Salaries, wages, and fringe benefits

Salaries and wages

Normally, only compensation for University faculty & staff and students who are necessary to meet the goals of the project are allowed as direct costs. To determine how much to budget for faculty/staff, think in terms of each person’s percent-of-effort to be devoted to the project and apply that percentage to the appropriate base period.

There are three basic salary (wage) bases: Calendar Year, Academic Year and Summer Term. Here is a month/week/hours breakout for each:

Calendar year (CY)

12 months 52 weeks 2,080 hours

Academic year (AY)

9 months 39 weeks 1,560 hours

Summer term (SM)

3 months 13 weeks 520 hours

To fill out the budget forms for many grants you need to convert percent-of-effort to months.


A PI on AY appointment at a salary of $63,000 would have a monthly salary of $7,000 (one-ninth of the AY).

  • 25% of AY effort would be 2.25 AY month. The budget figure for that effort would be $15,750 (25% of total AY salary)
  • Two Summer Salary months for this PI would be $14,000 (equivalent to two-ninths of AY salary). Two summer months would be 66% of the three month summer term.

A PI on a CY appointment at a salary of $72,000 would have a monthly salary of $6,000 (one-twelfth of total CY salary).

  • 25% of CY effort would be 3 CY months. The budget figure for that effort would be $18,000 (25% of total CY salary).

Please note:

  • Always check program guidelines to determine if there are any restrictions imposed on personnel costs (summer salary only, no AY time, no more than x% of PI time, etc.).
  • NSF and many other federal agencies will pay for only two months summer salary. That is: two/ninths of the individual’s regular Academic Year salary.
  • For multi-year projects, DORED recommends using an annual salary/wage escalation factor of 3% for each year of the project.
  • To budget funds for students, check with your Department Chair to determine normal departmental rates.

Fringe benefits

The fringe rate is expressed as a percentage of salary as follows:

  • Faculty & staff salaries (permanent, full-time): 36%

The fringe benefit rate of 36% is an average rate that represents the cost of fringe benefits normally charged. It covers the costs for Social Security, Medicare, retirement, disability, and life & health insurance.

  • Part-time employees: 7.65%
  • Students (academic year or summer, enrolled in the University): No charge