (Texas State Property Accounting (SPA) Guidelines).
Definition and Allowability. Professional and consultant services by individuals who are not employees of the University are allowable when they are necessary considering the University’s capabilities, would not be more economically acquired by direct employment, are delivered by qualified individuals, and are priced comparably to non-federally funded activities and past patterns of such costs (§200.459).
When professional consultants are using facilities at an institution with a federally negotiated rate agreement, a subaward agreement may be more appropriate. See the Sponsored Project Outgoing Agreement Guide for additional guidance on distinguishing between a consultant and subrecipient relationship under a sponsored project.
Documentation. When the consultant is identified at proposal, a signed consultant letter is required and should include:
- a statement of the work,
- the number of days/months of work and the rate of pay, and
- a curriculum vitae.
Budgeting. UT-Austin employees may consult on sponsored projects. Generally, consulting by faculty is assumed to be undertaken as an academic obligation requiring no additional compensation; however, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and is in addition to regular responsibilities, any charges for such work above the regular rate of pay are allowable provided that such consulting arrangements are specifically provided for in the award or approved in writing by the awarding agency (§200.430).
Institutional procedures on contracting and paying consultants, including payments for travel and honorarium, are managed by the University’s Purchasing Office (Independent Contractor Overview & Guidelines).
Indirect (F&A) costs are charged on all consultant costs when using the University’s federally negotiated rates. See UT’s F&A rates.
Costs that might otherwise be considered entertainment may be allowable only if they have a programmatic purpose and are authorized either in the approved budget for the award or with prior written approval of the awarding agency (§200.438).
Definition and Allowability. Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost of $5,000 (§200.33).
General purpose equipment (e.g. office equipment and furnishings, modular offices, telephone networks, information technology equipment and systems, air conditioning equipment, reproduction and printing equipment, and motor vehicles) is unallowable, except with prior written approval of the sponsor (§200.48; §200.439).
Special purpose equipment (e.g. microscopes, x-ray machines, surgical instruments, and spectrometers) which is used only for research, medical, scientific, or other technical activities is allowable with prior approval of the sponsor (§200.89; §200.439).
Budgeting. Freight and shipping charges associated with acquiring equipment must be included in the asset's value as well as all modifications, attachments, accessories, or apparatuses necessary to render the asset usable for service. Warranty costs and service agreement costs are not included if the warranty costs or service agreement costs are listed as separate line items on the purchase order or invoice. Otherwise, warranty costs and service agreement costs are added to the value of the asset (HBP 16.2.A.3).
Equipment is exempt from indirect (F&A) costs when using the University’s federally negotiated rates. See UT’s F&A rates.
Equipment items acquired on a rent/lease-to-own/purchase or installment payment basis must be added to the departmental inventory at the total value of the purchase when the initial payment is made or when the property has been received and should be budgeted as equipment. These items will be inventoried in the same manner as direct or outright purchases (HBP 16.2.B).
Fabricated equipment is defined as a unique one-of-a-kind item that is built or assembled from individual parts or materials by or under the direction of university personnel. The completed item of fabricated equipment may have, but is not limited to, a single power source and may result as a stand-alone item. Fabrications are created by assembling a number of components (manufactured or custom made) to produce a piece of equipment that meets unique research specifications.
All services purchased for equipment fabrication must be used in the fabrication process and become a permanent part of the end product’s value. All items purchased must become a permanent part of the end product’s value as well, unless they are destroyed during testing or consumed in fabrication. The completed item of fabricated equipment must have a useful life of at least one year and must be classified as either a capital or controlled asset per State Property Accounting (SPA) guidelines (HBP 16.2.C.1).
Components, other than on-campus machine-shop labor, used to fabricate an item of capital equipment may be considered as capital equipment for budgeting purposes and should be identified for inventory purposes. The on-campus machine-shop labor component is subject to facilities and administrative costs. Additionally, service/maintenance agreements are not considered a capital equipment charge; therefore, such agreements are subject to facilities and administrative costs. A separate subaccount is required for each capital equipment item being fabricated (HBP 16.2.C.3).
Fringe benefits are a direct cost to a sponsored project (§200.431). They are budgeted as a percentage of the salaries and wages and shown as a separate entry in the budget. The University’s fringe rates are negotiated with its cognizant agency (DHHS) and are part of the University’s F&A Cost Rate Agreement. Fringe is charged on all payroll transactions processed in Workday (See a detailed list here: https://utexas.app.box.com/v/fringe-pay-components).
