Frequently Asked Questions
If the approved budget for a sponsored award includes a factor for annual salary increases can the employees paid under that award receive an increase for that amount?
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.
An employee who is only partially paid from a sponsored award is eligible for an increase in accordance with institutional and departmental policies. The department doesn’t have the funds for the non-sponsored portion of the employee’s increase, but there is budget available in the award to pay the entire amount.
Can the employee be appointed full-time to the sponsored account in order to fully fund the increase?
An employee’s payroll funding should not be based solely on budgets or available funds. Allocation of pay must reflect the effort the employee is devoting to all activities, including research, instruction, administration or other activities. All employees working on sponsored awards must be able to certify on the applicable university Effort Report that their allocation of pay is representative of the total effort expended for each activity for the time period being certified. If the employee has significant responsibilities besides those needed to carry out the project objectives, their sources of payroll funding must reflect that.
Attention should also be paid to any cost sharing commitments related to specific employees prior to changing payroll funding. The commitment of cost-shared effort is a binding, auditable obligation owed to the sponsor.
Can the employee be paid a higher rate on the sponsored award to cover the increase?
Rates of pay should not vary due to the type of funding available or other non-performance related reasons. The compensation rate for an employee must be based on their IBS and consistently applied to both Federal and non-Federal activities and must be reasonable to the extent that it is consistent with that paid for similar work in other activities of the university.
Can increases be given to employees just for the period of the award?
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.
Can I pay a one-time bonus to an employee funded on a sponsored award?
No, salary charged to sponsored awards must be commensurate with the employee’s IBS and the actual effort expended on the project.
Where can the federal guidelines be found? What sections are most helpful for decisions regarding compensation?
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.
What about situations with sponsored salary adjustments that aren’t covered in the FAQ section?
Please direct additional questions to Sponsored Programs Accounting at 532-6207 or PreAward Services at 532-6804.