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2.2 Residual Funds

Guidelines

This guideline describes the treatment of residual funds pertaining to fixed-price awards from externally funded sponsored programs at the University of Houston. The Principal Investigator (PI), department administrators and the Division of Research must ensure that residual funds are used to advance the mission of the university and do not create a possible conflict of interest for the PI.

Definitions

Residual Funds – Unspent funds on a privately funded fixed-price award at the end of the project performance period, as long as deliverables have been met and accepted by the private sponsor.

A residual fund is defined as an unobligated, unspent balance remaining in a sponsored account at the conclusion of the project. A residual fund occurs when the income or revenue is greater than the expense incurred upon completion of the project. A residual fund will only occur on fixed price awards.

Fixed-Price Award – The university earns a predetermined fixed amount, regardless of the actual costs, for services performed. Revenue is recognized when cash is received.

A fixed price award is provided to the University of Houston by an external funding agency when a fair price for the anticipated work is determined at the proposal stage. Costs are pre-determined based on a fixed fee per unit of service or product. The total award is not subject to any upward or downward adjustment of funds based on actual cost. There is no stipulation or expectation that excess funds be returned to the funding agency.

Sponsored Program – Funds in cost centers issued by the Division of Research for projects or programs for which the funds have been solicited and received from a source outside of the normal operating budget of the university.

Procedures

Following the expiration of a fixed-price award, any unspent balance may be transferred to a residual funds cost center for the use of the Principal Investigator, subject to the following provisions:

  • If the sponsor has formally accepted the planned deliverables.
  • If the balance remaining in the original award cost center exceeds 25% of the total award amount, the PI must provide a written justification for the amount of the unspent balance, and the VC/VP for Research and Technology Transfer or designee must approve the transfer of any amount.
  • Only the portion of funds that would have been available to pay for direct costs at the current indirect costs rate may be transferred to the residual funds cost center. The portion of the remaining balance that is attributable to indirect costs will be transferred to a DOR cost center and maintained for the VC/VP for Research and Technology Transfer.
  • The funds transferred to the residual cost center are no longer subject to the terms and conditions of the original award(s). The MAPP policies that apply to the use of local funds also govern the use of residual funds.
  • Residual fund cost centers will be extended as long as a balance remains available in the cost center.
  • In the event the PI leaves the university, the remaining balance reverts to the institution and not the department or college.
  • In the event that the total balance remaining on the fixed-price project is less than $200, that balance will be transferred to the institution and not to the PI’s cost center.
  • If the PI has cost overruns in an existing sponsored project cost center, residual transfers will not be approved until the deficit balance is cleared.
  • If the PI has a cash deficit on a project that he/she is responsible for, as outlined in Section 3.2: Sponsor Nonpayment - Prevention and Remediation, a residual transfer will be denied and the balance will be used to offset the sponsor non-payment.

Revised: May 31, 2012