Office of Sponsored Programs - 300.07 - Direct Costs, Personnel


Office of Sponsored Programs - 300.07 - Direct Costs, Personnel


In assisting the University's departmental research administrators, this operating standard provides guidelines for budget planning of direct personnel costs in accordance with Federal regulations.

Policy Statement

When estimating a sponsored research budget, the following direct cost elements regarding personnel must be calculated and included, as follows:

I. Salary

Proposed salary for research projects is based upon the Institutional Base Salary (IBS), including all allowable administrative supplements of each proposed individual as shown in ConnectCarolina, taking into consideration any projected legislative salary and merit increases that may occur before the start date of the project. Such salary escalations should take into consideration inflation for the duration of the project and add the calculated amount to all future year budgets, following any limits presented by the sponsor.

Some agencies impose a salary cap. For personnel yet to be determined, projections are based upon the IBS for the proposed position.

Unless otherwise directed by the sponsor, proposed salaries are based upon the total percentage of effort that the University employee will spend working on the project. This effort is reported according to guidelines set by the sponsoring agency and is subject to audit.

The percentage of effort indicated and the salary support requested for the sponsored project must be reasonable and consistent without jeopardizing an employee's other commitments to the University regarding fulfilling their administrative, teaching, or clinical responsibilities.

With the exception of employees hired solely to conduct research (their total percentage of effort would equal 100% on a sponsored project or projects), it is advisable for the PI and other members of the research team to limit their total combined effort so it does not exceed 90% on one or more sponsored projects. Federal auditors will question an employee's high percentage of effort on sponsored projects that does not take into account administrative, teaching, and clinical commitments as part of the employee's total effort. Once funds are awarded and accepted, the proposed percentage of effort becomes legally binding. Therefore, it must be carefully and judiciously considered before committed in the budget.

When proposing salary amounts, always include the applicable percentage of effort for every individual contributing effort to the project, regardless of the salary source. Otherwise, the sponsor may presume the absence of a proposed salary amount constitutes cost sharing. The department is required to absorb such costs.

Likewise, when sponsors place a ceiling on annual salary rates that are chargeable against an award, the department is required to absorb any unreimbursed amounts and record the expense as cost sharing.

II. Fringe Benefits

Fringe benefits are calculated separately from salary estimates using specifically defined Fringe Benefit Rates. Depending on the position being proposed, fringe benefits may include:

  • Social Security
  • Workers' Compensation
  • Severance
  • Retirement
  • Disability
  • Unemployment

The second area, health insurance, is a calculation based on health insurance rates factored according to employee classification.


  • Compensation received by any person through the University’s payroll is considered salary. Therefore, employees of the University are ineligible to serve as paid consultants or independent contractors on University research projects.
  • Escalation rates may be limited by a sponsor and are usually presented in the proposal guidelines. The appropriate Office of Sponsored Programs (OSP) Sponsored Projects Specialist (SPS) can also provide generally accepted sponsor rates.
  • Fringe benefits and health insurance rates differ for those clinical faculty members licensed to practice medicine in North Carolina as well as those providing clinical effort equal to or greater than 50%. These employees are eligible for the UNC Faculty Physicians (FP) Supplemental Fringe Benefits in addition to the baseline fringe benefit and health insurance rates.
  • Salary for part-time employees cannot be calculated as if they were full-time.
  • Calculations for postdoctoral scholars must be based on the compensation guidelines presented by the Office of Postdoctoral Affairs.
  • Graduate research and teaching assistants are limited as to the maximum number of work hours they are allowed per week. Calculating a full-time graduate research/teaching assistant should be based and shown as 100% level of effort, a 12-month commitment or 1,280 hours per year.

Related Requirements

Unit Policies, Standards, & Procedures

Contact Information

For questions regarding this operating standard and its related procedure, please contact

For questions regarding Pre-Award management or Post-Award administration, please contact the assigned SPS.

For invoicing, reporting and other financial matters, please contact the assigned Sponsored Projects Accountant.
OSP Staff assignments may be found in RAMSeS or on the OSP website.


History Table
Date Description
07/01/2022 Revised to reflect new office name.
05/15/2018 Revised to coincide with the release of the new OSP Website.

The operating standards in the Office of Sponsored Programs Operating Standards & Procedures Manual supersede any OSP operating standards, procedures and appendices previously included in the University Business Manual, a publication of UNC-Chapel Hill’s Division of Finance.

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Article ID: 132287
Thu 4/8/21 9:28 PM
Fri 1/19/24 11:02 AM
Responsible Unit
School, Department, or other organizational unit issuing this document.
Research-Office of Sponsored Programs
Issuing Officer
Name of the document Issuing Officer. This is the individual whose organizational authority covers the policy scope and who is primarily responsible for the policy.
Issuing Officer Title
Title of the person who is primarily responsible for issuing this policy.
Vice Chancellor
Next Review
Date on which the next document review is due.
01/19/2025 12:00 AM
Last Review
Date on which the most recent document review was completed.
01/19/2024 12:00 AM
Last Revised
Date on which the most recent changes to this document were approved.
07/01/2022 12:00 AM
Effective Date
If the date on which this document became/becomes enforceable differs from the Origination or Last Revision, this attribute reflects the date on which it is/was enforcable.
07/01/2022 12:00 AM
Date on which the original version of this document was first made official.
07/01/2008 12:00 AM