Graduate Research Assistants (GRAs) should be budgeted as full-time benefits-eligible employees.
Undergraduate Research Assistants (URAs) should normally be budgeted as benefits ineligible. If a URA is appointed for more than 30 hours for 90 days (e.g. 6/1 – 8/31), the student will become eligible for, and be auto-enrolled in, UT Select. In this situation, a department should budget for the appropriate pooled fringe rate; however, if a student is otherwise insured, they will need to take action to decline the offer of UT Select.
For current rates, see UT’s Fringe Rates & Guidelines page.
Additional fringe benefit rate information can be found at UT Austin Payroll.
Materials and Supplies
Supplies are tangible items costing less than $5,000 each (§200.94). Materials and supplies are allowable as direct costs when they are 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 (§200.453).
Faculty who anticipate the use of a particularly large number of research animals or animals requiring special care should consult with the Animal Resources Center staff to see whether the funds estimated will be adequate and whether the Animal Resource Center has adequate facilities to accommodate the animals.
Individual memberships are unallowable. Costs for the University’s membership in business, technical, and professional organizations are allowable (§200.454), but must normally be treated as indirect (F&A) costs (2 CFR 200 Appendix III.B.6.b.(2)). Costs of membership in any civic or community organization are allowable with prior approval by the sponsor (§200.454).
Other Direct Costs
Other Direct Costs is a category within a budget justification generally used to justify expenses for non-tangible items that cannot otherwise be categorized as salary, fringe, consultants, or subawards.
Office supplies, postage, local telephone costs, and memberships are generally not allowable as direct costs and must normally be treated as indirect (F&A) costs (2 CFR 200 Appendix III.B.6.b.(2)).
Participant Support Costs
Definition and Allowability. Participant support costs means direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects (§200.75). Participant support is an allowable direct cost to a project with prior sponsor approval (§200.456).
A participant is a recipient who is not an employee of the University of Texas at Austin (UT-Austin), nor the provider of a service or training associated with a workshop, conference, seminar, symposium, or other short-term instructional or information sharing activity. Participants are not required to provide any deliverable to the university and they are not subject to UT-Austin Human Resource policies (e.g., they cannot be terminated for failure to perform). Participants may include students, scholars, and scientists from other institutions, representatives of private sector companies, teachers, and state or local government agency personnel. A person classified as an intern would be paid as an employee and not as a participant, because the intern, while receiving certain training, is also providing services to the university, to the grant sponsor, or to a third party (e.g., counseling students at a local public schools).
Budgeting. Participant support costs include the direct costs for items such as the following:
- Stipend. A stipend is a set amount of money to be paid directly to the participant. Certain agencies of the federal government specifically restrict participant stipends. The professional staff in the Office of Sponsored Projects (OSP) will assist the Principal Investigator (PI) to determine if the sponsoring agency for a particular project restricts the stipend to be paid to a participant.
- Travel. Travel includes the costs of transportation and associated costs and must follow sponsor guidelines (e.g., U.S. flag carrier, coach class, most direct route) as well as travel rules for the State of Texas and UT-Austin policies and guidelines. The sole purpose of the trip must be to participate in the project activity. If a training activity involves field trips, the costs of transportation for participants may be allowable.
- Subsistence allowance. The cost of a participant’s housing and per diem expenses necessary for the individual to participate in the project are generally allowed, provided these costs are reasonable and limited to the days of attendance. Although they may participate in meals and snacks provided at the meeting or conference, participants who live in the local area are not entitled to subsistence payments.
- Fees. The fees paid by a participant in connection with meetings, conferences, symposia, or training projects are generally allowable costs. These fees may include laboratory fees, passport or visa fees for foreign participants, and registration fees. A sponsor may also allow the costs of any UT- Austin tuition and fee charges that are required to be paid for the individual to participate in the training project.
- Other. Certain other costs in support of the participant’s involvement may be allowable, including training materials, laboratory supplies, and insurance.
Participant support costs do not include the following types of payments:
- Honoraria paid to a guest speaker or lecturer.
- Conference support costs such as facility rentals, media equipment rentals, or conference food.
