Sponsored Programs Effort Reporting Policy

Responsible Unit: OSA | Executive lead: CRO
Created: 10/20/21 | Reviewed/Revised: N/A | Effective: 06/2024
Compliance: 2 CFR § 200.430, NWCCU 2.B.2, COCA 8.2 
Approving Body: PAC | Classification: Institution-wide

Policy:  
Government agencies, private foundations and industry, and other sponsors provide funding to enable Pacific Northwest University of Health Sciences (PNWU) to conduct research and public service projects. A primary use of such funds is to support the salaries of individuals engaged in those activities.  

PNWU follows the Federal Office of Management and Budget Uniform Guidance (OMB Uniform Guidance) on effort reporting including 2 CFR § 200.430, which provides the framework for documentation that is required to support charges of compensation for personal services to sponsored projects. This Policy provides the principal means for assuring that the salaries and wages charged to or committed to sponsored projects are reasonable and consistent with the requirements of 2 CFR § 200.430 . 

Federal regulations require charges to Federal awards for salaries and wages to be reasonable in relation to the work performed. Such charges must be documented in records that meet the standards of documentation set forth in the regulations and must reflect a system of internal controls that ensure the charges are accurate, allowable, and properly allocated. Accordingly, it is PNWU policy that: 

  • Compensation must be reasonable and conform to the PNWU’s written policies, consistently applied. Compensation charges to sponsored projects may be made initially based upon the planned or estimated workload, provided that such estimates reasonably approximate the activity expected to be performed. The actual effort of each individual working on sponsored projects must be monitored, with charges modified as necessary based on variances between the estimated and actual effort. 
  • Significant changes in effort during the year, defined as material changes with a duration of greater than two months, should be reflected in the individual’s payroll distribution at the time the change occurs. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term. 
  • The required monthly and annual effort report is an after-the-fact review to assure that the final salary amounts charged to each sponsored project reasonably reflect the effort expended. The effort report must be signed by either the individual him/herself, or by a responsible official who has a reasonable basis, i.e., a suitable means of verification, for review of the activities of the individual(s).  
  • All necessary adjustments to compensation charged to sponsored projects must be made such that the final amount charged to the sponsored project reasonably reflects the effort expended and thus is accurate, allowable, and properly allocated. 

Principle Investigators (PIs) who commit effort on sponsored projects are required to review and sign their own effort reports. In addition, PIs are required to review and sign the effort reports of other individuals working on the PI’s projects. Special compensation issues, including summer salary, extra service pay, and other issues, are addressed in this Policy below. Additional information regarding PNWU’s Time and Effort certification process can be found in SOP 307.01 titled External Funding Pre-Award and Post-Award including Time and Effort Reporting. 


1) Institutional Base Salary 

Salary charges are proposed in funding applications and made based upon the individual’s institutional base salary (IBS) rate. IBS is the annual compensation paid by PNWU for an employee’s appointment, whether that individual’s time is spent on research, teaching, or other activities. IBS does not include bonuses, one-time payments, or incentive pay. Also excluded from IBS is salary paid directly by another organization, and income that an individual is permitted to earn outside of PNWU responsibilities, such as consulting compensation. 

Institutional Base Salary: 

  • may not be increased as a result of replacing PNWU salary funds with sponsored project funds; 
  • is established by PNWU in an annual letter regardless of the source of funds; 
  • includes regular salary and salary paid for an additional academic administrative appointment, such as chair or director; and 
  • excludes bonuses, incidental pay, and extra service pay. 

2) Effort 

Effort is the proportion of time spent on any activity, expressed as a percentage of the total professional activity for which an individual is employed by PNWU and receives IBS (“Total University Effort”). (Some sponsors, such as NSF and NIH, require that effort be expressed in person-months in grant proposals, but the concept is the same, e.g.., three person-months for an individual with a 12-month appointment represents 25% effort.) Total University Effort is defined in terms of actual effort. It is not defined on the basis of a standard number of hours in a week, month, or year. For example, if an investigator works 80 hours a week in fulfilling his or her base salary obligations, then 40 hours represents 50% effort. The Total University Effort can be neither more nor less than 100%. 

3) Charging Compensation to Sponsored Projects 

  • Must be reasonable for the services rendered and must follow an appointment made in accordance with PNWU policies. 
  • Must be based upon the IBS rate, which is computed based upon the number of months for which the individual is appointed. For example, an individual on a nine-month academic calendar who devotes one month of effort to a sponsored project during the Academic Year may charge one-ninth of his or her IBS to the sponsored project 
  • Must not exceed the proportionate share of IBS for the period during which the individual worked on the award. 
  • Must be documented and confirmed in accordance with the requirements below. 

