Effort Reporting: Total Professional Activity vs. Institutional Activity

Salary and Wage Costs What NIH Expects  Charges for salaries and wages will reflect actual effort expended--not necessarily the proposed or budgeted effort  Charges for salaries and wages, whether treated as direct costs or indirect costs, will be based on documented payrolls/effort reports approved by a responsible official of the organization  Significant changes in actual effort vs. budgeted effort will be adjusted

What is a Significant Change?  No precise definition  Determination should be made by the employee or the individual who certifies the effort report  Any changes made by the individual or certifying official should be considered significant

Significant Change  General Rule: A change applicable to a given project or activity of 5% or more of an employee’s TOTAL effort would require an adjustment to the effort report

Salary and Wage Costs- Cost Transfers  Used to correct errors or changes in effort certified vs. budgeted effort  Must be well documented  Must be made in a timely manner

Personnel - Prior Approval  Required for change in a key person specified on Notice of Grant Award (NGA) Always Principal Investigator (PI)  Key Person: an individual identified in the application who contributes to the scientific development or execution of the project in a substantive way, whether or not salary is requested

Personnel - Prior Approval  Required if PI or other key personnel named on the NGA will:  Withdraw from the project completely  Be absent 3 months or more  Reduce time devoted to project by 25% or more

Prior Approval  Required for: Change in scope or objective of a project Change in Scope is a change in direction or other area that constitutes a significant change from the aims, objective, or purpose of the originally approved project (significant change in effort by key personnel could indicate potential change in scope)

Institutional Base Salary (IBS)  The annual compensation that the applicant organization pays for an employee’s appointment whether that individual’s time is spent on research, teaching, patient care or other activities.  Excludes any income that an individual may be permitted to earn outside of duties to the applicant organization.  May NOT be increased as a result of replacing institutional salary funds with grant funds

Revised NIH Grants Policy Statement

NIH Grants Policy Statement – A Closer Look  Closely related work:  NIH eliminated the option for grantees to pursue prior approval to account for multiple projects under a single cost objective  NIH applies the relatedness provision of A-21 to all NIH recipients, which is consistent with the FDP Terms and Conditions

Key Personnel:  Expanded definition to: describe contribution of key personnel as “measurable” whether or not salaries are requested. Clinical Practice Plan (IBS):  Clinical practice plan appointments compensation may be considered in the base salary as long as criteria are met. NIH Grants Policy Statement – A Closer Look

Clinical Practice Compensation (IBS): Clinical Practice Compensation (CPC) appointments compensation may be considered in the IBS, provided: 1. CPC must be guaranteed by the university/Institution 2. Clinical practice effort must be shown on the appointment form and must be paid through the university/institution 3. Clinical practice effort must be included and accounted for on the university/institution effort report Revised Grants Policy Statement

Total Professional Activities – Other Support  NIH requires complete and up-to-date other support information before an award can be made  Complete means all sources of research support (including outside the applicant organization – Total Professional Activities)  Grantees must report changes in other support as part of the annual progress report NIH Guide, February 13,

Total Professional Activities - Career Awards  Most Career Awards require a minimum commitment of total professional effort to research.  Previously defined total professional effort as all sources of research support (including appointments outside the applicant organization, exclusive of consulting activity within institution's limits.)  Effective for all applications submitted after 10/1/04 investigators will meet the required commitment of total professional effort as long as: 1) the individual has a full-time appointment with the applicant organization; and 2) the minimum percentage of the candidate’s commitment required for the proposed Career award experience is covered by that appointment. NIH Guide, August 3,

Support/Commitment Overlap  Overlap of support (scientific or budgetary) is unallowable  Over commitment of an individual’s effort is unallowable

Salary Cap  Restricts the amount of direct salary under a grant or contract to Executive Level I of the Federal Executive Pay Scale  Executive Level I increase effective January 1, 2005 $175,700 $180,100 January 7, 2005 NIH Guide Notice

Top 10 Issues on Salary Costs to NIH Grants?  Certifying official does not have first-hand knowledge of effort performed  Effort reports not certified and returned in a timely manner  Certifying the budgeted effort vs. actual effort  Salary cap not treated correctly with respect to effort and charging NIH grants/contracts  Corrections for significant changes in budgeted vs. actual effort are not made OR not made in a timely manner

Top 10 Issues on Salary Costs to NIH Grants?  Transferring costs from one project to another to avoid a cost overrun  Failure to get prior approval for change in key personnel, i.e., withdraw from project completely, be absent for 3 months or more or reduces time by 25% or more  Overlap of support (scientific or budgetary)  Overlap of commitment  Use of incorrect IBS, especially when CPC is involved

What’s at Risk?  Audit Findings/Cost Disallowances  Designation as High Risk Organization  Special Terms and Conditions on NGAs  Requirement for Corrective Action Plan  Special Monitoring by NIH  Temporary Withholding of Payments  Withholding of Future Awards

Questions? Joe Ellis Acting Director, Office of Policy for Extramural Research Administration