Managing Salaries/Wages Charged To Sponsored Activities
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Scope
This document describes a set of best practices for scheduling, maintaining, and adjusting labor
to sponsored projects.
Salaries and wages represent the vast majority (80% or more) of the University's expenses
against sponsored activities. Sound business practices, as well as government and sponsor
requirements, influence how the University monitors and accounts for salary and wage costs. The
Integrated System’s Labor Distribution Module is the primary tool used for labor cost
accounting and reporting.
The Labor Distribution (LD) Module of the Integrated System satisfies the following basic
business needs:
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It allows for the creation and maintenance of labor schedules
It allows for the distribution of labor costs
It imports labor cost information from the Human Resource System (HRS)
It allows for the adjustment of labor cost distributions
It allows effort certification to be in compliance with OMB A-21 requirements
It is the source of information for reports on employee labor cost distribution
Definitions
Encumbrances: Expenses that have not yet occurred, but that must be planned for because they
have been committed to the project.
Labor Distribution Adjustment: A correction to the distribution of salary dollars after they
have been paid. If it is determined after the fact that the distribution of labor across projects is
incorrect, for example upon review of monthly financial statements, adjustment can be made to
correct the distribution. Adjustments more than 90 days old or that affect an effort report that
has already been generated require prior approval from OSP.
Labor Encumbrance End Date: The end date through which salaries are encumbered for
financial reporting purposes. This date is entered by the Office of Sponsored Programs during
the Award (PTAO) set up process when the Notice of Award is received. This date normally
coincides with the end of the sponsored activity’s current budget period.
Labor Schedule: A labor schedule is a collection of charging instructions that specify how
labor costs should be distributed for an employee and assignment. An employee must have at
least one and may have more than one PTAEO distribution. Each assignment may have one or
more schedule lines with specified PTAEO(s) 1. Each schedule line will have a start dates, may
have an end date, and will have associated distribution percentages. Labor schedules may be
created for any period of time subsequent to the end date of the last payroll period associated
with the employee's payroll assignment. The sum of the percentage for all schedule lines for a
current period must total 100%, though percentages may be less than 100% for future periods.
Scheduling current labor at less than 100% will cause the unscheduled portion of salary to
default to a Labor Suspense account.
Notice of Award (NOA): A legally binding document notifying the grantee and others that an
award has been made. It contains or references all terms and conditions of the award, and may
be in letter format or may be issued electronically.
Principal Investigators/Project Directors and Key Personnel: Individuals whose effort is
absolutely essential to the success of the proposed activity, either because of their critical
leadership positions within the proposal (and consequently their intellectual guidance) or because
of the uniqueness of the expertise they are contributing relative to the proposed scope of activity.
‘Key personnel’ typically include research scientists, principal scientists and senior scientists,
depending on their intellectual contribution to the proposed scope of activity. Typically,
replacement of any of these individuals requires approval from the sponsor. Importantly, the
status of ‘Principal Investigator/Project Director’ and ‘key personnel’ does not necessarily imply
salary support from the sponsor.
Other Contributing Personnel - Other individuals included in a proposal (e.g., graduate
students, postdocs, trainees, technical staff, other researchers, etc.) whose service is necessary to
complete the proposed scope of work, but whose intellectual involvement is not required for the
success of the sponsored activity.
Project Start and End Dates: The official period of performance during which
allowable/allocable costs (as well as Facilities & Administrative costs) can be charged against
the individual sponsored activity. These dates are most often determined by the award notice
provided by the sponsoring agencies.
Sponsored Activities: Externally funded programs under which the University is obligated to
perform a defined scope of work according to specific terms and conditions and within budgetary
limitations. These programs are to be budgeted and accounted for separately from other
activities. Sponsored activities include grants, contracts, cooperative agreements, clinical trial
agreements, Intergovernmental Personnel Agreements and other awarding instruments
supporting research, instruction, public service, and clinical trials. These activities are
established as ‘G or Z’ awards in the University’s Integrated Financial System.
Sponsor Salary Caps/National Institutes of Health (NIH): Salary caps are limitations or
sponsor-imposed ceilings on the amount of an individual’s salary that a sponsor will directly
support. When an employee’s institutional base salary (IBS) exceeds the effective salary cap the
University must fund the difference from non-federal sources. This difference is considered cost
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A PTAO (Project Task Award Expenditure Type Organization) is the basic accounting unit used at UVA, as part
of the Integrated System. All charges and/or credits are assigned a PTAEO or are divided among different PTAEOs.
share to that sponsored activity and the associated effort is expected to be captured on the effort
report for certification purposes (toward 100% ‘University effort’). Annual salary caps can be
found at the NIH or OSP website. These caps apply automatically only to NIH awards or where
the sponsor explicitly imposes the cap.
