Frequently Asked Questions

Increases funded by external sponsors can’t be based solely on the budget available in the award. Increases must be given in accordance with institutional and departmental policies that are consistently applied regardless of the funding source. Compensation charged to a sponsored award must reflect the employee’s actual pay rate (their current institutional base salary, also known as “IBS” – defined below), not budgeted pay.

Increases cannot be based solely on budget available or the budget period of an award or on other non-performance related reasons. An employee cannot receive a raise just because there is funding in the award to cover it. Increases must be given in accordance with institutional and departmental policies that are consistently applied regardless of the source of funding. An employee’s compensation must be reasonable to the extent that it is consistent with that paid for similar work at the university and the salary paid for the effort expended on externally funded projects cannot be greater than the salary established by the employee’s IBS.

If the employee’s IBS is increased for promotion or performance reasons, then the award can be charged the proportional share of the IBS. This means that the employee would have a permanent raise, independent of the source(s) of funding.

No, salary charged to sponsored awards must be commensurate with the employee’s IBS and the actual effort expended on the project.

1. For any situation involving grant funding, it is always best to review the specific agreement for any unique terms and conditions. Some sponsors may require prior approval of changes in budget categories, though most allow for some level of flexibility. Normally, when developing budgets for a proposal submission, PreAward Services will build in cost escalation – typically 3%. Following these standard budgeting practices will normally prevent an increase in salaries at the university from being a re-budgeting problem.
2. Limitations involving pay rates or salary levels are unusual. It is a standard expectation that pay rate increases on externally funded sponsored programs follow university policy, including increases due to promotion, merit and across-the-board increases. When pay is established under policies that are applied consistently, regardless of the source of funding, it is typically allowable. The proportion of the salary allocated to the sponsored account, as always, must align with the effort devoted to the project.
3. A few federal programs do have limitations on the total amount of salary or stipends that can be charged to the federal award. Examples include:
   • NIH salary cap: Established and publicized annually, it sets limits on the amount of salary that can be charged to the award, but allows non-award funds to be used to pay salary beyond the cap. More details can be found on the National Institutes of Health website.
   • NIH NRSA stipend levels: These are rates set for NRSA Fellowship and Training awards. If you have post-docs or fellows supported on one of these awards, you will want to check the award to ensure compliance.
   • NSF two months rule: NSF longstanding faculty salary compensation policy states that compensation for senior personnel is limited to no more than two months of salary in any one year. This includes salary compensation received from all NSF-funded grants. Any anticipated excess must be disclosed in the proposal budget, justified in the budget justification, and must be specifically approved by NSF in the award notice budget. Once NSF makes the award, NSF grants awardees the authorization to transfer funds from one budget category to another for allowable expenditures, including funds for faculty salary. At K-State, this authorization is handled by the PreAward Services office under expanded authorities processes.

Regardless of budget availability, it is not appropriate to deny an employee an increase based on lack of funding within a grant budget. University guidelines for handling salary increases take precedence. Other funding resources would need to be utilized in cases where limitations exist with grant funding.

The federal guidance is codified in 2 CFR 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards. The full text can be found in the Electronic Code of Federal Regulations: eCFR — Code of Federal Regulations.

Guidance specific to compensation can be found in eCFR 200.430 Compensation - personal services. Applicable language within that section includes the following:

• The definition of Institutional Base Salary (IBS): The annual compensation paid by an institution of higher education (IHE) for an individual's appointment, whether that individual's time is spent on research, instruction, administration, or other activities.
• Salary basis for work performed on Federal awards: Charges of a faculty member's salary to a Federal award must not exceed the proportionate share of the IBS for the period during which the faculty member worked on the award. A greater than proportionate share must be approved in advance by the Federal awarding agency.
• Reasonableness of salary: Compensation for employees engaged in work on Federal awards will be considered reasonable to the extent that it is consistent with that paid for similar work in other activities of the non-federal entity.
• Consistency of total compensation: The total compensation for individual employees must conform to the established written policy of the non-Federal entity consistently applied to both Federal and non-Federal activities.

Please direct additional questions to Sponsored Programs Accounting at 532-6207 or PreAward Services at 532-6804.

Generally, for purposes of federal travel regulations, it is travel anywhere other than the fifty states, Puerto Rico, Guam, the Northern Mariana Islands and the U.S. Territories and possessions.

Some federal agencies have slight variations on this for budgeting and prior approval situations; some don’t consider Canada or Mexico foreign travel for those purposes, for example. A contract under Federal Acquisition Regulations (FAR), may be more restrictive and consider all travel outside the continental U.S. as international travel. It is always best to check the specific agency and agreement to be sure.

