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Business and Financial Policies and Procedures

Section 16.1.3 - Compensation for Personal Services Charged to Sponsored Projects

Urbana-Champaign Campus Supplement

Compensation for personal services covers all amounts paid or accrued by the University for the services of employees which are rendered under sponsored projects. Personal services cost is allowable to the extent that the total compensation to the individual employee conforms to the established policies of the University, is consistently applied, and conforms to the sponsor's cost principles. The direct charges for work performed are supported by after-the-fact confirmations. It is recognized that teaching, research, and public service are intricately intermingled and specific activities cannot be measured with a high degree of precision. Reliance, therefore, is placed on reasonably accurate approximation.

Direct Charges to Sponsored Projects

Academics – Personal services costs of academics (except those with hourly appointments) are distributed to sponsored projects on the basis of payroll appointments when the percentage of effort devoted to the project is reasonably predictable and stable over an academic term (for example, a semester or summer). Appointments are made before the services are performed. Short term fluctuations between workload categories need not be considered as long as the distribution of salaries is reasonable over an academic term.

When there is a significant change in an employee's workload, the appointment is updated. A significant change occurs when:

  • Work begins or ends on a sponsored project;
  • A teaching load is materially modified;
  • Additional unanticipated assignments are received or taken away;
  • An individual begins or ends a sabbatical leave or prolonged sick leave;
  • An individual's percent of appointment changes; and
  • There are other changes of comparable significance.

Appointments are updated in the Banner HR module by means of an Electronic Personnel Action Form (NOAEPAF). More commonly known as EPAF, this Banner form is used to update information on the Employee Jobs Form (NBAJOBS) to change the future distribution of labor charges. Overall steps for NOAEPAF Labor Distributions can be obtained at the DART Web site.

If the change in appointment requires a retroactive adjustment, it is corrected by initiating a Labor Redistribution using Banner form PZAREDS in the Banner HR module and documented in accordance with Section 16: Grants and Research Contracts – Cost Transfers.

Professional staff – Personal services costs of professional staff (those paid bi-weekly and exempt from the Fair Labor Standards Act) are distributed to sponsored projects on the basis of payroll appointments. When the percentage of effort devoted to a project is reasonably predictable and stable over an academic term, short term fluctuations need not be reflected.

Should there be longer-term significant changes in workload, a changed appointment should be updated in the Banner HR module by means of an Electronic Personnel Action Form (NOAEPAF). This Banner form is used to update information on the Employee Jobs Form (NBAJOBS) to change the future distribution of labor charges. Overall steps for NOAEPAF Labor Distributions can be obtained at DART Web site.

If the change in appointment requires a retroactive adjustment, it is corrected by initiating a Labor Redistribution using Banner form PZAREDS in the Banner HR module in conformance with Section 16: Grants and Research Contracts – Cost Transfers.

Other staff – Personal services costs of staff subject to the Fair Labor Standards Act (except those with hourly appointments) are distributed to sponsored projects on the basis of the bi-weekly time reports. Appointments are made on the basis of the C-FOP(s) that will benefit directly from the employee's work, but short-term variations are to be reflected in the bi-weekly time report. Whenever possible, the job record should reflect expected workload by C-FOP, so that reasonable salary encumbrances for each C-FOP can appear on monthly accounting statements.

Hourly employees – Wages for hourly employees are distributed on the basis of the bi-weekly time report.

Vacation and sick leave - Vacation and sick leave are charged to the C-FOP(s) to which an employee's salary is charged at the time the vacation or sick leave is used. Payouts for termination vacation and sick leave are not allowable on sponsored projects (see Section 16: Grants and Research Contracts – Cost Transfers for additional information.)

Overtime – Overtime charges are unallowable for exempt employees. Overtime for nonexempt employees may be charged only under the following circumstances:

  • In situations such as during the conduct of tests, laboratory procedures, etc., which are continuous in nature and cannot be reasonably interrupted but must be completed; and
  • In situations which result in lower overall costs to the sponsor.

Overtime must be pro-rated to each C-FOP from which an employee is paid unless the overtime is clearly and demonstrably necessitated by demands placed on that employee on behalf of a specific project.

Consulting by University employees – In accordance with 2 CFR Parts 215 and 220 (OMB Circular A-21), charges for work performed on sponsored agreements are allowable at the base salary rate. In no event will charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period.

However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to the regular departmental load, any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically approved by the University in conformance with Section 17.1, Consultants and Other Contractors for Professional and Artistic Services, and provided for in the agreement or approved by the sponsoring agency, either in writing or under the terms of the sponsored agreement.

Cost Sharing

Cost sharing is that portion of sponsored project costs not borne by the sponsor. For federal activities, the cost sharing must be provided from non-federal funding unless approval is obtained from the sponsor. A given cost may not be used as cost sharing for more than one federally sponsored agreement, unless the sponsor(s) explicitly approve(s).When an agreement includes a cost sharing requirement, this requirement is normally satisfied by a percentage of effort of the Principal Investigator or other senior personnel. The costs consist of the percentage of salary, fringe benefits, and associated indirect costs. In addition to the effort expended in the direct conduct of the project, the following activities may be considered as cost sharing:

  • Initiation of appointments, requisitions and vouchers;
  • Review of expenditures and effort;
  • Preparation of continuation and renewal proposals;
  • Evaluation of equipment specifications;
  • Preparation of patent disclosures for inventions arising from the project; and
  • Preparation of technical and non-technical reports.

