ALLOCATING PAYROLL COSTS:
TIME DISTRIBUTION
Rules set out in OMB Circular A-87
Must demonstrate that employees paid
with federal funds actually worked on the
specific federal program
Applies to all employees who are paid
with federal funds
TIME DISTRIBUTION
Overview of process:
Estimate how employee will work
Pay based on estimate
Reconcile estimates to how actually worked
Necessary documentation:
Payroll records
Personnel activity report
PERSONNEL ACTIVITY REPORT
Must be maintained for all employees
whose salaries are:
Paid in whole or in part with federal
funds
Used to meet a match/cost share
requirement
COMPENSATION FOR PERSONNEL SERVICES
Includes all compensation paid for services rendered during the award period
 Salaries
 Wages
 Fees
 Incentive awards
 Fringe benefits
 Pension costs
 Allowances for off-site pay
 Incentive pay
 Location allowances
 Hardship pay
 Cost of living differentials
PAYROLL RECORDS
Payroll must be:
Documented
Approved by a responsible
official of the organization
PERSONNEL ACTIVITY REPORT (CONT.)
Must meet the following standards
After the fact
Account for total activity
Signed by employee or supervisor with first
hand knowledge
Prepared at least monthly and coincide with
one or more pay periods
PERSONNEL ACTIVITY REPORT (CONT.)
Time increments reported on PARs should
be sufficient to recognize:
Number of different activities
performed
The dynamics of these
responsibilities
EXAMPLE OF PERSONNEL ACTIVITY REPORT
SUBSTITUTE SYSTEM(S)
Florida currently has an substitute system in
place approved in 1996 and many districts
have implemented this system.
In addition to our current system in place a
‘new’ option will be offered that allows
employees with schedules that do not change
from week to week to certify time and effort on
a semi-annual basis.
CURRENT SUBSTITUTE SYSTEM
DESIGNATED REPORTING MONTHS
During the designated reporting months, participating
employees will be required to keep a record of the actual
distribution of their time and effort. These records, or
Personnel Activity Report (“PAR”) forms, will be executed
by employees and collected during the 3 months your
District elects.
CURRENT SUBSTITUTE SYSTEM (CONT.)
The Goals Of The Substitute System:
Establishes advance allocations of employees’ time and effort on individual grant awards or cost
objectives used to support the employees’ salaries and benefits.
Requires employees to report the actual time and effort spent on various projects on a
percentage basis for comparison with advance salary allocations.
Reconciles differences between advance allocations of salary/related costs and employee reports
of actual time and effort dedicated to various grant awards or cost objectives.
Produces documentation which summarizes both actual employee time distribution and employee
funding on an annual basis.
CURRENT SUBSTITUTE SYSTEM (CONT.)
The District’s substitute system must address the
following areas:
1) participating employees
2) required personnel documentation
3) frequency of reporting
4) monitoring deviations
5)reconciliation process
6) record keeping requirements.
CURRENT SUBSTITUTE SYSTEM (CONT.)
PARTICIPATING EMPLOYEES
 The personnel activity reporting system will be utilized by all
employees who work on two or more cost objectives where at
least one cost objective is a federal award.
 If an employee worked on a single federal award or cost
objective, the employee will not execute the PAR. The
employee will execute a semi- annual certification that the
employee worked solely on that program for the period
covered by the certification. These certifications will be signed
by the employee at least twice per year.
CURRENT SUBSTITUTE SYSTEM (CONT.)
REQUIRED PERSONNEL DOCUMENTATION
Personnel Activity Reports
The District should produce a Personnel Activity Report (PAR) for each
participating employee. The PAR form will document the actual time spent on
individual cost objectives.
For each of the three reporting months of a fiscal year, each participating
employee should complete a PAR containing the employee’s name, fiscal year,
reporting month, and EFFORT statement. The PAR requests information on the
number of actual hours worked and the program or cost objectives upon which
the employee worked. Actual effort should reflect the specific program or cost
objectives upon which the employee worked. The total number of hours the
employee either works or takes leave should be reflected.
CURRENT SUBSTITUTE SYSTEM (CONT.)
FREQUENCY OF REPORTING
Participating employees must report their actual effort in 3
months designated by the District office. When the average
level of effort difference between the actual time records and
the initially estimated time is more than 10% during any fiscal
year, then the employees position funding should be adjusted
for the following fiscal year.
CURRENT SUBSTITUTE SYSTEM (CONT.)
MONITORING DEVIATIONS
Role of Supervisors
The accuracy of this system is heavily dependent upon the
supervisor’s oversight of the system. The consistency that
individual local and federal program cost objectives pay it’s fair
share for the benefits received is important equal to the level of
funding.
To this end, it is the responsibility of the supervisor to seriously
review the reports of employees and alert the program
management of any deviations.
CURRENT SUBSTITUTE SYSTEM (CONT.)