Compensation charges to sponsored projects may be made initially based upon the planned or estimated workload, provided that such estimates reasonably approximate the activity expected to be performed. The actual effort of each individual working on sponsored projects must be monitored, with charges modified as necessary based on variances between the estimated and actual effort. 

Significant changes in effort during the year, defined as material changes with a duration of greater than two months, should be reflected in the individual’s payroll distribution at the time the change occurs. Short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term 

During the regular academic terms, PNWU faculty typically engage in non-sponsored PNWU activities, such as writing competitive funding proposals, teaching, service on committees, advising students and other non-sponsored activities. These activities must be funded by the relevant school or department and may not be charged to sponsored projects. 

4) Effort Reporting 

Effort reporting is a means of verifying after-the-fact that the salary charged to the project is reasonable in relation to the effort expended on the project. The process of completing the effort report also affords an opportunity to consider whether the effort expended in support of a project is consistent with the effort required by the sponsor or committed by the Principal Investigator. 

The annual effort report summarizes the proportion of work time devoted to sponsored projects, teaching, and other activities, expressed as a percentage of Total University Effort.  

It is important to understand the distinction between payroll distributions and effort distributions. Payroll distributions reflect the allocation of an individual’s salary, while effort distributions reflect the allocation of an individual’s effort to individual projects independent of salary. 

PNWU’s effort reporting process relies on payroll distributions to provide information regarding the projects to which an individual’s salary was provisionally charged during the previous fiscal year. As previously indicated, PNWU policy requires that such provisional charges must be monitored on a regular basis, with adjustments processed on a timely basis to reflect significant variations in effort. It is important, therefore, that material changes in effort are routinely communicated and recorded on PNWU’s financial records during the course of the fiscal year and are generally not first reflected at the time the effort report is prepared. 

Nevertheless, the provisional salary allocation information as reflected on the effort report may not in all cases be consistent with the percentage of effort expended on various activities. For example, a recent change in effort may not as yet have been communicated and/or reflected in the accounting system at the time that report is generated. It is the responsibility of individuals completing the annual effort report to report actual effort percentages, whether or not those percentages agree with the salary allocation percentages pre-printed on the report, and to ensure that any necessary corrections are recorded in the PNWU’s accounting system. When such corrections result in the need to reduce the charge to a sponsored project, they are mandatory, and therefore always permissible. Corrections which have the effect of increasing the charge to a sponsored project are subject to review by PNWU’s Finance Department (Finance). 

Under certain circumstances, the percentage of total effort devoted to a sponsored project may exceed the percentage of salary provisionally charged to the project. This may occur, for example, where there is a commitment of cost sharing, whether mandated by the sponsor or voluntarily committed by the PI.  See Sponsored Program Cost Sharing Policy. It may also occur where there are limitations on the rate of salary that may be charged to a project, as in the case of the National Institutes of Health (NIH) salary cap. See section 6(c) below for additional discussion of the NIH salary cap. 

Those who complete effort reports should be aware of these conditions and ensure that the certification reflects actual effort expended on commitments, whether or not the percentage of effort corresponds with the provisional allocation of salary. 

The completed effort report should reflect all activities, including any administrative or other responsibilities of the individual, conducted under the terms of an individual’s employment by PNWU and for which he/she receives IBS. It is important that, to the extent an individual has devoted time to non-sponsored activities, including teaching, committee work, the preparation of competitive grant and contract proposals and other such activities, the effort report reflects an appropriate distribution of non-sponsored salary to those non-sponsored activities. 

It is important to recognize that in allocating salaries to sponsored programs and other activities, precision is not expected. Federal regulations provide that “it is recognized that, in an academic setting, teaching, research, service and administration are often inextricably intermingled. A precise assessment of factors that contribute to costs is not always feasible, nor is it expected.” 

5) Important Requirements for the Effort Reviewer 
The monthly and annual effort report must be signed by either the individual him/herself, or by a responsible official who has a reasonable basis to review the activities of the individual(s). A “reasonable basis” means that the person certifying has a suitable means of verification of the effort being certified, such as direct supervisory responsibility, discussion with the employee whose effort is being certified, email correspondence, review of calendars, travel records and teaching schedules, review of progress reports, time cards and logbooks, and/or contemporaneous notes from meetings and/or discussions. 

