Effort Reporting –Rising Above the Challenge

1. Effort Reporting –Rising Above the Challenge

2. Legal Guidance • OMB Circular A-21 Cost Principles for Educational Institutions • OMB Circular A-110 Uniform Administrative Requirements for Grants & Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations • Tennessee Code Annotate • Sponsor Terms and Conditions • TBR Policies and Guidance • Institutional Policies and Procedures/Practices • Sponsored Programs Policies and Procedures • A Guide to Managing Federal Grants

3. What is Effort? The proportion of time spent on any activity and expressed as a percentage of the total professional activity for which an individual is compensated. Restated: Effort is how someone spent or expended their time.

4. Proposal Creation & Effort Reporting When writing a proposal, the amount of time expressed in dollar amounts or percentages (effort) has to be tracked and verified throughout the life of the award whether salary is charged directly, indirect or not at all to the grant. $50,000 salary- request $10,000 =20% effort commitment. $69,000 salary- commits 20% = $13,800 allowable charge to the grant

5. What is Effort Reporting? Council of Government Regulation (COGR) definition of effort reporting “Effort reporting is the mechanism used to confirm that salaries and wages charged to each sponsored agreement are reasonable in relation to the actual work performed. Certification of an effort report must reasonably reflect the activities for which the employee is compensated by the institution.”

6. Who Must Report Effort? Anyone charged to a federal award must certify that the salary paid or the commitment proposed is reasonable in relation to the effort (activity) devoted to the award. This includes individuals shown as match to federal awards and those with unpaid commitments.

7. How is Faculty Effort Determined • NOT based on 37.5 hour work week • Based on the total amount of time needed to perform the activities for which one is compensated by the institution including: - Sponsored project activities - Non-sponsored project activities • Administration (including duties as chair, dean, etc)

8. Institutional Base Salary (IBS) IBS is annual compensation paid by the college for an employee’s appointment. The institution must establish what is included in the base salary of each employee. JSCC IBS for faculty includes: instruction, office hours, advising, committee service, curriculum development, faculty development, public service and research

9. For Example • If you work 60 hours a week, 30 hours represents 50% effort • If a lab assistant works 20 hours a week, the 20 hours represents 100% effort

10. Effort Example… (cont’d) • In a typical week Professor Y estimates that she works 54.5 hours.

11. Why Must Effort Be Certified? Circular A-21 requires that institutions receiving federal awards maintain procedures documenting the distribution of activity, and associated payroll charges, to each sponsored agreement.

12. Why Should We Care • Signed effort reports are considered legal documents in which an individual attests to the accuracy of the effort spent on sponsored projects • Erroneously certifying effort reports can be viewed as fraud • We are obliged by federal regulations to exercise good stewardship of those funds 1.) Effort is a part of that stewardship 2.) Personnel costs are the majority of research costs False Claims Act, 31 U.S.C., sections 3729 & 3721

13. Effort Reporting vs. Payroll Distribution Difference between effort reporting and payroll distribution…. • Effort reporting is how you spent your time • Payroll distribution is how you are paid • Effort drives the payroll distribution • Payroll distribution does not drive the effort certification

14. Example… (cont’d) Estimate of weekly hours spent on sponsored project % of effort = on Total hours in an average work week Sponsored Project

15. Effort Example When Professor Y certifies her effort, it should be reasonably estimated as follows:

16. Effort Example… (cont’d)

17. Effort Reporting and Extra Compensation Note: It is on rare occasions that University’s and College’s charge extra compensation, above IBS, to federal awards. Such cases should occur only when: • Work crosses departmental lines or • Involves a separate or remote operation and • Work is in addition to regular department load and • Specifically provided for in the agreement and approved in writing by sponsoring agency Circular A-21 section J(10) d

18. Effort Example • Professor Y submits another proposal • The new project will be require 5 hours, every weekend, for 15 week.

19. Cost Allowability All 3 criteria must apply for a cost to be charged directly to a federal project: • The cost must be allowable under both the provisions of A-21 AND under the terms of a specific project • The cost must be allocable, meaning it can be associated to a project with a high degree of accuracy • The cost must be reasonable, meaning it reflects what a “prudent person” would pay in like circumstances

20. Effort Reporting Common Finding: • Salaries and wages charged inappropriately to sponsored projects • Employees not being properly trained • Reports not certified in timely manner • Missing or incomplete documentation that serves as “suitable means for verification” of effort • Weakness in the reporting system • Effort certified by individuals with insufficient knowledge of the work performed

21. Audit Disallowance Cases • Northwestern University- $5.5 million • South Florida - $4.1 million • University of California - $2.1 million • John Hopkins University – $2.6 million • University of Connecticut - $2.5 million

22. Websites • www.whitehouse.gov/omb/circulars_default • www.tennesseeanytime.org/laws/laws.html • www.gpoaccess.gov/cfr/ • www.tbr.edu

23. Celebrating Success As A Team