Authority for the Fly America Act comes from 49 U.S.C. 40118. Simply put, the Fly America Act requires use of U.S. air carriers for all flights when traveling internationally, regardless of cost or convenience. If the airline is not a U.S. air carrier, the flight must be under a code-sharing arrangement with a U.S. air carrier – or the circumstances must fall under one of a few allowable exceptions.

While there are many indicators of federal funding to be found in proposals and agreements and other documentation in Cayuse, one of the easiest ways to tell is by looking at the Fund Source assigned to the “G” project set up in FIS by Sponsored Programs Accounting (SPA). Any of the following fund sources indicate federal funding:

• 3145: Fed Funds – Main Campus
• 5140: Fed Funds – Vet Med
• 1340: Fed Funds – AES
• 1360 or 3350: Fed Funds – Advanced Payments

When reviewing and approving travel reimbursement requests, if the reviewer in DFS sees that a non-U.S. airline was used, there must also be a completed Fly America Act-Exception Form attached to the document before the reimbursement can be approved centrally for payment from the federally-funded account. This form can be found in eforms.

More details can be found at the U.S. General Services Administration (GSA) website. Individual federal agencies have it incorporated into their policies in different ways; for example, the National Science Foundation (NSF) includes it in their PAPPG. Information adapted from these sources is summarized below.

Use of U.S.-Flag Air Carriers

In accordance with the Fly America Act (49 USC 40118), any air transportation to, from, between, or within a country other than the U.S. of persons or property, must be performed by or under a code-sharing arrangement with a U.S.-flag air carrier if service provided by such a carrier is available. Tickets (or documentation for electronic tickets) must identify the U.S.-flag air carrier’s designator code and flight number.

For the purposes of this requirement, U.S.-flag air carrier service is considered available even though:

1. comparable or a different kind of service can be provided at less cost by a foreign-flag air carrier;
2. foreign-flag air carrier service is preferred by, or is more convenient for traveler; or
3. service by a foreign-flag air carrier can be paid for in excess foreign currency.

The following rules apply unless their application would result in the first or last leg of travel from or to the U.S. being performed by a foreign-flag air carrier:

1. A U.S.-flag air carrier shall be used to destination or, in the absence of direct or through service, to the farthest interchange point on a usually traveled route.
2. If a U.S.-flag air carrier does not serve an origin or interchange point, a foreign-flag air carrier shall be used only to the nearest interchange point on a usually traveled route to connect with a U.S. flag air carrier.

Exceptions that allow use of Foreign-Flag Air Carriers

There are certain circumstances under which use of a foreign-flag air carrier is permissible. These circumstances are outlined below.

1. Open Skies Agreement

Please note, this is not an allowable exception for Department of Defense (DOD) funding.

A foreign-flag air carrier may be used if the transportation is provided under an Open Skies agreement between the U.S. and a foreign government, which the Department of Transportation has determined meets the requirements of the Fly America Act. Information on "Open Skies" agreements in which the U.S. has entered is available on the GSA website.

2. Involuntary Rerouting

Travel on a foreign-flag carrier is permitted if a U.S.-flag air carrier involuntarily reroutes the traveler via a foreign-flag air carrier, notwithstanding the availability of alternative U.S.-flag air carrier service.

3. Travel To and From the U.S. on non-European Community Airlines
   Use of a non-European Community foreign-flag air carrier is permissible if the airport abroad is:
   • travel by a foreign-flag air carrier would eliminate two or more aircraft changes en route;
   • travel by a U.S.-flag air carrier would require a connecting time of four hours or more at an overseas interchange point; or (c) the travel is not part of the trip to or from the U.S. and use of a U.S.-flag air carrier would extend the time in a travel status by at least six hours more than travel by a foreign-flag air carrier.
4. Travel Between Points Outside the U.S. on non-European Community Airlines

Use of a non-European Community foreign-flag air carrier is permissible if:

1. • travel by a foreign-flag air carrier would eliminate two or more aircraft changes en route;
   • travel by a U.S.-flag air carrier would require a connecting time of four hours or more at an overseas interchange point; or (c) the travel is not part of the trip to or from the U.S. and use of a U.S.-flag air carrier would extend the time in a travel status by at least six hours more than travel by a foreign-flag air carrier.

5. Short Distance Travel

For all short distance travel, regardless of origin and destination, use of a foreign-flag air carrier is permissible if the elapsed travel time on a scheduled flight from origin to destination airport by a foreign flag air carrier is three hours or less and service by a U.S.-flag air carrier would double the travel time.