Total Professional Effort: All activities performed by a faculty or staff member regardless of
how (or whether) the individual receives compensation.
University Effort: The portion of ‘total professional effort’ that comprises one’s
professional/professorial workload at UVA, including the Medical Center and UVA at Wise, for
which the employee is compensated (through UVA and/or the University Physicians Group UPG). (See definition of Institutional Base Salary). This includes research, instruction, other
sponsored activities, administration, non-sponsored/departmental research, university service,
competitive proposal preparation and clinical activities. University effort totals 100%, regardless
of the number of hours worked or the individual’s appointment percentage.
Institutional Base Salary (IBS): The annual compensation rate, as determined by the
University, for an employee’s appointment (‘University effort’) devoted toward Universityrelated activities as defined above. Institutional base salary includes both compensation for
University-related effort, and compensation from the University Physicians Group (UPG) for
clinical effort.
Committed Effort: Any part of ‘University effort’ that is quantified and included in a sponsored
program proposal and the subsequent award (e.g., two summer months, 12% time, one half of a
year, three person-months, etc.). This quantified effort/time is associated with a specific dollar
amount of the employee’s compensation.
Associated effort and funding to support this devoted effort/time can be in the form of:
Direct Charged Effort: Any portion of ‘committed effort’ toward a sponsored activity
for which the sponsor pays salary/benefits.
Cost Shared Effort: Any portion of ‘committed effort’ toward a sponsored activity for
which the sponsor does not pay salary/benefits, which instead are paid using other, nonfederal UVA sources.
System References
Procedure 8-22, "Retroactive Labor Distribution Cost Transfers"
ISDS_Labor_Distribution_Student_Guide.pdf
FIN-027 Time and Effort Certification
FIN-028 Minimum Effort on Federally Funded Sponsored Research Activities
Responsibility
The Principal Investigator:
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Ensures that labor costs are incurred for the intended purpose of the grant/contract, and in
accordance with sponsor requirements and University policies and procedures.
Communicates with administrators to establish accurate and timely LD schedules for
themselves and all supervised employees. It is recommended that this communication is
documented via notes or e-mail.
Provides written notification of the need for any modification to the labor schedule
Complies with Sponsor requirements regarding any significant reductions (normally >
25%) in effort on sponsored activities
Informs other key personnel on the project, particularly those in other departments, of the
receipt of the award.
The Research Administrator/Fiscal Contact/LD Specialist:
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Communicates with the Principal Investigator regarding the scheduling of salaries on
sponsored projects.
Establishes proper/timely labor distribution schedules for persons in the Employee
Assignment Organization who are supported from sponsored activities to ensure
appropriate allocations of salary costs.
Adjusts labor schedules in a timely fashion in support of accuracy in salary allocations.
The Department Chairs/Division Head:
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Maintains effective practices to assist with proper and timely scheduling of labor
distributions to ensure appropriate allocations of salary costs across various sponsored
and non-sponsored activities.
A. Labor Scheduling Steps
1) Upon receipt of a notice of award (NOA) and PTAO creation, the PI communicates to the
appropriate business unit employee the names and amount of effort of all personnel assigned to
the project, making any adjustments necessary to accommodate their effort on other projects.
The project budget is usually a good launching point for these discussions. (See Special
Conditions and Examples below should the NOA be delayed.)
2) Determine the scheduled start dates for each employee to be scheduled. The scheduled start date
can be the first day of the sponsored activity, but if the person will be starting on a sponsored
activity after the project start date, the scheduled start date is when the person’s effort actually
begins.
3) Determine the scheduled end date. There are a number of factors that should be considered
when determining the scheduled end date. Where possible, to minimize the number of entries
that have to be made in Labor Distribution, an individual’s labor should be scheduled for the
longest period that does not exceed the award/project end date in the Integrated System, since the
system is set up to automatically generate the proper encumbrances. Although is usually not
necessary to end-date non-grant PTAOs, grant PTAOs DO require an end-date.
Labor Encumbrances will be generated to the earliest end date of:
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The Labor Schedule, OR
Any segment of the PTAEO
Project End Date
Task End Date
Award End Date, OR
Sponsored Award Labor Encumbrance End Date (LEED), OR
The individual’s appointment end date (HR). Note that Labor Schedules should not
be ended for individuals who are terminating to allow for payout of any benefits owed
to them. The termination of their appointments will end the charging of their salary
to a project.
