Grant & Contract Deficit Procedures

Included on this page:



  • Deficit: The amount by which expenditures exceed a grant or contract award, a budget allocation, or revenue available in a specified fiscal period (grant period, biennium or fiscal year depending on the type of budget). Does not include negative budget balances resulting from un-liquidated encumbrances.   University of Washington Deficit Policy
  • Applies to:  Grants & Contracts, Budget Type 05
  • Process:  The following operating procedures for Grant and Contract budgets are intended to complement and supplement the University Deficit Policy as published on the Office of Planning & Budgeting web page.

GCA has developed an on-line deficit report of all Grant and Contract budgets (budget type 05) that are in deficit. University personnel with access to My Financial Desktop may access this report at any time through the “more Systems” menu under “Decision Support”.

Budgets with a deficit greater than the total future anticipated funding for multi-year awards are to be cleared within 30 days of the budget going into deficit.

Deficits that cannot be cleared within 30 days will require a written deficit resolution plan for clearing the deficit within 90 days of the end date of the budget. The plan is to be sent for review and approval to the

Executive Director
Grant and Contract Accounting
Campus Box 354966

To facilitate the timely closing of a grant or contract budget deficits need to be moved to non-grant & contract budget in a timely manner. Therefore deficit resolution plans need to provide for clearing of the deficit within 90 days of the budget end date.
The plan should include
• An explanation for why the deficit cannot be cleared within 30 days.
• The source of funds that will be used to clear the deficit.
• Timeline for clearing the deficit.
• Signature and/or email approval of the deficit resolution plan from one of the following Unit Dean/ Vice President/Vice Provost/Chancellor.


At budget expiration

If future award funding is to be used to clear the deficit the department is to provide GCA with a written plan for project expenditures and/or additional funding that will result in the deficit being cleared within the total award period. Deficits which cannot be cleared by anticipated future funding require a deficit or cost transfer to a non- grant and contract budget to clear the deficit on the grant/contract budget. Send the plan to

Executive Director
Grant and Contract Accounting
Campus Box 354966

See Closing Types for budgets with continuation budgets.

Departmental monitoring

  • Departments are to access the on-line deficit report at least quarterly to obtain a list of all Grant and Contract budgets that are in deficit and promptly clear any deficits.
  • If deficits have not been resolved or an approved deficit resolution plan is not in place when GCA begins closing the budget, GCA will contact the department for a budget to transfer the deficit into.
  • If the deficit is not cleared within 90 days of the budget end date or GCA has not received an approved deficit resolution plan, GCA will contact the Dean’s office for assistance in clearing the deficit. The PI, Chairman, department administrator and the Office of Planning & Budgeting will be copied.

Transferring/clearing deficits

Deficits may be cleared or transferred off grant and contract budgets in a number of ways.

  • Transferring deficits in GrantTracker. Budgets that are in deficit will have a transfer deficit link in GrantTracker. Click on the link and enter the non-grant and contract budget number to which the deficit is to be transferred. Using this process, deficits may only be transferred to one budget.
    • NOTE: Transferring deficits in GrantTracker only applies to parent or standalone accounts.  Deficits being resolved on sub budgets must be done manually by GCA.  Please submit a GrantTracker request on the sub budget with the deficit budget and any PCA coding needed.
  • Transferring deficits to more than one budget. To transfer a deficit to more than one budget send a request to and include the non-grant and contract budget numbers and corresponding amounts to which the deficit is to be transferred.
  • Deficits may be cleared by processing expense cost transfers including salary transfers. These transfers require identifying specific transactions to be transferred but may be transferred to other grant and contract budgets with proper justification. (See GIM 15)

Cash Deficits

Deficits resulting from non-payment by the sponsor (cash deficits) On occasion sponsors do not pay the full amount of an award.  This may occur for a variety of reasons including:

  • Non-performance by the PI.
  • Changing financial position of the sponsor (e.g., bankruptcy)
  • Disputes over the results of the project

Most often we are not aware of these situations until well after the end of a budget period making it difficult to administer under the standard deficit process.

When GCA has exhausted all attempts to collect payment and becomes aware that payment of the full award/expenditure amount will not be made by the sponsor

GCA will do the following

  • Notify the department that the sponsor refuses to pay and provide the resulting budget balance.
  • Enter a negative budget allocation to balance the budget with the amount of cash the sponsor has paid. This will result in putting the budget in deficit.
  • The budget will then appear on the automated budget deficit report.

Departmental action

  • Clear the deficit within 30 days of notification of non-payment
  • If the deficit cannot be cleared within 30 days provide GCA with a deficit resolution plan as provided for in the deficit resolution policy above.
  • If the deficit is not cleared or an approved deficit resolution plan is not in place GCA will notify the Dean’s office for assistance in clearing the deficit.

Disallowed Costs

  • From time to time, costs charged to sponsored projects are determined to be unallowable upon review by internal or external examiners. Should this occur during the budget period, upon notification departments are to promptly transfer the cost to a non-grant and contract budget.
  • When disallowed costs are determined after the end of the budget period and it is not possible to extend the budget period departments are to promptly, upon notification transfer the cost to non-grant and contract budget. It is not appropriate to use a deficit transfer in this situation.
  • The specific disallowed cost must be transferred using the MyFD cost transfer process.
  • GCA will notify the department of disallowed costs upon final determination and request that the cost be transferred to a non-grant and contract budget as soon as possible. If the budget is closed, GCA will enter a negative budget allocation to bring the total budget allocation in balance with allowable costs. Any resulting positive cash balance will be refunded to the sponsor.
  • In all cases if the disallowed cost is not transferred off the sponsored budget within 30 days of when the notice of unallowable cost is sent to the department GCA will contact the Deans’ office for assistance in removing the unallowable cost.

Helpful hints

  • Monitor SNAP budgets carefully
  • Change budget status early to avoid unwanted expenditures that can create a deficit
  • Recognize that deficits cannot be transferred between federal projects
  • If unable to get requisitions approved due to a deficit and the deficit transfer is in process, note this when submitting the requisition.


updated 031011: SME/tm

© 2016 University of Washington     PRIVACYTERMS