- Subaward to a provider for multiple training events (i.e. an ongoing contract with specific terms and conditions).
- Agreements with employers (e.g., public school system) to reimburse the employer for the costs related to sending its employee to a conference or workshop. It is recommended that the PI inform participants prior to the initiation of the project about any costs associated with their participation in the project that are not covered.
Conditions associated with participant support funds
- All costs that are reimbursed to or paid on behalf of participants must be incurred within the project period and specifically allowed by the sponsoring agency.
- Participant support costs are budgeted in a separate line and must be accounted for separately.
- Funds provided for participant support costs that are not spent cannot be rebudgeted for use in other categories except with the prior written approval of the sponsor.
- In most cases, unspent participant support costs must be returned to the sponsor.
Participant Support is exempt from indirect (F&A) costs when using the University’s federally negotiated rates. See UT’s F&A rates.
Publication costs for electronic and print media, including distribution, promotion, and general handling are allowable. Page charges for professional journal publications are allowable when publishing the results of the work supported by the project (§200.461). This category may also include data deposit and curation. A data deposit cost is a one-time charge paid at the time a data set is deposited into a data repository. Data curation costs are expenses associated with preparing data into a form that others can use.
Recruitment costs may be an allowable direct charge to an award when they meet the test of reasonableness and the employee remains appointed to the award at allocable proportions for at least twelve (12) months (§200.463).
Recruiting is considered reasonable and necessary when there is a need for a specialized individual with unique skills and expertise in order to complete the scope of work of the project, and there are no available faculty or staff currently employed within the unit who could perform the same tasks. Eligibility is limited to research faculty, associates, and post docs.
Recruiting costs are considered allocable when incurred solely to advance the research objective of the award. If the personnel being recruited will not be working on the sponsored project full time, only the proportionate amount of the recruiting costs should be allocated to the sponsored project.
Recruitment costs may include advertising, operating costs of an employment office necessary to secure and maintain an adequate staff, costs of operating an aptitude and educational testing program, travel costs of employees while engaged in recruiting personnel, travel costs of applicants for interviews for prospective employment, and relocation costs incurred incident to recruitment of new employees (§200.463; §200.421)
Relocation costs (§200.464) are allowable when incurred incidental to recruitment of a new employee who is considered necessary.
Where relocation costs are incurred incidental to recruitment of a new employee have been funded in whole or in part to a Federal award, and the newly hired employee resigns for reasons within the employee's control within twelve (12) months after hire, the University will be required to refund or credit the sponsor’s share of such relocation costs to the sponsor.
Relocation costs related to the permanent change of duty assignment for a new or existing full-time employee may be an allowable direct cost on a sponsored project when the move is for the benefit of the University, and the individual remains appointed to the applicable award for at least twelve (12) months (§200.464).
Salaries and Wages
Salary and wages for faculty and staff are an appropriate direct cost when charged to a sponsored project at a rate proportional to the time the individual dedicates to the project. Grant funds may not be used to augment the total salary or institutional rate of pay of faculty or staff (§200.430).
Allowable activities related to work under an agreement include delivering special lectures about specific aspects of the ongoing activity, writing reports and articles, developing and maintaining protocols (human, animals, etc.), managing substances/chemicals, managing and securing project-specific data, coordinating research subjects, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and conferences (§200.430).
The Principal Investigator (PI) and other key personnel are required by University policy (HOP 7-1010) to commit at least 1% effort (i.e. 0.09 months or 0.12 months) per year on all sponsored projects except:
- Equipment grants,
- Dissertation grants,
- Other awards intended as student augmentation,
- Limited-purpose grants such as travel or conference grants.
The minimum effort required by PIs and other key personnel may be charged to the award either as a direct cost or as cost share. This is voluntary uncommitted cost share that is not reported to the sponsor; it is recorded in the UT Effort Certification System (ECS). See the OSP Effort Certification & Training page for more details on effort.
Generally, researchers may not commit more than 95% effort to sponsored projects during the academic year. Summer effort on sponsored projects may be 100% if there are no teaching responsibilities. To determine maximum rates of commitment for you and your department, contact the fiscal office in your academic unit.
Budgets should include appropriate escalations for future salary increases. To determine appropriate escalation rates, contact the fiscal office in your academic unit.
