Shifts in Level of Effort or Source of Funding for Committed Effort

Introduction

These guidelines are being provided to assist and provide clarification for University personnel in defining, planning for, and monitoring fulfillment of faculty effort commitments under sponsored agreements including effort charged directly, cost sharing commitments, funding shifts (i.e., change in the source of salary funding), and reductions of effort. This includes, but is not limited to:

Defining circumstances when cost sharing is 'created' by virtue of the shift in the funding of a faculty member’s committed effort which occurs when faculty continue to work on a grant but elect to have the associated salary charged elsewhere,
How to identify and capture cost shared effort when and if it is created and when to document this cost sharing on a GC-1 addendum,
The process for addressing reductions of effort,
When sponsor approval may be required,
When it is necessary to involve the Office of Sponsored Programs.

Notes:

The scenarios and examples below assume that the award is under expanded authorities, which is when the University (typically Office of Sponsored Programs (OSP)) has specific authority to act on behalf of the sponsor. If your award is not under expanded authorities, then sponsor approval is generally required before taking any action.
There are times when a sponsor makes an award that is less than the proposed amount. In those cases, it may be necessary to communicate (via OSP) with the sponsor’s Grants Management Officer (GMO) about any of the following scenarios to obtain approval. Using this method, the “originally proposed effort” or “originally funded amount” becomes a new percent/amount against which future reductions should be calculated. Not doing this assumes that the PI will maintain the original proposed effort even with the reduced funding.
Under OMB A-110 guidelines, a PI may reduce his/her effort up to a cumulative maximum of 25% (across all non-competing segments of the award) from the originally proposed effort. If at any time the cumulative change would be greater than 25%, a formal request to the sponsor for reduction in effort is required.
While this document refers to the PI (out of writing convenience), a change in the effort of any Key Personnel (as identified on the award document) on a grant or contract requires these same procedures be followed.

Reduction of effort or shift in funding source – short term vs long term

The appropriate process will be determined by whether the reduction in effort or the shift in funding source is short term or long term.
- Short term: less than three months does not require OSP or Sponsor approval.
- Long term: three months or more will require the department to work through OSP to contact the sponsor for prior approval.
It is recommended that, for the department’s future reference, documentation for the shift in effort be maintained in department’s records (e.g., OPUS text, letter in faculty and/or grant file, etc.).

EXAMPLE 1: Minor reduction in PI effort (<25%)

Faculty indicates 20% effort commitment on a grant proposal.
After the proposal is awarded, the PI discovers a need to reduce his/her effort to 16% (a reduction which is less than 25% of the originally proposed effort).
- Shift Calculation: 20% - 16% = 4% 4% ÷20% = 20% change in effort

Option #1: Original effort is directly charged to the grant:

Department Action: The PI directs the department to make appropriate adjustments to OPUS to reduce the salary charged to the grant commensurate with the reduction in the level of his/her effort.
No other action is required as change is less than 25%.

Option #2: Original effort is cost shared (short or long term)

Department Action: Department submits a GC1 Addendum directly to GCA to reduce the cost share pledge in BGT for the PI.
GCA Action: GCA reduces the pledge as documented by the revised GC1 Addendum.

Option #3: Original effort is cost shared and some responsibilities are assumed by another faculty member (short or long term)

Department Action: Department secures appropriate approvals for commitment of funds to cost share salary of other faculty member.
Department Action: Department submits a revised GC1 Addendum directly to GCA to reduce the cost share pledge in BGT for the PI. If the team member assuming the additional responsibility is not being paid from the grant for the additional effort, then the cost share for that team member should be included with information added to the revised GC1 Addendum.
GCA Action: GCA reduces the original pledge as documented and also adjusts the pledge by adding the faculty member replacing the PI if documented on the revised GC1 Addendum.

Note: If the originally documented cost share is Mandatory, i.e., required as a condition of the award, other cost shared expenses must be provided to make up any shortfall resulting from the adjustments to PI or other personnel effort.

