Effort Reporting

Scope

This document sets forth the University of Houston's requirements and procedures on certification of effort expended on sponsored project awards administered by the University. These requirements and procedures apply to all individuals who commit and devote effort to a sponsored project as well as those individuals involved in certifying the effort of individuals on a sponsored project.

Purpose

Effort reporting is a federal requirement. Accordingly, the government requires that institutions receiving federal funds for sponsored agreements maintain an effort certification process that complies with the requirements set forth in the Uniform Guidance and OMB Circular A-21. As a recipient of significant external funding, the University must assure Federal and other sponsors that the assignment of time and associated salary and fringe benefit costs to the projects they sponsor is fair, consistent, and timely.

Effort Reporting Federal Requirements

Uniform Guidance and OMB Circular A-21 require that the University have a system in place for confirming that salaries and wages associated with federally sponsored agreements. The Guidance stipulates that the certification reports should reasonably reflect effort allocated to the activities for which the employee is compensated, and that they are to be verified by the employee, the principal investigator, or responsible official using suitable means of verification that the work was performed.

To comply with federal requirements and the terms and conditions of the sponsored agreements, the University of Houston requires certification of the percentage of time (i.e., effort) that each employee devotes to sponsored projects. The University's effort reporting system assures external sponsors that their funds are appropriately expended in that the portion of an individual’s salary charged to a funded project is no greater than the portion of the individual's effort spent on that project. The system also provides confirmation that the University is in compliance with requirements related to meeting commitments of effort proposed and included in funded agreements. Principal Investigators (PIs) and other faculty and staff paid from sponsored projects must confirm, after-the-fact, that salaries charged to sponsored projects are consistent with the effort that was contributed.

Financial penalties, expenditure disallowances, and harm to the University's reputation could result from failure to provide accurate effort certifications or failure to comply with the University's effort reporting requirements.

Who Needs to Know the Requirements and Procedures?

Employees who are compensated in whole or in part by sponsored research funds, have made a commitment of uncompensated effort (cost share) to sponsored projects, or are involved with the administration of sponsored agreements are expected to abide strictly by the provisions of these procedures. This includes central and departmental sponsored project administrators, deans, chairs, principal investigators, and other sponsored research personnel. Each faculty member must be aware of his/her level of committed effort to sponsored projects, their ability to meet those commitments in light of any other University obligations they may have, and to communicate any significant changes in level of sponsored projects effort to his/her respective business office. All individuals involved in the effort certification process should be aware of the requirements and the importance of complying with them as funding disallowances and financial penalties can be imposed on the University for inaccurate, incomplete, or untimely effort reporting.

Explanation of University Compensated Effort

The effort verification process must account for all activity for which the University compensates the individual. This is referred to as the Institutional Base Salary (IBS). IBS includes all effort expended on research, teaching, administration, clinical activity, business development, and any other activity for which an individual receives compensation of salary, wages, supplementary salaries, and overloads (but not bonuses) from the University. It does not include effort for which the employee receives compensation directly from another entity (e.g., outside consulting work). University compensated effort must be reasonable, allowable, and allocable to the sponsored research in order to be properly charged and certified to the sponsored program. For example, it is generally inappropriate to charge or certify costs to a sponsored agreement for time spent preparing a proposal for an unrelated or competing award because such costs might not be allocable to the sponsored agreement.

Example

Example of Institutional Base Salary Amount Effort New Effort With Chair New Effort with additional Teaching
Dr. X earns 90,000 in his nine month appointment and dedicates half of his time to Research 45,000 50% 40% 38%
Dr. X earns 90,000 in his nine month appointment and dedicates half of his time to Teaching 45,000 50% 40% 38%
Current Institutional Base Salary     90,000
If Dr. X will be Dept. chair stipend and receives $20,000 over 9 months 20,000 20% 16%
New IBS will increase     110,000
Dr. X asked to teach for the fall and will receive an additional 10,000 for the effort 10,000 8%
New IBS will increase     120,000    
Total Effort     100% 100% 100%

Cost Sharing

Cost sharing describes the portion of the cost of a sponsored project that is borne by the University rather than by the external sponsor. One example of cost sharing is where some or all of an individual's effort is expended on a specific sponsored project, as a requirement of the award, but not funded by the external sponsor. The total percentage of effort cost shared during the certification period is entered on the Quarterly Effort Reporting for Grant Activity form (effort certification report) under the "Cost Shared – Actual" column. Any cost sharing time should be reviewed for accuracy by the Principal Investigator as part of the review of the overall effort identified in the certification report.

Sponsor Salary Caps/National Institutes of Health (NIH)

Certain sponsors impose a limit or "cap" on the annual rate of salary reimbursement for a given amount of effort. The difference between the reimbursed salary ("capped amount") and the unreimbursed salary can be used as committed cost sharing.

Similarly, certain sponsors may limit the amount of salary that can be requested from a specific program; these programs, notably NIH Career Development Awards, may also carry minimum effort requirements. The cap establishes a maximum annual rate of pay at which an individual's full time effort over a twelve-month period can be charged for a federal contract, grant, or cooperative agreement. It is not intended to limit the actual salary paid by the institution. An institution may pay an individual in excess of the cap. The program's salary limitation/cap does not constitute committed cost sharing.

Actual salary paid to an individual by the University of Houston is not constrained by the salary cap. Only the salary charged to sources that are subject to the cap are affected. Federal regulations permit institutions to supplement salary paid under awards that are subject to the salary cap using non-federal funds. However, Federal regulations do not allow for salary dollars in excess of statutory or regulatory salary caps, such as the National Institute of Health (NIH) salary cap, to be used as cost sharing. The amount of the faculty member's institutional base salary (IBS) to be charged to the grant is determined based on the percentage of effort to be devoted to the grant multiplied by the salary cap (not the IBS).