Consequently, to assure that reported salary encumbrances are accurate, individual labor should
be scheduled for the longest period possible, thereby allowing the system to cut off the
encumbrances at the correct point.
(Note: Payroll start and end dates should not normally be used for ongoing labor schedules, i.e.
25-JUL-2012 to 24-JUL-2013. It is usually more accurate to use Award start and end dates, i.e.
01-JUL-2012 to 30-JUN-2016.)
However, if it is known that the person’s effort on a project is limited to a predetermined period
of time, the LS end date should be set to the date that the PI has determined that the person’s
work on the project will end. For example, a data analyst could be brought in for a period of two
months to analyze data generated from experiments. That data analyst would be scheduled
starting on the first day of work on the project and ending two months later.
4) The responsible business unit schedules the data using the Labor Distribution Module in
accordance with IS Labor Schedule Specialist procedures. Any changes in effort requiring
modification of Labor Distribution should be communicated in writing to the responsible
administrator in the business unit by the PI. Changes may include, but are not limited to:
• Reassignment of work (changing projects),
• Changes in level of effort,
• Departure of employee,
• Budget modification
5) In order to encourage proactive sharing of information, both the PI and the Labor Schedule
Specialist should communicate initial effort distributions as well as any modification with the
Effort Reporting Coordinator. Delayed adjustments to effort reporting can result in the need for
extensive justification and additional documentation.
Special Considerations and Examples
Delays or Gaps in Research Funding - The use of preliminary/at-risk PTAOs is encouraged for
situations where official award confirmation is anticipated but not yet received and research
effort is being expended. Some form of documentation from the sponsor regarding the pending
award, including the proposed start date, should accompany a request for a preliminary/at-risk
PTAEO. Similarly, in order to maintain continuity in a research program, a preliminary/at-risk
extension of an award may be implemented if a subsequent year of funding is anticipated and/or
delayed and documentation is available from the sponsor. In instances where requesting a
preliminary/at-risk PTAEO is not feasible (including circumstances when documentation is not
available, etc.), departmental overhead or other non-grant funded PTAOs should be used for
initial labor distribution until NOAs are received. These labor distributions should be
retroactively adjusted back onto the project when it becomes active. Salaries should never be
scheduled to another sponsored activity as a temporary measure, when the intention is to move
the salary back onto the project when it becomes active.
A NOA Includes Key Personnel in Two or More Schools - OSP receives the “Notice of Award”
from a sponsor. This is communicated to the Principal Investigator and the Fiscal Administrator
in the School of Medicine’s Department of Microbiology. The awarded budget includes
funding for two additional “Key Personnel” in the College of Arts & Sciences’ Department of
Biology. It is the responsibility of the Department of Microbiology to notify the Department of
Biology that the project has been funded so that labor schedules can be appropriately established.
Working with Salaries in Excess of NIH Salary Cap - The NIH salary cap should be reviewed
prior to establishing LD schedules. Salary in excess of the cap should be charged to a
departmental overhead or other non-grant funded PTAO.
To calculate the maximum percentage of labor that should be entered into the Labor Distribution
module:
(Committed Effort Percentage x Current NIH Salary Cap)
÷ UVA Compensation ONLY (REMOVE any UPG pay from denominator)
Working with Salaries in Excess of Other Salary Limitations – Sometimes NIH or other sponsors
will impose a salary limit, for example NIH “K” career awards. To calculate the maximum
percentage of labor that should be entered into the LD module:
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Committed Effort Percentage x UVA Compensation ONLY (REMOVE any UPG pay)
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If answer to #1 above is GREATER than the sponsor salary cap,:
Salary Cap
÷UVA Compensation ONLY (REMOVE any UPG pay)
3) If answer to #1 above is LESS than salary cap:
Committed Effort Percentage x UVA Compensation ONLY (REMOVE any UPG pay)
÷ UVA Compensation ONLY (REMOVE any UPG pay)
Clinical Faculty (UPG) – The UVA University Physicians Group portion of an employee’s IBS
is not paid through the University Integrated System. Consequently it is important track any
UPG salary separately for clinical faculty.
Suspense Accounts - LD should never be scheduled directly to, or allowed to default to, a
Suspense Account PTAO. Any salary that goes to suspense should be cleared as soon as the
error is identified but no more than 30 days after hitting suspense.
Clinical Trials – Special care should be exercised when scheduling labor on Clinical Trial
accounts. Labor should be scheduled on clinical trials according to the effort expended,
beginning when the effort commences if the amount of effort is known beforehand. Timely LD
adjustments may be used in the case of some Clinical Research Coordinators when the amount of
time they are devoting to the project is not known until after the fact. Since budgets are loaded
when money is received, it is recognized that these accounts may run deficits from time to time.