Monitoring
 At the end of each reporting month, the participating employee’s
supervisor should review the employee(s) PAR. If the supervisor
notices that the average ACTUAL EFFORT for that week deviates
from the anticipated effort statement by greater than 10%, the
supervisor must either redirect the efforts of the employee or
bring the deviation to the attention of the appropriate division
leadership to either adjust the funding source or justify not
adjusting the funding source.
 If reason exists to questions the accuracy of the employee
reporting, the supervisor should discuss the form with the
employee and make any necessary adjustments.
CURRENT SUBSTITUTE SYSTEM (CONT.)
At the end of the month, each employee’s
total percentage of ACTUAL EFFORT must be
compared to the EFFORT statement to
determine the amount of any deviations. Any
deviations will be resolved through the
reconciliation process and will impact future
budget allocations for successive months.
CURRENT SUBSTITUTE SYSTEM (CONT.)
District’s Substitute System should provide for a
reconciliation between the PAR form as
completed by the employee and budgeted
position funding. Thus, the PAR allows for a
comparison between actual employee effort and
employee funding. Employee funding as
reflected on the position funding report must be
consistent with the percentage breakdown of the
employee’s actual time and effort.
CURRENT SUBSTITUTE SYSTEM (CONT.)
RECORD KEEPING REQUIREMENTS:
PAR forms are to be maintained for a
period of five years by the District Office.
CURRENT SUBSTITUTE SYSTEM (CONT.)
COST ALLOCATION PLANS FOR CERTAIN EMPLOYEES:
Certain employees in the District may have ‘blended’
responsibilities that are not easily categorized as benefiting a
specific federal cost objective. When it would too
burdensome to categorize the work conducted by supervisory
employees who oversee many different cost objectives and
clerical staff serving many individuals. Therefore, the time
and effort of these employees will be recorded based on a
simplified cost objective, such as “supervisory activities,” or
“clerical activities”.
CURRENT SUBSTITUTE SYSTEM (CONT.)
Allocation of time and effort for these employees will be made on the following
basis:
Supervisory Employees — Time spent by supervisory employees on
purely supervisory activities will be allocated based on the time
allocations on the Personnel Activity Report of the supervised
employees. (For example, if a supervisor conducts only supervisory
activities associated to the cost objectives for which the five or more
employees work on, the supervisor’s time and effort distribution will be
attributed based on an average of the same cost objectives. If the
supervisor works on other - non-supervisory activity(ies) that are
outside of the scope or cost objectives that the five or more employees
work on, then the supervisor must list such activity(ies) and indicate
the time spent.) The supervisors’ Personnel Activity Report will include
Supervisory Activities and Other (non-supervisory activities).
CURRENT SUBSTITUTE SYSTEM (CONT.)
Clerical Employees—Time spent by clerical employees who provide
support for five or more employees working on many cost objectives.
(For example, if a clerical employee conducts only clerical activities
associated to the cost objectives for which the five or more
employees work on, the clerical employee’s time and effort
distribution will be attributed based on an average of the same cost
objectives. If the clerical employee works on clerical activity(ies) that
are outside of the scope or cost objectives that the staff they
support work on, then the clerical employee must list such
activity(ies) and indicate the time spent.) The clerical employees’
Personnel Activity Report will include Clerical Activities and Other
Clerical Activities.
TIME AND EFFORT UPDATE
USED issued new guidance that aims
to further reduce the burden of
documentation requirements while
also ensuring that the overall
objective of time-and-effort reporting
continues to be met.
SYSTEM GUIDELINES
Eligibility for ‘new’ system
Currently work on a schedule that includes
multiple activities or cost objectives that must be
supported by monthly personnel activity reports.
Work on specific activities or cost objectives
based on a predetermined schedule.
Not work on multiple activities or cost objectives
at the exact same time on their schedule.
IMPLEMENTATION OF SUBSTITUTE
SYSTEM
Implementation of the ‘new’ system
(and our current system) is subject to
approval by FDOE.
Districts currently approved for our
substitute system will be required to
reapply if adding this new option.
ACTIONS TO EASE THE BURDEN OF TIME
AND EFFORT REPORTING
Substitute System for Time and Effort for
Employees Supported by Multiple Cost
Objectives.
SYSTEM GUIDELINES
In lieu of personnel activity reports,
eligible employees may support a
distribution of their salaries through
documentation of an established work
schedule.
Work schedule may be in a style or
format already used by an LEA.
SYSTEM GUIDELINES-EMPLOYEE SCHEDULES
Must indicate a specific cost objective that the employee
worked on for each segment of the employee’s
schedule.
Must account for the total hours for which each
employee is compensated during the period reflected
on the employees schedule.
Must be certified at least semiannually and signed by
the employee and a supervisor having firsthand
knowledge of the work performed.
EXAMPLE OF A FIXED WORK SCHEDULE
EXAMPLE OF TIMEAND-EFFORT
CERTIFICATIONEMPLOYEE WITH
FIXED SCHEDULE
MORE INFORMATION OR QUESTIONS
Contact:
Alricky Smith, CPA
Director of Audit Resolution and Monitoring
Phone: (850) 245-9875
E-Mail: [email protected]