Allowable Costs

Based on OMB A-21 and the Uniform Guidance, to be allowable, costs must be necessary,reasonable, allocable to the sponsored agreement, and given consistent treatment.

Costs must be necessary to complete the scope of work.

Reasonable costs is when the cost does not exceed what a prudent person would incur under the circumstances prevailing at the time the decision to incur was made. Thresholds are not given here because each situation is different, with different circumstances. Reasonable costs will be reviewed case-by-case.

Allocable means the cost was incurred solely to advance the work of the sponsored project, and can be directly linked to the sponsored project. The cost should be charged in reasonable proportion to the benefit it provided to the project. If more than one project received a benefit, the cost should be allocated accordingly. If there is no direct way to link the benefit or if it benefited multiple projects, then the cost should be treated as an indirect cost (Facilities & Administrative, F&A).

Consistent treatment means university policy and generally accepted accounting principles would treat similar costs in similar circumstances the same way. If costs are direct costs, they are always treated as direct costs depending on their identifiable benefit to the project. The costs must be treated consistently for all work of the organization under similar circumstances, regardless of the source of funding.

If costs are not reasonable, allocable or treated consistently, then they are not allowable to sponsored programs. Pi's should contact their department to see if other, non-restricted funds, are available to cover the transaction.

The following is a partial list of generally allowable costs:

Direct Costs

Direct costs are costs that can be identified specifically to a sponsored project. If the cost benefits multiple projects, they should be prorated rated on use. If costs can't be identified with a high degree of accuracy, then the costs should be treated as indirect cost, or Facilities & Administrative (F&A) costs. Examples of F&A costs would be office supplies, telephone and postage.

Communication Costs

Costs incurred for individual local and long distance telephone calls and fax transmissions are allowable as a direct charge to a project if the project is a "major project" and they are directly related to the project. Otherwise, these costs should be treated as F&A costs. OMB A-21 describes "major projects" as large, complex projects where there is extensive data collection, data entry, analysis, tabulation, etc, requiring extensive departmental support hours. (See OMB A-21 Exhibit C for more information on major projects).

Compensation for Personal Services

Compensation for personal services covers all amounts paid currently or accrued by the institution for services of employees rendered during the period of performance under sponsored projects. Such amounts include salaries, wages and fringe benefits. These costs are allowable to the extent the total compensation to individual employees conforms to the established policies of the institution, consistently applied, and charges for work performed directly on sponsored projects are determined and supported by government cost principles. Any limitations set by the sponsoring agency must also be applied.

For information pertaining to classification or wage amounts for sponsored award positions, please contact Human Resources.

Per OMB A-21 Exhibit C, salaries for administrative or clerical staff shall normally be treated as F&A costs. Direct charging a sponsored project may be appropriate when they are a part of a "major project". For details and definitions of a "major project", please see OMB A-21, Exhibit C. They may also be direct charged when they are specifically identified and approved in the budget.

Applying the consistency principle, regardless of the increases included in budgets, the cost-of-living and merit increases are applied to sponsored awards just as they are applied to university funds. For example, during periods when the university community does not receive raises, appointments paid from sponsored projects also do not receive raises. Colleges and departments follow their own internal procedures for determining the amount of the increase when there is one awarded. This does not apply to salary increases due to promotions.

Employees should not be funded 100% from federal awards since they spend time working on other proposal submissions, attending department meetings, etc. Personnel costs for submitting proposals are not to be charged to current sponsored agreements.

Salary Rates for Academic Years

Charges for work performed on sponsored projects by faculty members during the academic year will be based on the individual faculty member's regular compensation for the continuous period that constitutes the basis of salary. Charges for work performed on sponsored projects during all or any portion of such period are allowable at the base salary rate. In no event will charges to sponsored projects, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored project conducted by another faculty member of the same institution.

In unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his or her regular departmental load, any charges for work representing extra compensation above the base salary are allowable provided that such arrangements are specifically provided for in the sponsored agreement or approved in writing by the sponsoring agency.

Salary Rates for Periods Outside the Academic Year

Except as otherwise specified for teaching activity, charges for work performed by faculty members on sponsored projects during the summer months or other period not included in the base salary period will be determined for each faculty member at a rate not in excess of the base salary divided by the period to which the base salary relates. The base salary period used in computing charges for work during the summer months will be the number of months covered by the faculty member's official academic year appointment.

Equipment and Other Facilities

The costs of permanent equipment or other facilities are allowable when such purchases are approved by the sponsoring agency or provided for by the terms of the sponsored agreement.

Material Costs

Costs incurred for purchased materials and supplies directly related to the sponsored project are allowable. Expenses should include only the materials and supplies actually used for this sponsored project. Office supplies for non-"major projects" should be treated as F&A costs.

Meetings and Conference Costs

Costs of meetings and conferences are allowable when the primary purpose is the dissemination of technical information. This includes costs of registration, meals, transportation, rental of facilities, and other items incidental to such meetings or conferences. Illinois Higher Educations Travel Control Board (IHETCB) regulations apply to all travel expenses.

Memberships, Subscriptions and Professional Activity Costs

Costs of the institution's membership in business, technical, and professional organizations are allowable if they specifically pertain to the sponsored project. Costs of the institution's subscriptions to business, professional, and technical periodicals are allowable.

Transportation Costs

Costs incurred for freight, and other transportation relating to either goods purchased, in process, or delivered, are allowable if they specifically pertain to the sponsored project.

Travel Costs

Travel costs are allowable when they are directly attributed to specific work under a sponsored agreement, and are included in the sponsor-approved budget justification. While OMB A-21, the Uniform Guidance, and grantor rules regulate some of the allowed travel expenses, employees of Illinois State University are also bound by Illinois Higher Education Travel Control Board regulations. Please ask about regulations prior to traveling, or see ISU's travel site for more information.

Foreign and domestic travel is sometimes limited by the sponsor. If travel was not included in the approved budget, check with Research and Sponsored Programs to determine if it needs prior approval from the sponsor. Also, any foreign airfare must abide by the Fly America Act.