Budget Structure for CDC Cooperative Agreements
CDC cooperative agreement budgets follow the standard federal budget format defined by the SF-424A, organized into object class categories. Understanding this structure is essential for both initial application budgets and annual continuation budget justifications. Every cost must be reasonable, necessary, and allocable to the CDC-funded program — the three fundamental cost principles under 2 CFR 200 Subpart E (implemented by 45 CFR Part 75, Subpart E).
Direct Cost Categories
Direct costs are expenses that can be identified specifically with the CDC cooperative agreement. The budget narrative must justify each cost and link it to specific activities in the work plan.
Personnel
Personnel costs typically represent the largest budget category for CDC cooperative agreements, often comprising 40% to 60% of the total direct costs. The budget justification must specify:
- Name and title of each position (or "TBD" with a position description for vacant positions)
- Annual salary or hourly rate for each position, consistent with your organization's established compensation policies
- Percentage of time (FTE) devoted to the CDC cooperative agreement, supported by time-and-effort documentation
- Role description explaining how each position contributes to specific work plan activities
For positions funded across multiple grants, ensure the combined FTE across all funding sources does not exceed 100%. This is a common audit finding — an epidemiologist charged at 0.5 FTE to the ELC cooperative agreement and 0.6 FTE to the HIV prevention cooperative agreement creates a compliance problem.
Fringe Benefits
Fringe benefits are calculated as a percentage of personnel costs and include employer-paid benefits such as health insurance, retirement contributions, FICA, workers' compensation, unemployment insurance, and other benefits your organization provides. Use your organization's actual fringe rate, which should be documented and consistent with your established policies. Typical fringe rates for health departments range from 25% to 40% of salary depending on the benefit package.
Travel
Travel costs must be justified with specific trips linked to work plan activities. The budget justification should specify the purpose of each trip, destination, number of travelers, and estimated cost breakdown (airfare, hotel, per diem, ground transportation). Key travel considerations:
- CDC grantee meetings: Most cooperative agreements require attendance at annual grantee meetings. Budget for 2–3 travelers for a 3–5 day meeting, typically in Atlanta.
- Per diem rates: Federal per diem rates (GSA rates for domestic, State Department rates for foreign) set the maximum allowable daily reimbursement for lodging and meals. Your organization may use lower rates but cannot exceed federal rates.
- Foreign travel: Requires prior approval from CDC and must comply with the Fly America Act (use of U.S. flag carriers). Include foreign travel in the budget justification even if the specific trip details are not yet known.
Equipment
Equipment is defined as tangible personal property with a useful life of more than one year and a per-unit acquisition cost of $5,000 or more (or your organization's capitalization threshold if lower). Equipment purchases require prior approval from CDC regardless of whether they are included in the approved budget.
Include in the budget justification: item description, unit cost, quantity, and justification for why the equipment is necessary for the funded activities. Note that general-purpose equipment (computers, office furniture, vehicles) is typically treated as a supply unless the per-unit cost exceeds $5,000.
Supplies
Supplies are tangible personal property other than equipment — items with a useful life of less than one year or a per-unit cost under $5,000. Common supply categories in CDC cooperative agreements include laboratory supplies, testing materials, educational materials, office supplies, and IT supplies (computers under $5,000). Group similar items and provide total estimated costs rather than itemizing every supply purchase.
Contractual
The contractual category includes both sub-awards to sub-recipients and contracts with vendors. The budget justification should clearly distinguish between the two and provide:
- Sub-awards: Name of sub-recipient (if known), scope of work, estimated amount, and how the sub-award supports program objectives. Sub-recipients must comply with federal requirements as passed through.
- Contracts: Description of goods or services to be procured, estimated cost, procurement method (competitive or sole-source with justification), and connection to work plan activities.
For sub-awards exceeding $25,000, many CDC programs require sub-recipient budgets broken out by the same object class categories as the primary budget. Even if not explicitly required, providing this detail strengthens your application.
Other Direct Costs
This category captures allowable direct costs that do not fit into the categories above. Common items include:
- Participant support costs: Stipends, incentives, or support for program participants (e.g., transportation vouchers for community health screening participants). These costs are typically excluded from the indirect cost base.
- Printing and publications: Costs of producing educational materials, reports, and program communications
- Training and conference registration: Fees for staff professional development directly related to the funded program
- Rent and utilities: If directly charged (not included in indirect cost rate) and allocable to the funded program
Indirect Costs
Indirect costs (also called facilities and administrative costs or F&A costs) are costs incurred for common or joint objectives that cannot be readily identified with a specific project. For CDC cooperative agreements, recipients have two options for recovering indirect costs:
Negotiated Indirect Cost Rate
Organizations with a negotiated indirect cost rate agreement (NICRA) with their cognizant federal agency use their negotiated rate. For most health departments, the cognizant agency is HHS. The negotiated rate is applied to an agreed-upon base (modified total direct costs is most common). Using a negotiated rate typically results in higher indirect cost recovery than the de minimis rate.
If your NICRA is pending renewal, you may use the most recently negotiated rate until the new rate is established. Once a new rate is negotiated, adjustments may be required for the period covered by the new rate.