These accounts should be monitored closely for problems that may arise.
MINIMUM Effort on Federally Sponsored Projects – Based on federal guidance, and in
accordance with Policy FIN-028, effort on most federally sponsored awards cannot be zero (0);
some level of committed effort by principal investigators/program directors and key personnel
should be budgeted in the proposal and scheduled in LD. The minimum amount committed to
specific federally sponsored activities may be no less than 1% of the employee’s University
effort. (See Appendix A of FIN-028 for exceptions to the Minimum Effort Requirement). The
specific amount above this 1% is left to the judgment of the Principal Investigator/Program
Director.
MAXIMUM Effort on Federally Sponsored Projects – In addition to sponsored program activity,
faculty, as part of their University effort, have responsibilities such as proposal preparation,
instruction, administration, service and clinical activities, which would generally preclude
consistently scheduling their LD 100% on federally sponsored awards. (It may be appropriate
for certain research faculty to be scheduled 100% to federally sponsored awards if they have
none of these responsibilities. See Effort Reporting FAQs for more information on this topic) .
B. Monthly Maintenance of Labor Schedules
Responsibility:
The Integrated System Labor Distribution module takes payroll information from the Human
Resources module and distributes it according to the LD Schedule. For each person in a
department or unit, a determination must be made on allocation of 100% of their salary. Under
no circumstances should anyone have a current LD Schedule for less than 100% of their payroll.
For persons who are not paid from sponsored research project (i.e. Departmental
Administrators), it is allowable for salaries to go to an Organizational Default Account.
However, everyone who has salary coming from sponsored research must have an LD schedule
to allocate their salary to the correct project(s).
Employee labor schedules are maintained by the employee Assignment Organization. This is
true even if the employee is working for a faculty member on a project or in space owned by a
different Organization. However, Centers may have tenure track faculty who have their primary
assignments in different Employee Organizations. In this case a report will either need to be run
for each Department that has a faculty member assigned to that organization, or alternatively
individual reports may be run by name. For example, The Center for Cell Signaling may have a
faculty member in the Department of Microbiology. This faculty member will show up in
Microbiology’s ORG, but Cell Signaling will have the primary responsibility for scheduling
her/his labor. A report using Microbiology’s ORG, or a report using the individual’s name, will
need to be run monthly to check the labor schedule for needed updates.
Review of Labor Schedules by Assignment Organization:
• At the beginning of each month and before the first payroll for the month runs, log onto
Discoverer and run the following report:
LD_Labor Schedule Hierarchy Report: Labor Schedule with end dates tab (middle tab)
Select your ORG code in the Assignment Organization field from LOV (report will not run
properly if ORG number is hand-keyed). Click OK to run report.
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From Menu at top of page select Format: Conditional Format. Click New Conditional
Format……..From the Item pull-down menu select:
UVA_LD_Labor_Sched_Asg_Org.Schedule_End_Date <=Last Day of Current Month
(select from Calendar). Click OK
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Click OK on the Conditional Format Screen
Employees with a Schedule End Date in the Current month will have a RED highlight
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Employees whose Labor Schedule expired in the previous month will have a Schedule
Type of S (Suspense)
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Update the Labor Schedules with Type S Schedule Types or who have Schedule End
Date highlighted in Red.
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For anyone with a PTAO ending in the current month, a determination will need to be
made on how to extend the LD schedule. If the project in question is being continued or
renewed, and the person’s effort on the project will continue, then schedule the person to
the end of the new end date. If the project in question is ending, then a determination will
need to be made as to where the person’s effort should be directed, and the new PTAO
added. This decision is made by Principal Investigators for themselves and for the people
under their supervision.
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This report gives the Labor Encumbrance End Date (LEED) that was entered when OSP
either created the award or updated it to reflect a new budget period. Since mistakes can
occur, in the event that you observe that this date is wrong you should do the following.
Email [email protected]. In the Subject Line write CORRECTION TO LEED.
Include in the body of the text the PI, the current LEED and the date it should be changed
to. The front desk at OSP will route your request to the appropriate person to make the
change.
C. Labor Distribution Adjustments
Sometimes the distribution of payroll will need to be adjusted after it has been processed.
The Labor Distribution module of the Integrated System allows for the retroactive
adjustment of labor schedules.