Graduate Research Assistants appointed to a sponsored project are paid within UT’s published student employee compensation salary ranges. The appropriate graduate student salary rate within this range is determined by the academic unit.
GRAs may not exceed 20 hours/week during the first two long-session semesters of graduate study and 30 hours/week in subsequent long-session semesters (HOP 9-2030). Exceptions occur during break periods (See Graduate School website).
Unless the sponsor disallows it, tuition is required on all sponsored projects that support graduate students. Tuition should be budgeted proportionally at the percent effort the GRA dedicates to the project.
See the Grad Student Salary & Tuition page for additional guidance
Undergraduate Research Assistants appointed to a sponsored project are paid within UT’s published student employee compensation salary ranges.
Under Executive Order 13658, work performed on certain federal contracts solicited or awarded on or after January 1, 2019, require payment of a minimum wage rate of at least $10.60 per hour. This requirement does not apply to work performed on federal grants. Employers of students who are performing work on a federal contract in an FLSA non-exempt student job title (i.e., a title other than Graduate Research Assistant, Assistant Instructor, or Teaching Assistant) may contact the Office of Sponsored Projects at email@example.com for more information.
Undergraduates must have full-time status (12 hours) during long semesters (HOP 9-2030).
Administrative and Clerical Staff
Administrative and clerical staff should normally be treated as an indirect (F&A) cost (§200.413(c)). Administrative and clerical salaries may be appropriate only if all of the following conditions are met:
- Services are integral to the project, and
- Individual is specifically identified with the project, and
- Costs are explicitly budgeted or have prior written approval, and
- The costs are not also recovered as indirect costs (F&A).
Before including administrative salary in your proposed budget, contact your unit’s pre-award specialist for pre-review to better ensure allowability.
Definition. The University must make case-by-case determinations whether each agreement it makes to disburse program funds is a subaward or a procurement contract (§200.330).
A subaward is for the purpose of carrying out a portion of a sponsored project. Characteristics which support the classification of an entity as a subrecipient may include some or all of the following:
- Has its performance measured in relation to whether objectives of the project were met;
- Has responsibility for programmatic decision making;
- Is responsible for adherence to applicable award requirements specified in the prime award;
- Is assigned a portion of the work statement’s intellectually significant activity;
- Is responsible for administrative and programmatic decisions, including intellectual leadership, for the portion of the work statement that they will undertake (§200.330).
Documentation. When a subaward is included in a proposed budget, the following documentation is required before proposal:
- Statement of work
- Detailed budget and justification
- Negotiated rate agreement (Federal/Federal pass-through funding)
- Letter signed by the subcontractor's authorized institutional representative
Financial Conflicts of Interest (FCOI). All subcontract Principal Investigator(s) and Covered Individuals must comply with applicable Financial Conflict of Interest Policies. Some institutions are compliant by virtue of their participation in the Federal Demonstration Partnership’s FCOI Institutional Clearinghouse and do not have to submit additional training or disclosure. Institutions not listed in the FDP Clearinghouse must either submit their FCOI policy for review by the Office of Research Support and Compliance, or covered individuals at the subaward entity may complete UT’s FCOI training and disclosure. See RSC FCOI policy.
Budgeting. Subrecipients to the University of Texas at Austin should use the federally negotiated F&A agreements in effect at their institutions unless a published or statutory limitation from the prime sponsor applies. When no approved cost rate agreement exists and there is no sponsor-published policy, the University will accept the following F&A rates:
Prime Sponsor Subaward Entity Rate
National Institutes of Health (NIH)
National Institutes of Health (NIH)
*For-profit entities with a negotiated rate agreement should use their negotiated rates.
Non-Federal entity (never having received a negotiated indirect cost rate)(2 CFR 200.414(f))
In the event that the total amount to be subcontracted represents a substantial portion (> 50%) of the proposed direct costs, the budget justification should include specific justification for the necessity of both the subaward entity and and its statement of work.
Subawards beyond the first $25,000 are exempt from indirect (F&A) costs when using the University’s federally negotiated rates. See UT’s F&A rates.
Costs for institutional subscriptions to business, professional, and technical periodicals are allowable (§200.454).