10% De Minimis Rate
Organizations that have never had a negotiated indirect cost rate may elect to use the 10% de minimis rate under 2 CFR 200.414(f). This rate is applied to modified total direct costs (MTDC), which excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships, participant support costs, and the portion of each sub-award exceeding $25,000. The 10% de minimis rate is available indefinitely to eligible organizations and does not require negotiation with a federal agency.
Rebudgeting Rules
CDC cooperative agreement recipients have some flexibility to reallocate funds between budget categories without prior approval, but this flexibility has clear limits:
| Scenario | Prior Approval Required? | Documentation Needed |
|---|---|---|
| Transfer ≤25% | No (for most CDC awards) | Internal documentation of rationale; PO notification recommended |
| Transfer >25% | Yes — written approval from GMS | Revised SF-424A, budget justification, explanation of need |
| New budget category | Yes — written approval from GMS | Revised budget with justification for new category |
| Equipment purchase ≥$5,000 | Yes — regardless of budget category | Equipment justification, cost comparison, necessity statement |
The 25% threshold is calculated as a cumulative percentage of the total approved budget for the budget period. If your total approved budget is $1,000,000, any cumulative transfers between categories that exceed $250,000 trigger the prior approval requirement. Track rebudgeting throughout the year to avoid inadvertently exceeding the threshold. See the Compliance guide for the full list of prior approval requirements.
Unallowable Costs
Certain costs are explicitly unallowable under 2 CFR 200 Subpart E / 45 CFR Part 75 Subpart E, regardless of how they are categorized in the budget. Charging unallowable costs to a CDC cooperative agreement can result in questioned costs, disallowed costs, and potential repayment obligations. The most commonly encountered unallowable costs include:
- Alcoholic beverages: Never allowable under any circumstances
- Entertainment: Costs of amusement, social activities, and any associated costs (tickets, meals at entertainment venues, etc.)
- Lobbying: Costs of influencing federal, state, or local legislation, or costs of political activities
- General-purpose equipment: Equipment not directly required for the funded program (e.g., furnishing a new office that is not dedicated to the CDC program)
- Fines and penalties: Costs resulting from violations of or failure to comply with federal, state, local, or tribal laws and regulations
- Bad debts: Losses arising from uncollectable accounts and other claims
- Fundraising: Costs of organized fundraising activities including solicitation of contributions
- Contingency provisions: Budget line items set aside for unforeseeable events without specific plans for use
Annual Budget Justification for Continuations
Each year of a CDC cooperative agreement requires a new budget and budget narrative as part of the continuation application. The continuation budget should reflect:
- Personnel changes: Updated salaries reflecting annual increases, new hires, departures, or changes in FTE allocation
- Activity evolution: Budget shifts that reflect the natural progression of the program (e.g., less startup equipment in Year 3, more evaluation in Year 4)
- Lessons learned: Adjustments based on actual spending patterns from previous years — if travel costs were consistently under-budgeted and supplies over-budgeted, the continuation budget should reflect reality
- Funding level changes: If CDC communicates a different funding level for the upcoming year, the budget must be adjusted accordingly while maintaining core program activities
Sub-Award Budgeting
If your CDC cooperative agreement includes sub-awards to local health departments, universities, or community-based organizations, the budgeting process has additional considerations:
- Modified total direct costs base: Only the first $25,000 of each sub-award is included in your MTDC base for indirect cost calculation. For large sub-awards, this exclusion significantly affects your indirect cost recovery.
- Sub-recipient indirect costs: Sub-recipients are entitled to their own indirect cost recovery, either at their negotiated rate or the 10% de minimis rate. Budget for sub-recipient indirect costs in addition to their direct costs.
- Monitoring costs: Budget for the cost of monitoring sub-recipients, including staff time for desk reviews, site visits, and Single Audit follow-up. Sub-recipient monitoring is a federal requirement, and insufficient monitoring is one of the most common audit findings.
Typical Budget Distribution
While every program is different, typical CDC cooperative agreement budgets for state health departments distribute across categories roughly as follows:
| Category | Typical Range | Notes |
|---|---|---|
| Personnel | 40–60% | Largest category for most programs |
| Fringe Benefits | 10–20% | Varies by employer benefit package |
| Travel | 2–5% | Including required CDC grantee meetings |
| Equipment | 0–5% | Often higher in Year 1 for startup |
| Supplies | 3–8% | Lab programs may be higher |
| Contractual | 10–25% | Includes sub-awards and contracts |
| Other | 2–5% | Participant support, printing, etc. |
| Indirect Costs | 5–15% | Based on negotiated rate or 10% de minimis |
Program Income
Program income is income directly generated by the CDC-funded program during the award period. This can include fees for services, sales of products, or interest earned on federal advances. Under 45 CFR Part 75, program income must be:
- Reported: Program income must be reported on the SF-425 and tracked in your financial management system
- Used for program purposes: The default treatment under HHS rules is the "addition" method — program income is added to the federal award and used for allowable program activities
- Subject to the same requirements: Program income is subject to the same cost principles and compliance requirements as federal award funds
Failure to report program income is a compliance violation that can result in questioned costs. Ensure your accounting system captures all income generated by CDC-funded activities.