Developing the
Budget and Budget Justification

SF-424A, Budget Information - Nonconstruction Programs | HUD-4123 (12/98) Cost Summary | sample budget and budget justification

Most grants require federal form SF-424A, Budget Information - Nonconstruction Programs to be submitted with the application. However, HUD requires use of their own form HUD-4123 (12/98) Cost Summary. Provide a budget with line item detail and detailed calculations for each budget object class identified on the Budget Information form. Detailed calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient for the calculation to be duplicated. Also include a breakout by the funding sources identified in Block 15 of the SF-424. Provide a narrative budget justification that describes how the categorical costs are derived. Discuss the necessity, reasonableness and allocability of the proposed costs. The budget figures should be entered on that form and backed up with supporting discussion as demonstrated in the sample referenced. The simplest approach is to develop your project approach first, then develop your supporting discussion and when both are in sync, then enter the final figures on the required form.

Developing Personnel Salary Costs:

The easiest and best way to figure out how much to pay proposed staff, is to look at your organizational chart and pay structure, and to consult with your HR person if possible. If your staff is small, then look at other organizations in your community to see what other employers are paying employees with similar responsibilities. Many organizations conduct polls to see what the competitive rates are in the region. If you are unable to find specific information, general information can be pulled from Salary.com or go to the Alaska Department of Labor and Workforce Development for Wage Rates in Alaska and more information on the minimum wage standard and overtime hours. In completing the required forms, provide the title, time commitment to the project (in months), time commitment to the project (as a percentage or full-time equivalent), annual salary, grant salary, wage rates, etc for each proposed position. Do not include the costs of consultants or personnel costs of delegate agencies or of specific project(s) or businesses to be financed by the applicant.

Developing Personnel Fringe Benefit Costs:

This item encompasses the costs of employee fringe benefits unless treated as part of an approved indirect cost rate and includes all added non-salary compensation items. The amount is usually cast as a percentage of the salary costs per position and includes annual leave, sick leave, health insurance, dental insurance, life insurance, retirement, FICA, workman's comp, taxes and unemployment benefits. Usually your controller or financial officer will have this figure at hand. Provide a breakdown of what is covered.

Developing Travel Costs:

This item includes the cost of project-related travel by employees of the applicant organization and does not include costs of consultant travel. Use actual figures and add 3% to adjust for inflation. Fare information is usually available online at airline websites. Alternatively, if your organization has a travel department, those staff will usually have updated information at hand. Usually fund sources require attendance at post award sessions. This should be factored into the travel budget.

For each trip, show the total number of traveler(s), travel destination, duration of trip, per diem, mileage allowances, if privately owned vehicles will be used, and other transportation costs and subsistence allowances.

Projecting Supply Costs:

This item includes the cost of all tangible personal property other than that included under the Equipment category. Specify general categories of supplies and their costs. Show computations and provide other information which supports the amount requested. Look at actual supply costs for your offices in order to calculate a per person amount. Generally this will be in the $100 to $200 per month range.

Publications/Subscriptions:

Usually a minor amount is included here so that you can keep updated on the industry area of involvement.

Professional Services:

These are usually projected out on a hourly basis and can vary from $50 to $200 and up depending on the type of professional service. Check to see what like consultants are charging for the type of service you will be buying by simply calling and asking.

Contractual Services:

This item includes the costs of all contracts for services and goods except for those that belong under other categories such as equipment, supplies, construction. etc. Include third party evaluation contracts (if applicable) and contracts with secondary recipient organizations, including delegate agencies and specific project(s) or businesses to be financed by the applicant. Demonstrate that all procurement transactions will be conducted in a manner that provides, to the maximum extent practical, open and free competition. Recipients and subrecipients, other than States that are required to use part 92 procedures, must justify any anticipated procurement action that is expected to be awarded without competition and exceed the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently set at
$100,000). Contract costs can vary depending on the type of program that you are proposing. For instance, the Central Council partnered with TAMSCO to install broadband in Angoon. To accomplish this, we entered into a contact through which TAMSCO carried out broadband installation. The more common types of contract costs include:

Leased Space - Check with local realtors to figure out going rate for office space. Be sure to take into account common costs for shared spaces such as conference rooms, kitchen, restrooms, and reception areas. In Juneau the going rate is $2.01 per square foot.

Telephone/Internet - If it is necessary to get office and cell phones for proposed staff, check with the local provider to get rates for the purchase of equipment and the monthly charges.

Copy Services - Check out the lease arrangements on your current equipment to use in projecting out costs for proposed staff. Accounting staff can help cost this out for you. Be sure to take into account ink cartridge replacement costs. These can be quite high on color copiers.

Leased Payroll Services - Leased services cost of $500 per month for a total Year One cost of $6,000.

Leased Grant Administration Services - This leased service includes processing invoices/payments, processing travel, budget tracking and budget reporting for a cost of $750 per month or a total of $9,000 in Year One.

Equipment:

Equipment means an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the organization for the financial statement purposes, or $5,000. (Note: Acquisition cost means the net invoice unit price of an item of 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, protective in-transit insurance, freight, and installation shall be included in or excluded from acquisition cost in accordance with the organization’s regular written accounting practices.) For each type of equipment requested, provide a description of the equipment, the cost per unit, the number of units, the total cost, and a plan for use on the project, as well as use or disposal of the equipment after the project ends. Equipment purchase information can be obtained from your accounting staff or online at equipment supply sites.

Other

Enter the total of all other costs, such costs, where applicable and appropriate, may include but are not limited to insurance, food, medical and dental costs (non contractual), professional services costs, space and equipment rentals, printing and publication, computer use, training costs, such as tuition and stipends, staff development costs, and administrative costs. Provide computations, a narrative description and justification for each cost under this category.

Local Employment:

Go to the Alaska Department of Labor and Workforce Development for Wage Rates in Alaska and more information on the minimum wage standard and overtime hours.

In-Kind Donations/Matching Contributions:

This includes the amounts of non-Federal resources that will be used to support the project as identified in Block 15 of the SF424. The firm commitment of these resources must be documented and submitted with the application so the applicant is given credit in the review process. A detailed budget must he prepared for each funding source. Some fund sources give extra points for matching contributions and in-kind donations. The larger the percentage of match the more points. Others require a match with no exceptions. And then there are those that require the match, but provide way for eligible applicants to obtain waivers. It is important to look closely at the restrictions on the match, because some agencies will not accept other federal dollars as match.

Program Income

This line item includes the estimated amount of income, if any, expected to be generated from this project. Describe the nature, source and anticipated use of program income in the budget or refer to the pages in the application which contain this information.

Indirect Costs:

Some organizations have negotiated approved indirect cost rates that cover accounting support, grant management, space leasing, office equipment, office supplies, meeting space, etc. If your organization or company is one that doesn't have a federally approved rate, then these items will have to be costed out and included as direct expense items. A copy of the Central Council's indirect cost rate can be accessed here.

Sample Budget Justification to Support Form HUD-4123

Link to a sample budget and budget justification to see what a proposed budget, using an indirect cost rate, looks like.

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