Proposal budgets should reflect a reasonable estimate of the actual expenses needed to perform the project. This includes anticipated increases in costs over time, such as inflation or cost-of-living adjustments for salaries and stipends.
Always follow sponsor-specific guidance regarding inflation, escalation, or cost-of-living adjustments when preparing your budget.
Using Inflation in Kuali Research
Kuali Research automatically applies a 3% inflation rate to many budget categories, including salaries and stipends. Categories excluded from automatic inflation include:
- Equipment
- Subawards
This feature is helpful for:
- Detailed budgets with multiple years
- Converting detailed budgets to modular budgets
Sponsor-Specific Rules
- If the sponsor does not allow inflation or specifies a different rate, the award budget will typically be adjusted accordingly.
- In the absence of specific sponsor instructions, requesting reasonable inflation in your budget is permissible and not penalized.
Salary Caps and Inflation
- If a salary is subject to a federal salary cap, apply inflation to the budget as usual.
- Inflation is applied to the capped salary amounts.
- Budgets should still reflect a reasonable estimate of actual costs, including anticipated increases to the salary cap.
Adjusting Inflation in Kuali Research
For guidance on adjusting inflation rates or manually applying escalation in a detailed Kuali Research budget:
Budget Justification
- Include justification when applying inflation or cost escalation above the standard 3%.
- Explain why the increased costs are necessary for project execution and compliance with sponsor rules.