Individual memberships may be allowable on an award with an institutional allowance when the sponsor specifically allows direct charging of individual dues, memberships, or subscriptions. Examples include NIH or NASA fellowships, training projects, or any other type of award with an institutional allowance. The membership, subscription, or professional activity cost should directly benefit the fellow or participant.
Travel expenses are an allowable direct cost to an award when the trip directly benefits the project, participation by the individual traveler is necessary, and UT travel policies are followed; however, the terms and conditions of each award should be reviewed for restrictions or requirements for specific sponsor prior approvals, even when travel was included in the proposed budget (§200.474).
When travel is approved by the sponsor, University travel procedures should be followed. Travel costs should be budgeted using per diem rates for lodging and meals, Texas Comptroller’s travel reimbursement rates for mileage, and an estimate of the basic least expensive unrestricted accommodations class for airfare (HBP Part 11).
Meals & Lodging. Per diem rates differ between State and Local accounts. The total allowed for meals is limited within the daily total per diem allotted for both meals and lodging. See the Handbook Business Procedures – Part 11 for current per diem rates.
Dependent care. Federal standards allow costs for temporary dependent care above and beyond regular dependent care resulting directly from conference travel when these costs are provided for all qualified employees of the university. UT Austin does not have such a policy; therefore, these are unallowable costs to an award (§200.474(c)(1)).
Dependent travel. Travel costs for dependents are unallowable, except for travel of duration of six months or more with prior approval of the sponsor (§200.474(c)(2)).
Transportation. Mileage should be budgeted at the rate listed on the Texas Comptroller of Public Accounts' Travel Reimbursement Rates web page. Airfare should be budgeted at the coach class rate, unless an approved exception is anticipated.
Federal funds cannot be used to make trips to secure new or additional research support or funds.
Tuition is required on all grant and contract proposals that include graduate research assistants, unless the sponsor does not allow tuition remission. Tuition should be budgeted proportionally at the percent effort the GRA dedicates to the project.
See the Grad Student Salary & Tuition page on the OSP website for additional guidance.
Tuition is exempt from indirect (F&A) costs when using the University’s federally negotiated rates. See UT’s F&A rates.
All costs on sponsored projects are categorized as either direct or indirect costs. Some costs may be allowable only as indirect costs and cannot be direct charged to a sponsored project. The following are costs that are not allowable as either a direct or indirect cost on a sponsored project:
- Advertising and public relations (200.421): limited allowability is outlined
- Advisory councils (200.422)
- Alcoholic beverages (200.423)
- Alumni/ae activities (200.424)
- Entertainment (200.438)
- Fines, penalties, damages, and other settlements (200.441)
- Goods or services for personal use (200.445)
- Idle facilities and idle capacity (200.446)
- Lobbying (200.450)
- Losses on other awards or contracts (200.451)
- Country club, social, dining club memberships (200.454)
- Individual memberships (200.454)
- Organization costs (§200.455)
Short-term travel visas are allowable as a direct cost when issued for a specific period and purpose that is directly connected to the award. They must be critical and necessary to the project (§200.463). Visas should be included in the budget justification at proposal, or if added later in the project, must have prior written approval from the contracting officer.
The following visa types may be allowable as a direct charge:
- H-1B petition expenses. An H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in specialty occupations that require theoretical or technical expertise in specialized areas. If the individual is being recruited to work on the sponsored project, H-1B visa fees are chargeable to that sponsored project because that project will receive a direct benefit from the university’s appointment.
- O-1 Visas. An O-1 visa is a non-immigrant visa for an individual who possesses extraordinary ability in the sciences, arts, and education. O-1 Visas may be charged to sponsored projects if there is a clear and direct benefit derived by the sponsored project to justify charging the expenses.
- J-1 Visas. A J-1 visa is a non-immigrant visa issued to research scholars, professors, and exchange visitors participating in programs that promote cultural exchange. J-1 Visas are allowable when the purpose of the visiting scholar or faculty exchange is to work on one or more sponsored projects.
The following costs related to visas are unallowable:
- All student (F-1) Visas. The primary purpose of an F-1 visa holder is to join the university community as a student, and participation on sponsored projects is incidental to their roles as students.
- J-1 Visas. The policy generally excludes exchange visas for visiting scholars or professors to come to the US to participate in teaching, scholarship, or research, unless the purpose is specifically to participate in a sponsored project. (See J-1 Visas above)