EXAMPLE 2: Major shift in PI effort (> 25%)

Faculty indicates 20% effort commitment on a grant proposal.
After the proposal is awarded, the PI discovers a need to reduce his/her effort to 10% (a reduction which is greater than 25% of the originally proposed effort).
- Shift Calculation: 20% - 10% = 10% 10% ÷ 20% = 50% change in effort

Option #1: Short term

Department Action: Department determines if additional effort during subsequent cycles will result in a total change in effort less than 25% (within competitive grant periods). If this is true, then no action is required beyond adjusting OPUS. (See Example 1, Option 1).

Option #2: Long Term – When Directly Charged to Grant

PI Action: PI must forward a written request to OSP for concurrence and submission to the sponsor GMO.
Department Action: Wait for Sponsor approval.
When written approval is received from the Sponsor

OSP Action: OSP will forward approval to PI and Department
Department Action: The PI will direct the Department to make appropriate changes in OPUS to reduce the salary charged to the grant commensurate with the reduction in the level of effort.

Note: All Federal grants and some non-federal grants require sponsor approval. Departments should check with OSP if there is any question about the sponsor’s requirements.

Option #3: Long Term – When Cost Shared Effort

Department Action:
- PI must forward a written request to OSP for concurrence and submission by the sponsor GMO
- Department prepares a new or revised GC1 Addendum as appropriate.
Department Action: Wait for Sponsor approval.
OSP Action: If approved by Sponsor (which will be in written form, typically an email, OSP will forward approval to PI and Department and will send revised NEA and GC1 Addendum to GCA.
GCA Action: GCA adjusts the cost share pledge in BGT.

Note: All Federal grants and some non-federal grants require sponsor approval. Departments should check with OSP if there is any question about the sponsor’s requirements.

A change in effort which requires sponsor approval should not be initiated until AFTER the formal approval is received.

EXAMPLE 3: No change in committed effort, but reduction in effort funded by award

Faculty indicates 20% effort commitment on a proposal with requested funding for the full 20%
After the proposal is awarded, the PI discovers a need to reduce his/her compensation from the award (e.g., from 20% to 15% from the award) but maintains his/her effort committed at the originally proposed level of 20%.
This results in a cost share situation

Option #1: Short Term (3 months or less):

Note: no GC1 Addendum is required for this scenario)

Department Action: Place a notation in the FEC comment box confirming that the proposal pledged X% amount of committed effort for this faculty member and that this is a short term shift in funding source.
Department Action: Write budget number of award and percent of cost share in “Section 4: Cost Sharing Effort” on the FEC form. This will normally equal the difference between the amount pledged in the proposal less the amount charged directly to the grant.
Department Action: MAA assumes that the faculty member signing the FEC has received concurrence from the Department Chair (or authorized department representative) to commit departmental resources for meeting this newly created cost sharing amount.
MAA Action: MAA will enter actual cost sharing in the budget driver as “S” (Shift) without a pledge.
RAA Action: RAA will periodically sample this type of cost shared effort to ensure that the department is not over cost sharing or accounting for voluntary uncommitted effort as cost sharing.

Option #2: Long term (greater than 3 months): originating at receipt of grant OR for more than one quarter.

Department Action: Department will prepare a GC1 Addendum documenting amount of effort being cost shared.
Department Action: The GC1 Addendum will be sent to both OSP (for record purposes only) and to the appropriate GCA Team. Place a notation in the FEC comment box confirming that the proposal pledged X% of committed effort for this faculty member and that this is a long term shift in funding source.
Department Action: The dean’s or department chair’s signature (or their designee) must appear on the GC1 Addendum to ensure that appropriate permissions have been obtained and resources are available.
GCA Action: GCA will set up an “S” (Shift in Funding Source) cost share pledge in the BGT driver if it is not intended to replace prior committed cost sharing. This pledge will preprint on the FEC form.
Cost sharing must be met before the budget can close.
Department Action: Should the PI decide to begin charging his/her full effort at a later date, an updated GC-1 Addendum must be filed in the same manner to discontinue this expectation of cost sharing.

Management Accounting and Analysis