Administrative and clerical salaries

1. Administrative and clerical salaries Background, Best practices, and the future of direct charging administrative/clerical salaries to grants MRAM March 2014 FISCAL COMPLIANCE CORNER

2. Breakdown of Facilities & Administrative rate Incurred for common or joint objectives and cannot be identified readily and specifically with a particular sponsored project: Facilities* includes: • Operation/maintenance of buildings • Building Interest (cost of interest) Administrative* includes: • General administration • College/School administration • OSP/GCA (research administration) *Based on OMB Circular A-21 Management Accounting and Analysis (MAA) website contains detailed information on the cost pools

3. Administrative portion is 26% Established by Congress in 1991. No change since that time despite efforts by Universities and COGR requesting this be re-visited. Administrative costs associated with sponsored projects are charged to the project by virtue of sponsor paying the F&A rate associated with the project. Direct charging administrative or clerical costs is generally disallowed for this reason. No double-charging!

4. Are there exceptions? No bright line exceptions, just general guidance via OMB interpretation issued in 1994: ...direct charging of these costs may be appropriate where the nature of the work performed under a particular project requires an extensive amount of administrative or clerical support which is significantly greater than the routine level of such services provided by academic departments. The costs would need to meet the general criteria for direct charging in section D.1. -- i.e., be identified specifically with a particular sponsored project relatively easily with a high degree of accuracy, and the special circumstances requiring direct charging of the services would need to be justified to the satisfaction of the awarding agency in the grant application or contract proposal. {italics, bold added}.

5. Proposal stage: Key steps CONSISTENT TREATMENT within your unit: Compare activity to be undertaken by individual with other grants with similar activity or other grants the individual is on doing same type of work. CLEAR and THOROUGH JUSTIFICATION: Explain the activity of the individual and why this project has “unlike”circumstances warranting the direct charging of the salary cost. RESPOND to OSP Review Comments: OSP has a “bird’s eye” view of grants at the University and is looking to ensure consistent treatment of costs in budget proposals across the University. Know DEPT responsibility/risk: Despite your best efforts to justify and OSP approval of the proposal, the sponsor/auditor may see it differently! See POST-AWARD key steps. REMEMBER: OSP approval does not guarantee acceptability of costs as a direct cost!

6. When is it guaranteed the costs would be allowable? Sponsor EXPLICITLY approves the line item cost in the award terms and conditions (this rarely happens). University requests and receives direct sponsor approval to add/charge such a cost to a budget. If post-award, this would come through as a concurrence request. Merely receiving an award in response to a proposal that includes admin/clerical costs as a direct line item with justification, is NOT explicit sponsor approval. Spend at your risk and document, document, document (see Post-Award key steps)

7. Key Post-Award Steps • Identify the individuals/positions involved. • Document activity directly related to achieving the objectives of the sponsored program. • GCCRs processed and signed by the PI per university policy.

8. If costs are questioned . . . Have available: Proposal with justification Documentation in department file Be prepared to explain individual’s activity and why unlike/unusual Be prepared to explain why individual’s activity on THIS grant is different than on another grant, if such individual’s time is NOT directly charged on another grant.

9. Specific findings from recent years (at other Universities) • Auditor’s findings included unallowable salary for administrative and clerical type work such as cleaning glassware, ordering supplies, and supervising data collections. • The auditors determined that neither the nature of the work performed on the projects nor any other circumstances justified any unusual degree of administrative support or showed that the employees were necessary for the performance of the awards. • Disagreement over what constitutes a Major project or program.

10. Uniform Administrative Requirements (“OmniCircular”) New provision: (d) The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate where all of the following conditions are met:

11. Uniform Administrative Requirements (“OmniCircular”) Conditions: (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.

12. Uniform Administrative Requirements (“OmniCircular”) Applies to new funding received after Dec 26, 2014 Current regulations will continue to apply to existing funding. The new language dropped the reference to “Major Project or Activity” and the examples in Exhibit C. Appears to provide some additional flexibility for direct charging. Not sure what specific sponsors or auditors will do. Cautiously optimistic

13. Resources OMB Circular A-21 GIM 23: (Includes list of job codes considered administrative/clerical as determined by UW Management Accounting and Analysis, MAA) OSP: osp@uw.edu GCA: gcahelp@uw.edu FAQs and additional process information: http://www.washington.edu/research/guide/news.php?entry=795