Example of Budgeting and Effort Reporting

Budget Amount NIH Cap Amount Per Year Amount Per Month
Current NIH Salary Cap (12 months) $183,300.00 $15,275.00
Current Institutional Base Salary for PI  (9 months appointment) $200,000.00 $22,222.22
Total Compensation if Summer Salary Covered (no restrictions) $266,666.67 $22,222.22

Example 1

3 calendar months/year = 3/12 = 25% effort Amount Per Year For Proposal Budgeting Amount Per Month for Payroll and  Effort Reporting % Effort Report % ePRF Distribution
Using the PI's regular salary @ 25% effort amount PI should be paid $66,666.67 $5,555.56    
Using the the NIH salary cap the PI can only be paid from the grant $45,825.00 $3,818.75 25% 17%
Difference between the amount allowed per cap and regular salary
(Can only be paid on a  non-grant)
$20,841.67 $1,736.81 8%
Remaining PI salary that can be paid on other grant/s $200,000.00 $16,666.67 75% 75%

Example 2

3 academic months/year = 3/9 = 33% effort - Assuming no summer salary Amount Per Year For Proposal Budgeting Amount Per Month for Payroll and  Effort Reporting % Effort Report % ePRF Distribution
Using the PI's regular salary @ 33% effort amount PI should be paid $66,666.67 $7,333.33    
Using the the NIH salary cap the PI can only be paid from the grant $45,825.00 $5,040.75 33% 23%
Difference between the amount allowed per cap and regular salary
(Can only be paid on a  non-grant)
$20,841.67 $2,292.58 10%
Remaining PI salary that can be paid on other grant/s $133,333.33 $14,888.89 67% 67%

Example 3

3 Summer months/year = 3/3 = 100% effort - Assuming  summer salary only Amount Per Year For Proposal Budgeting Amount Per Month for Payroll and  Effort Reporting % Effort Report % ePRF Distribution
Using the PI's regular salary @ 100 % effort amount PI should be paid $66,666.67 $22,222.22    
Using the the NIH salary cap the PI can only be paid from the grant $45,825.00 $15,275.00 100% 69%
Difference between the amount allowed per cap and regular salary
(Can only be paid on a  non-grant)
$20,841.67 $6,947.22 31%
Remaining PI salary that can be paid on other grant/s $0.00 $0.00 0% 0%

The PI should ensure that adequate non-sponsored funding is available to cover any cost in excess of the cap when his/her institutional base salary is over the salary cap. The PI and other key personnel must still devote the amount of effort agreed upon irrespective of a sponsor imposed salary cap or program limitation.

Frequency of Certification

The University of Houston collects effort certifications on a quarterly basis following the schedule below: 

Reporting Period Due Date
September 1 - November 30 May 31, 2015
December 1 - February 28 *TBD
March 1 - May 31 *TBD
June 1 - August 31 *TBD

*The above schedule will be updated as due dates become available, and notifications will be sent via listserv.  

Distribution of the Certifications

The Quarterly Effort Reporting for Grant Activity form (effort certification report) must be distributed by the Department Business Administrators (DBAs) in due time for collecting the quarterly certifications. The department effort report packet contains each individual employee's effort certification report with the name of the Principal Investigator. 

Who can Certify Effort Reports?

Effort certification reports are signed by the employee and/or principal investigator or other responsible official, to confirm that all activities (sponsored and non-sponsored) are reported correctly, and that the distribution of effort shown on the certification report reflects a reasonable estimate of the percentage of total effort that was spent on each activity.

Corrections to Effort Certification

Actual effort should be closely monitored throughout the life cycle of each award. The PI and their department business administrators should be reviewing sponsored project cost centers and payroll expense reports regularly to identify errors or to ensure that costs are being charged to the correct cost center. If, during the certification period, the effort percentage reflected on the certification is not a reasonable estimate of the employee's effort, the percentage should be crossed out in ink with the correct percentage written in the margin. Any changes of the actual charged percentage with a variance of more than 5 percent should be corrected using a Payroll Reallocation Form in accordance with the Cost Transfers on Sponsored Agreements Policy.

Recertifications & Payroll Reallocations

This policy requires that the payroll distribution match the effort percentages certified on the effort certification report with a variation of no more than 5 percent. Once effort has been certified for a given period, requesting a retroactive payroll cost transfer for that period calls into question the reliability of the certification process. Payroll cost transfers, accompanied by appropriate explanations, are strongly encouraged prior to the certification of effort.

Once certification of effort has been completed, only in certain circumstances will subsequent payroll cost transfers be permitted. If it is necessary to adjust the salary charges for a previously certified effort period, documentation must provide a detailed explanation of the need for the payroll cost transfer and subsequent recertification. The written justification (see sample) should be submitted within 90 days of the end of the period being certified and must be approved by the Principal Investigator, appropriate Department Chair or Center and Institute Director, and the Dean and submitted to the Director of OCG for approval. Once the cost transfer has been processed, a new effort certification report must be produced for the required signatures.

Non-compliance

The University of Houston is required to ensure that all responsible parties utilize the current effort reporting system. This process will entail a rigorous monitoring of all compliance issues, documentation of any delinquencies, and escalating notices to relevant UH personnel of delinquent effort reports. Notifications will be forwarded first to the Principal Investigator and Department Business Administrator, then to the Department Chair or Center and Institute Director, and finally to the College Dean.

Failure to follow the provisions of the University of Houston's Effort Reporting Requirements and Administrative Procedures may subject the individuals and departments responsible for the violation(s) to administrative and/or disciplinary actions in accordance with University disciplinary procedures and the judgment of management.