Cost of Living Adjustment

A cost of living adjustment (COLA) or allowance must be budgeted in order to cover cost increases ranging from union mandated raises for salaries and generic inflationary forces for other direct costs.

Salaries

• Budget 3% to 5% COLAs for future years on multiple year projects.
• Some sponsors set limits on COLAs. For example, NIH limits them to 2%.
• If the budgeted rate of pay exceeds the employee's current rate of pay by more than 5%, or is otherwise out of line with bargaining unit agreements, please provide an explanation. Are there any pending personnel actions or anticipated promotions? Since OPAS is required to assess reasonableness of cost, provide detail either in a note to OPAS or in the budget justification itself.
• The PI should be prepared with supporting documentation when sponsor award negotiation occurs in case any questions arise.

For the latest bargaining unit contracts and information on COLA's and merit raises, visit Human Resources.

Non-Salary Inflation Factor

• Anywhere from 3 to 5% is also recommended.
• Some sponsors place limits on the rate of inflation built into the proposal. Check sponsor guidelines for any restrictions.
• Cost of living increases should not be applied to fringe or indirect cost (F&A) rates: use current (predetermined) rates or provisional rates as applicable. See the Fact Sheet.

Tuition Charge

• Tuition charges should be inflated by 2 to 5%. Apply the same COLA rate to tuition charges as for salary and non-salary items in the budget. So, for NIH budgets, use 2%. For most other sponsors, use a COLA of between 3 and 5%.
• Keep in mind that actual tuition rates will apply to the award, and tuition rates usually increase every year, so it is best practice to apply a COLA.  
• Please reach out to the R&E Help Desk with questions about sponsor policies that deviate from these instructions.