When a faculty member is on sabbatical, the only allowable cost sharing is for a nominal amount of time spent in the supervision of graduate assistants who are working on sponsored projects. This amount should be recorded under thesis supervision.

Expenses on Stores and Services C-FOP(s) cannot be considered as cost sharing.

The Grants and Contracts Office, Post-Award Administration (GCO) records the cost sharing commitment in the University's web-based Cost Share application for new sponsored projects or amendments to existing sponsored projects with identified cost-sharing commitments.

Confirmation of Direct Charges and Cost Sharing Contributed to Sponsored Projects

All personal services charges to sponsored projects must have after-the-fact confirmation that they were properly incurred. Salary that is contributed as cost sharing must also be confirmed after the fact.

Payroll Labor Distribution Report – At the end of each month, payroll labor distribution reports are made available to units. Units are to provide each Principal Investigator with a copy of his/her sponsored project payroll labor distribution report, or a unit form containing the same information. The information on the payroll labor distribution report is used to determine that the salaries charged to each sponsored project are reasonable in relation to the work performed. In signing the semi-annual confirmation of expenses, Principal Investigators confirm that they have reviewed monthly payroll labor distribution reports and initiated any necessary corrections.

Cost sharing commitment file – The GCO compares the cost sharing commitment of Principal Investigators with their appointments and their effort reports. If a Principal Investigator's effort report does not show as much cost sharing as has been committed, the GCO, with the assistance of the unit, either corrects the effort report or negotiates a reduction of the cost sharing effort with the sponsor(s).

Semi-annual statement – For the six-month periods ending December and June of each year, each Principal Investigator signs an after-the-fact confirmation to include all direct charges and cost sharing effort for each sponsored agreement. The external auditors review the Federal Expenditure Confirmation reports to determine if the University's internal controls are in compliance with federal regulations. Failure to have these confirmations on file at the Grants and Contracts Office, Post-Award Administration can result in having all of that grant's expenditures for the reporting period disallowed. These confirmations provide the basis of University reports to the federal government about the allowability, allocability, and reasonableness of charges placed against federal funds.

For federally sponsored projects, the expenditure confirmation must be signed by the Principal Investigator. In rare circumstances where the Principal Investigator is unavailable, the signature of a responsible official with suitable means of verification is an acceptable substitution for the signature of the Principal Investigator.

Transfers of allowable and proper charges which represent corrections must be initiated promptly, and must be supported by documentation justifying the transfer. Once confirmed, these expenditures cannot normally be transferred or otherwise changed. Signing these confirmations without knowledge of their correctness can be interpreted as a fraudulent action on the part of the Principal Investigator and the University.

By signing the semi-annual confirmation, the Principal Investigator is confirming that to the best of his/her knowledge certain conditions have been met, including:

    A. That the salary and wage payments in the above expenditures [shown above on the confirmation form] are for individuals whose names, percentages of effort and payments have been recorded in Banner for the above six-month period [covered by the confirmation],

    That I have reviewed each of the Banner transactions for the six-month period,

    That each transaction with any subsequent correction, is complete and accurate,

    That the salaries and wages charged to each of the above sponsored projects reasonably reflect the work effort or activity for each individual who was compensated during the period, That for federal projects, administrative salaries are allowable under the campus "Treatment of Cost" policy (see Section 16: Grants and Research Contracts – Cost Transfers), and

    That I have not, without prior written approval of the sponsor, been absent for more than three months or reduced the effort committed to (any of) the above project(s), either as a direct charge or as cost sharing, by more than 25% of the effort committed in the approved budget(s);

    B. That cost sharing when shown on the attached form [a form attached to the confirmation], corrected as necessary, reasonably reflects the work performed;

    C. That any and all non-salary direct costs charged to each sponsored project were directly related to each project and were incurred in accordance with the provisions of the award document and the campus "Treatment of Cost" policy; and

    D. That any necessary cost transfers are indicated above.

    Example: A Principal Investigator who has requested and received two summer months on a sponsored project is assumed to be spending 18% of his/her annual effort on the project. To charge only one summer month to the project (a reduction in effort of 50%), approval would have to be obtained from the sponsor. The Principal Investigator could charge 1.5 summer months, a reduction in effort of 25%, without sponsor approval.

The documentation required to support sponsored project cost transfers is described in Section 16: Grants and Research Contracts – Cost Transfers.)

Federal agricultural appropriations - The salaries and wages charged to Cooperative Extension appropriations provided by the U.S. Department of Agriculture are to be documented monthly as provided in the Cooperative Extension Services Contact Reporting System, dated July 1995, and the Current Research Information System for Experiment Station personnel.

Indirect Charges to Sponsored Activities

Under federal cost principles, the salaries and wages of certain administrative employees cannot normally be charged to federal projects. These include accountants, business managers, clerks, and shop/store keepers. Secretaries can be charged only under a limited number of circumstances (see Section 16: Grants and Research Contracts – Cost Transfers).

 

Please send questions regarding this policy manual to OBFSPolicies@uillinois.edu.

Last Updated: March 23, 2008 | Approved: Senior Associate Vice President for Business and Finance | Effective: August 2007

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