Employee Compensation Compliance (ECC) for Health Campus

2 CFR 200

Effective December 26, 2014, OMB Circular A-21 was replaced by the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, 2 CFR Part 200 (the Uniform Guidance).  Like Circular A-21, the Uniform Guidance requires an after-the-fact review of charges made to federal awards that were based on budget estimates. At OUHSC, this required after-the-fact review is conducted through the effort reporting process.

OUHSC

• Applying the Federal Salary Cap: This policy sets forth the procedures for applying the federally mandated cap on salaries.
• Principal Investigator Responsibilities: This Policy describes Principal Investigators’ stewardship responsibilities for fiscal management of grants and contracts awarded to the University.
• Salary Cost Transfers: This policy provides guidance to Principal Investigators and others responsible for the administration of sponsored projects on the requirements for cost transfers.

NIH Grants Policy Statement:

• Institutional Base Salary: The annual compensation paid by an organization for an employee’s appointment, whether that individual’s time is spent on research, teaching, patient care, or other activities. Base salary excludes any income that an individual may be permitted to earn outside of duties for the applicant/recipient organization. Base salary may not be increased as a result of replacing organizational salary funds with NIH grant funds.
• Graduate Student Compensation: The maximum amount NIH will award for the support of a graduate student on a research grant, or a cooperative agreement is tied to the National Research Service Award (NRSA) zero-level stipend in effect at the time the grant award is issued on the Federal award date.
• Budgetary/Commitment Overlap: Budgetary overlap occurs when duplicate or equivalent budgetary items (e.g., equipment, salaries) are requested in an application but already are provided by another source. Commitment overlap occurs when an individual’s time commitment exceeds 100 percent (i.e., twelve person months), whether or not salary support is requested in the application. Overlap, whether scientific, budgetary, or commitment of an individual’s effort greater than 100 percent, is not permitted.
• Salary Cap Limitation: None of the funds appropriated in the governing appropriation Act for NIH (the Act), shall be used to pay the salary of an individual through a grant or other extramural mechanism at a rate in excess of that prescribed in the Act. Current and historical information on the applicable salary cap for each fiscal year is on the OER Salary Cap Summary web page.
• Allocation of Costs and Closely Related Work: When salaries or other activities are supported by two or more sources, issues arise as to how the direct costs should be allocated among the sources of support. In general, a cost that benefits two or more projects or activities in proportions that can be determined without undue effort or cost should be allocated to the projects on the basis of the proportional benefit. A cost that benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved may be allocated or transferred to the benefiting projects on any reasonable basis as long as the costs charged are allowable, allocable, and reasonable under the applicable cost principles and the recipient’s financial management system includes adequate internal controls
• Salaries and Wages / IHEs - Periods outside the academic year:
  1. Except as specified for teaching activity in paragraph (2) below, charges for work performed by faculty members on Federal awards during periods not included in the base salary period will be at a rate not in excess of the IBS.
  2. Charges for teaching activities performed by faculty members on Federal awards during periods not included in IBS period will be based on the normal written policy of the IHE governing compensation to faculty members for teaching assignments during such periods.
• Salaries and Wages / IHEs - Sabbatical Leave Costs: Sabbatical leave costs may be included in a fringe benefit rate or in the organization’s F&A rate. Salary may be charged directly to a project for service rendered to the project by individuals while they are on sabbatical leave, provided the salary is proportional to the service rendered and is paid according to established organizational policies applicable to all employees regardless of the source of funds. Sabbatical leave paid by an individual’s employer, in combination with other compensation (e.g., partial salary from an NIH grant), may not exceed 100 percent of that individual’s regular salary from their organization.
• Salaries and Wages:Compensation for personal services covers all amounts, including fringe benefits, paid currently or accrued by the organization for employee services rendered to the grant-supported project. Compensation costs are allowable to the extent that they are reasonable, conform to the established policy of the organization consistently applied regardless of the source of funds, and reasonably reflect the percentage of time actually devoted to the NIH-funded project.
• Extra Service Pay: Extra Service Pay normally represents overload compensation, subject to institutional compensation policies for services above and beyond IBS. Where extra service pay is a result of Intra-IHE consulting, it is subject to the reasonableness standards for Salaries and Wages above. It is allowable if all of the following conditions are met:
  1. The non-Federal entity establishes consistent written policies which apply uniformly to all faculty members, not just those working on Federal awards.
  2. The non-Federal entity establishes a consistent written definition of work covered by IBS which is specific enough to determine conclusively when work beyond that level has occurred. This may be described in appointment letters or other documentations.
  3. The supplementation amount paid is commensurate with the IBS rate of pay and the amount of additional work performed.
  4. The salaries, as supplemented, fall within the salary structure and pay ranges established by and documented in writing or otherwise applicable to the non-Federal entity.
  5. The total salaries charged to Federal awards including extra service pay are subject to the Standards of Documentation as described in Salaries and Wages/IHEs.
• Intra-IHE Consulting: Intra-IHE consulting by faculty is assumed to be undertaken as an IHE obligation requiring no compensation in addition to IBS. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the faculty member is in addition to their regular responsibilities, any charges for such work representing additional compensation above IBS are allowable provided that such consulting arrangements are specifically provided for in the Federal award or approved in writing by the NIH awarding IC.
• Payments for Dual Employment: For investigators receiving compensation from the institution (recipient/contractor) and separately organized clinical practice plans, compensation from such sources may be included in the institutional base salary (IBS) budgeted and charged to NIH sponsored agreements if all of the following criteria are met:
  • Clinical practice compensation must be set by the institution. *
  • Clinical practice activity must be shown on the institution's payroll or salary appointment forms and records approved by the institution.
  • Clinical practice compensation must be paid through or at the direction of the institution.
  • Clinical practice activity must be included and accounted for in the institution's effort reporting and/or payroll distribution system.
  • The institution must assure that all financial reports and supporting documents associated with the combined IBS and resulting charges to NIH grants are retained and made available to Federal officials or their duly authorized representatives consistent with the requirements of 2 CFR Part 200.430 and 45 CFR Part 75.430. (“Set by the institution” means the recipient/contractor institution must be in a position to document and certify that the specified amount of clinical practice compensation is being paid in essentially the same manner as other specified amounts of the committed IBS (compensation) of the investigator. Further, this requires that the IBS not vary based on the specific clinical services provided by investigator within the periods for which total IBS is certified by the recipient institution.)
• Direct Charging Salaries of Administrative and Clerical Staff: The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met:
  1. Administrative or clerical services are integral to a project or activity;
  2. Individuals involved can be specifically identified with the project or activity;
  3. Such costs are explicitly included in the budget; and
  4. The costs are not also recovered as indirect costs.