Controller UG - Compensation

The Uniform Guidance (UG) replaces the OMB's Circular A-21, Cost Principles for Educational Institutions, and will now govern how compensation can be charged to a federal grant. The UG goes into effect on Dec. 26, 2014. To ensure compliance, please review this list of important updates to the guidance from CFR 200-430, Compensation-personal services and CFR 200-431, Compensation-fringe benefits. [Click here to return to the Uniform Guidance overview.]

• The Uniform Guidance uses the term "institutional base salary" (IBS) and defines that term as 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. (h)(2)

• The charging of a faculty member's salary exceeding the proportionate share of the IBS is allowed, but only if there is prior approval by the federal awarding agency. (By contrast, the old guidance stated that "in no event" was this allowable.)

• The old guidance required that compensation be "reasonable." The UG explains what this means: "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 in the nonfederal entity." Otherwise, "compensation will be considered reasonable to the extent that it is comparable to that paid for similar work in the labor market in which the nonfederal entity competes for the kind of employees involved." (b)

• Additional compensation is possible for intra-institutional consulting and incidental activities that represent an addition to a faculty member's regular responsibilities. However, any supplemental compensation of this sort must have been "specifically provided for in the federal award or approved in writing by the federal awarding agency." (h)(3)

• Allowable activities have now been expanded to include research and development activities:  "developing and maintaining protocols (human, animals, etc.), managing substances/chemicals, managing and securing project data, coordinating research subjects." (h)(1)(i)

• The UG outlines the conditions for extra service pay, which include the requirement that the nonfederal entity (e.g., Amherst College) establish consistent written policies on extra service pay, and that these be applied uniformly to all faculty members, not just those working on federal awards. (h)(4)(i) Extra service pay must be reasonable and documented; it may also be earned by nonfaculty full-time professional personnel, in accordance with the IHE's written policy. (h)(8)

• The UG outlines the conditions for sabbatical leave costs. As under the old guidance, the IHE is expected to have a uniform written policy on sabbatical leave for persons engaged in instruction and persons engaged in research. (h)(7)(i)

• The salaries of administrative and clerical staff should be directly charged to the project if (and only if) these employees are integrally involved in the project. Such staff must be non-exempt employees and their salaries must be explicitly included in the budget.

• The UG defines the allowability fringe benefits separate from compensation. It clarifies what fringe benefits may include and states that they must be reasonable.(a)  Pension plan costs are allowable as fringe benefits and may now be charged as direct or indirect costs, as fits the IHE's accounting practices.(c)

• Finally, the Uniform Guidance allows federal agencies to approve alternative accounting methods that tie salaries and wages to the achievement of performance outcomes. This includes areas that blend funding from multiple programs to achieve a more efficient combined outcome.

(The summary above was adapted from this useful CLA white paper.)

Questions? Please contact Kiku Ichihara at x2804 or at kichihara@amherst.edu.