FIN-003: Management of Sponsored Program Awards in a Budget Deficit

Date: 06/23/2004 Status: Final
Last Revised: 10/15/2009
Policy Type: University
Contact Office: Sponsored Programs
Oversight Executive: Vice President for Finance
Applies To: University faculty and staff who submit proposals or process awards.
Table of Contents:

Policy Statement
Procedures

Reason for Policy:

To manage sponsored program award-projects that are in a budget deficit.

Definition of Terms in Statement:
  • Deficit:

    For the purposes of this policy, a deficit is defined as a project where expenditures and outstanding commitments have exceeded the total amount budgeted.

Policy Statement:

Sponsored Program awards and projects are created as the result of an agreement with a funding agency. The budget is established at a high level according to sponsor requirements. The Office of Sponsored Programs (OSP) collects payment on actual expenditures, up to the limit of the budget. Sponsored Program awards and projects are unique, in that the State allows for the charging of expenditures before the collection of cash. However, the University must use other resources to fund Sponsored Program expenditures until the actual funds are received from the sponsor. Since overcharges/overruns cannot be billed to the sponsoring agency, deficit awards place additional constraints on already limited University resources.

OSP is charged with filing financial reports required by the sponsoring agencies. In general, federal reports are due 90 days after the completion date of the project. The reports cannot be filed when a deficit exists or the award contains outstanding commitments. Many sponsoring agencies may delay issuing awards or withhold scheduled payments because of delinquent financial, progress or technical reports. It is not possible for an award-project combination that is in deficit to be billed.

The principal investigator is responsible for ensuring that the Sponsored Program project does not exceed the budget.

OSP will facilitate corrective action on deficit projects through distribution of the “sponsored programs budget deficit letter.” Departments and PIs must have a plan for corrective action and the plan must be implemented within 70 days or OSP may transfer the deficit to the department’s facilities and administration award.

Procedures:

Sponsored Programs Procedure 8-30 provides detailed information on the handling of budget deficits; 8-20, 8-21 and 8-22 provide detailed information on how to effect cost transfers.

Policy Background:

**ACTIVE BUT UNDER REVISION**
This policy is currently under revision at the University. Although the statements herein reflect enforced policy guidance, please call the "Contact Office" listed above if you have questions about how this policy applies to your office. The statements herein are to be used as general guidance until the policy has been revised. Thank you.

Major Category: Finance and Business Operations
Category Cross Reference: Research Administration
Approved by, Date: Policy Review Committee, 06/23/2004
Revision History: Updated 10/15/09. Previous version in effect from 6/23/04 to 10/14/09.
Supersedes (previous policy):
VIII.C.2, Budget Deficit