6) Special Compensation Issues 

a) Extra Service Pay 

Extra Service Pay (ESP) normally represents compensation for any services above and beyond an employee’s PNWU appointment and associated IBS. ESP is not limited to those individual’s devoting effort to Federal awards and is provided without regard for the source of funds. ESP must be: 

  • Appropriately documented, including an explanation of how the ESP compensates activity above and beyond the activity contemplated in the individual’s appointment letter. 
  • Processed in PNWU’s payroll system; 
  • Approved by the Office of Scholarly Activities (OSA) and Finance if it is charged to a sponsored project; 
  • Included in PNWU’s effort reporting processes, if it is charged to a sponsored project. 

An individual’s total salary, including ESP, must fall within the salary structure and pay ranges established and documented by PNWU or applicable PNWU unit. 

In any funding application that requests ESP, the budget justification must state explicitly that the salary listed for the relevant individual represents Extra Service Pay above the individual’s IBS. In addition, prior approval for such ESP must be explicitly sought and obtained from the funding agency in accordance with agency requirements. 

ESP resulting from intra-University consulting is rare, as such consulting is assumed to be undertaken as a PNWU obligation requiring no compensation in addition to IBS. However, in unusual cases, ESP resulting from intra-University consulting may be charged to a sponsored project provided that: 

  • the work performed is across campuses or involves a separate or remote operation; 
  • the work performed by the individual is in addition to his or her regular departmental load and is temporary, and not recurring; 
  • the arrangement has been approved by: (a) the chair of the individual’s department; (b) OSA, in consultation with Finance as applicable; (c) the appropriate dean or Provost. 
  • all ESP requirements are met; and 
  • all other applicable regulatory requirements are met. 

c) National Institutes of Health (NIH) Salary Cap 

Every year beginning in 1990, Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant. This provision limits the rate of pay for compensation that is charged to NIH funded projects; during the academic year, the difference between the NIH cap and IBS must be funded by the relevant academic school or department. Consult with OSA or the NIH website for the currently applicable NIH salary cap. https://grants.nih.gov/grants/policy/salcap_summary.htm  

NIH’s maximum salary rate limitation applies to summer salary just as it does to academic year salary. This means that monthly Sponsored Summer Salary may not be charged to sponsored projects at a rate that would exceed one-twelfth of the NIH maximum; any difference between this amount and summer salary paid must be funded by the relevant academic school or department. Individuals with salary above the NIH cap may be paid Sponsored Summer Salary at the NIH cap rate. However, one consistent rate of pay must be used for all activity during the summer, regardless of the sponsor. 

d) National Science Foundation (NSF) Salary Limits for Senior Personnel 

“PI is responsible for consulting with OSA regarding agencies other the NIH to ensure compliance with any specialized requirements that federal or state granting agencies may have regarding effort reporting and charging salaries to grants from agencies other than NSF.  

As a general policy, NSF limits the salary compensation requested in the proposal budget for senior personnel, including principal investigators, to no more than two months of IBS in any one year, from all NSF-funded projects. See  National Science Foundation’s (NSF) policies concerning senior project personnel salaries and wages.  If anticipated, compensation for such personnel in excess of 2 months must be specifically disclosed and well-justified in the proposal budget justification. Upon approval of the proposal budget, the additional effort is deemed approved by NSF and is no longer subject to the two-month limitation. 

Under normal re-budgeting authority, PNWU’s OSA may internally approve an increase or decrease in person months devoted to the project after an award is made, even if doing so results in salary support for senior personnel exceeding the two-month salary policy. No prior approval from NSF is necessary as long as that change would not cause the objectives or scope of the project to change. NSF prior approval is necessary if the objectives or scope of the project change. 

Responsibilities 

Finance 

  • Develops and monitors all policies, procedures and training materials concerning compensation as it pertains to sponsored projects, in collaboration with the OSA  
  • Conducts effort reporting training sessions 
  • Monitors PNWU’s compliance with federal guidance surrounding salary compensation 
  • Maintains and supports PNWU’s  processes for tracking effort reporting on federal and other research grants for which effort reporting is required. 
  • Supports audit and other inquiries regarding the PNWU’s effort reporting process. 

OSA 

  • Works with Finance to develop and monitor all policies, procedures and training materials concerning compensation as it pertains to sponsored projects 
  • Conducts effort reporting training sessions 

Principal Investigators 

  • Monitor their own effort and that of others working on their sponsored projects 
  • Notify OSA and Finance of significant changes in effort throughout the year. 
  • Review appropriate documentation to ensure that charges to Sponsored Projects are consistent with the effort devoted to those projects.  
  • Report effort for themselves and staff in the PNWU Effort Reporting System on a monthly and annual basis or as required by Effort Reporting Standard Operating Procedures 

Definitions:
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Related Documents:
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Policy Resources

For assistance with policies and procedures contact:

Lori Fulton
lfulton@pnwu.edu