Corrections to previously posted payroll should be made as soon as possible after the need for
the adjustment is identified. Delays in submission of distribution adjustments may result in
disallowance of those charges on sponsored program accounts. Distribution Adjustments should
not be used to replace proper Labor Scheduling, and should be used as sparingly as possible as
they are a form of cost transfer. Prior approval (retro approval number) is required for
adjustments over 90 days old or if an effort report has been generated and is in any other status
than “Uncertified.”. Please see Procedure 8-22, "Retroactive Labor Distribution Cost Transfers"
Various circumstances can result in the need for labor distribution adjustments, including:
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Delays in the setup of funding resulted in charges being initially directed to a nonsponsored account
The Principal Investigator discovers an error during a monthly account reconciliation
review
The Principal Investigator or other personnel on the project change their effort and there
is a delay in the communication of this change, or it is communicated after the current
period payroll cutoff dates
Employees who are devoting effort to a project on a sporadic or as-needed basis, where
the amount of time spent working on the project is not known until after the fact. For
example, a clinical research coordinator who only works on a project when a new patient
is enrolled, or a departmental lab technician who mixes reagents for a specialized type of
experiment only when that particular experiment is run.
Another department delays notifying an employee’s home department that he/she should
have been scheduled on their award
During the effort certification process, the certifier realizes that payroll does not
accurately reflect effort. (Please see above if effort reports have been generated and are
in any status other than “Uncertified”).
Labor Distribution Adjustment Steps:
1) Determine the start and end dates of the adjustment. Be sure that they fall within the active
project dates.
2) Determine the percentage or dollar amount that needs to be adjusted. Be sure to account for
UPG pay to clinical faculty according to the formula provided in “Special Considerations
and Examples” above.
3) If another ORG provides a dollar amount instead of a percentage, verify that the amount you
are given does not include fringes or F&A. Follow steps 1&2 above.
4) Always adjust the salary using the dates of the actual period the work was performed, even if
it means you are required to get retroactive approval. Do not load the LD into the most
recent period(s). Otherwise, the effort report “Payroll” and “Calculated Effort” fields will not
be correct for that effort reporting cycle.
5) Moving salary dollars from one grant to another grant requires extra attention. Keep in mind
any sponsor thresholds for changes in effort of the PI or key personnel. Ensure that the
changes will reflect the actual effort expended across all projects and that the receiving
project has adequate funds. These types of moves require thorough justification and will be
reviewed for allowability. If in addition to the LD adjustment(s), LD schedules need to be
corrected, be sure this is communicated to the appropriate decision makers and/or LD
schedulers.
6) The LD adjustment batch comment should include:
a. The default batch comment.
b. Reason for the transfer – if you are transferring salary onto a sponsored project, include the
technological benefit to the recipient grant and the person’s role on that project; if
transferring salary off the project, include the reason for the transfer. Be sure to address the
ROLE of the person being moved and how their effort is ALLOCABLE to the project it is
being moved to. (“PI requested salary charges be moved” is not an adequate description.)
OSP has a shortcut list of Reason Codes posted to the website to reduce the amount of text
that must be included. If your adjustment required retro approval, be sure to include the
approval # in the comment field.
7) Verify that your adjustment is correct and all comments are in place before the final
submission. As a reminder, the UVA naming convention to be used is School/Department
prefix - last name of employee you are entering the distribution adjustment for, first name or
initial - date entered, for example MDBIOC-Smith,J-05SEP2011. Please NO wildcard
characters such as < >” ‘ \ & as these will cause an error in the workflow process.
8)
LD adjustments impacting sponsored projects ONLY (G and Z award/projects) do not
‘auto‐approve’ when debiting or crediting a G/Z award/project, but instead trigger a workflow
review process in the Integrated system.
OSP reviews LD adjustment batches daily and will take one of the following actions via
workflow notifications/email:
a)
Approve, b) Reject, or c) Return with Comments
Each of the actions above will generate an e‐mail to the creator of the batch noting the action taken
along with guidance for any additional information needed (if returned with comments from OSP).
The action cannot be taken from the email, but must be accomplished in Oracle workflow.
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If Returned with Comments, the creator will be responsible for taking one of the
following actions: a) Resubmit with added comments, or b) Finish (delete) the batch.
One of these two actions MUST be taken. Failure to act on a returned batch places the
salary dollars in a limbo status that is unreachable by anyone but the creator of the batch.
In order to add necessary details (reason code, employee role, etc.), click on the “Note”
field at the bottom where “Response” is indicated. Add the details and resubmit
9) Follow up LD Adjustments with a corrected Labor Schedule when needed, so that future LD
adjustments are avoided.