Budget Modification Request Procedure and Instructions

Authorization Procedure for Budget Modifications

Policy

Form: 
Use the budget modification request form whenever approval of budget modifications is required in accordance with sponsor instructions, or to reallocate funds among budget categories for allowable expenditures.  Most commonly, budget modifications are required to ensure that sufficient funds are in the equipment category or the contractual services category before a requisition can be approved for equipment purchase or for a subrecipient agreement.  This form is also used to allocate budgets from a summary level to budget categories for project management.

Budget categories (highlighted in gray)

Sponsor approval:
Sponsor approval is required when restrictions in spending categories are part of the terms and conditions of the award. To obtain Sponsor approval:

  • PI writes a letter to the Sponsor to request the budget modification.  The letter should include the budget categories and dollar amounts to be increased and decreased, and a justification for the requested changes.
  • The letter to the Sponsor must be signed by the PI and a Sponsored Programs Administration authorized official.

Internal approvals:
Requests for budget modification are initiated and signed by the Principal Investigator (PI) and forwarded for authorization and signature in the following order:
1) Department Administrator

2) Department Chair
3) Dean (not required for School of Medicine and School of Pharmacy)
Submit to
Sponsored Project Accounting and Compliance.  When required, attach documentation of Sponsor approval.

Justification for budget modification requests:
To document the request, the Principal Investigator must document the request for budget modification by explaining the reason for the reallocation of funds.  The following paragraphs provide guidance for writing the justification section of the budget modification form or the letter to the agency.  The justification section must be completed on all budget modification forms, regardless of the signatures required.

Salaries: Explain why the change is necessary.  Is an additional person(s) being added to the project?  Were salary increases/reclassification received that had not been anticipated in the proposal, thereby requiring an increase to the salary budget?  Is there an increase or decrease in the percent effort for any personnel, and if so, is this due to a change in the scope of the project? Reminder:  For Federal grants, agency approval is required for absence of the PI for three months or more, a change of Key Personnel, or a reduction in PI or Key Person effort of 25% or more of the committed effort.  The committed effort is the effort promised in the proposal, unless the agency has subsequently approved a new level of effort for that individual.  Reminder: If clerical and administrative expenses were not proposed in the original budget and funded by the agency, such expenses normally should not be charged to the grant or contract.  More about administrative expenses.

Fringe Benefits: Is the increase/decrease due to a change in the mix of the individuals being paid on the project?  Does the change reflect actual benefit costs?

Equipment: What is the piece of equipment to be ordered and why is it needed for this project?  Does the campus already have the equipment?  If so, why is additional equipment needed?  Is the item in question, considered “general purpose” equipment (examples: printer, copier)?  If so, then the request to rebudget and purchase may require the prior approval of the sponsor.  Equipment is defined as tangible, nonexpendable property having a useful life of more than one (1) year and an acquisition cost per unit equal to or greater than $5000.

Travel: Provide information regarding who will be traveling, the purpose of the trip, location and travel dates.  When the budget modification is for foreign travel, attach a copy of the program announcement showing that the traveler is presenting a paper, poster session, etc., or a copy of the letter the traveler received inviting him/her for the visit or meeting.  Reminder: Federal grants and contracts will only reimburse air travel with a US-flag air carrier at coach rates.

Supplies: Provide a justification for the change. This category contains the expendable material and supply items usually found in a laboratory.  Such items would include but are not limited to glassware, chemicals, radiotopes, animals, etc.

Other Expenses: Provide a justification for the change.  Remember that administrative expenses are normally disallowed under Federal regulations (OMB Circular A-21, section F.6.b), unless they are properly justified as to how they contribute to the successful completion of the technical aspects of the project.

Subrecipient Agreements:  For new subrecipients or to increase the allocation for an existing subrecipient agreement, complete the budget modification form to reallocate funds to the Contractual Services budget category.  For the justification on the budget modification request form, briefly explain.  For new subrecipients, is Sponsor approval required?  What portion of the project scope of work will be performed by the subrecipient?  For increases, what is the reason for the increase?  More about subrecipient agreements

Consultants: Explain why the increase is needed.  For new consultants, who is proposed consultant?  Does the amount include travel, supplies, and lodging in addition to the consultant fee?  For existing consultants, why is the increase needed?  Additional work?  Additional time?  Work with Procurement to initiate a new consulting agreement or to increase an existing one.

Facilities and Administrative Cost (F&A): F & A cost must be adjusted to account for any changes to the base from which the F & A costs were calculated.  Usually these result from changes to the amount for subrecipient agreements or the amount for equipment.

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