Grant and Contract Deficit Resolution Procedures The following operating procedures for Grant and Contract budgets are intended to complement and supplement the University Deficit Policy as published on the Office of Planning and Budget web page. ( f/Deficit-Policy_ pdf ) f/Deficit-Policy_ pdf The following operating procedures for Grant and Contract budgets are intended to complement and supplement the University Deficit Policy as published on the Office of Planning and Budget web page. ( f/Deficit-Policy_ pdf ) f/Deficit-Policy_ pdf

Grant & Contract Deficit Resolution Presented by: Ted Mordhorst, Assistant Director, Research Accounting and Analysis Presented by: Ted Mordhorst, Assistant Director, Research Accounting and Analysis

Grant & Contract Deficit Resolution Budgets with a deficit greater than the total future anticipated funding for multi-year awards are to be cleared within 30 days of the budget going into deficit.

Grant & Contract Deficit Resolution Deficits that cannot be cleared within 30 days will require a written deficit resolution plan for clearing the deficit within 90 days of the end date of the budget. To facilitate the timely closing budget deficits need to be moved to non-grant & contract funding in a timely manner. Therefore deficit resolution plans need to provide for clearing of the deficit within 90 days of the budget end date. Deficits that cannot be cleared within 30 days will require a written deficit resolution plan for clearing the deficit within 90 days of the end date of the budget. To facilitate the timely closing budget deficits need to be moved to non-grant & contract funding in a timely manner. Therefore deficit resolution plans need to provide for clearing of the deficit within 90 days of the budget end date.

Grant & Contract Deficit Resolution The plan should include; – An explanation for why the deficit cannot be cleared within 30 days. – The source of funds that will be used to clear the deficit. – Timeline for clearing the deficit. – Signature and/or approval from Unit Dean/ Vice President/Vice Provost/Chancellor of the deficit resolution plan. The plan should include; – An explanation for why the deficit cannot be cleared within 30 days. – The source of funds that will be used to clear the deficit. – Timeline for clearing the deficit. – Signature and/or approval from Unit Dean/ Vice President/Vice Provost/Chancellor of the deficit resolution plan.

Grant & Contract Deficit Resolution Approximately 30 days prior to the end date of a budget the Grant and Contract Accounting office sends a Notice of Expiring budgets (NOE) letter to the department administrator. The notice provides instructions for preparing the budgets for closure including clearing deficits.

Grant & Contract Deficit Resolution If future award funding is to be used to clear the deficit the department is to provide GCA with a written plan for project expenditures and/or additional funding that will result in the deficit being cleared within the total award period. Deficits which cannot be cleared by anticipated future funding require a deficit or cost transfer to non-sponsored funding to clear the deficit on the grant/contract budget.

Grant & Contract Deficit Resolution Departmental monitoring: Deficit Report Periodic budget reviews Departmental monitoring: Deficit Report Periodic budget reviews

Grant & Contract Deficit Resolution If deficits have not been resolved or an approved deficit resolution plan is not in place when GCA begins closing the budget, GCA will contact the department for a budget to transfer the deficit into. GCA will notify the PI and the departmental administrator after the transfer is completed.

Grant & Contract Deficit Resolution If the deficit is not cleared within 90 days of the budget end date or GCA has not received an approved deficit resolution plan, GCA will contact the Dean’s office for assistance in clearing the deficit. The PI, Chairman, department administrator and the Office of Planning & Budgeting will be copied.

QUESTIONS?

Grant & Contract Deficit Resolution Deficits resulting from non-payment by the sponsor (cash deficits) When GCA has exhausted all attempts to collect payment and has determined that payment will not be made by the sponsor GCA will: – Notify the department that the sponsor refuses to pay and provide the resulting budget balance. – They will enter a negative budget allocation to balance the budget with the cash received. – The budget will then appear on the deficit report. Deficits resulting from non-payment by the sponsor (cash deficits) When GCA has exhausted all attempts to collect payment and has determined that payment will not be made by the sponsor GCA will: – Notify the department that the sponsor refuses to pay and provide the resulting budget balance. – They will enter a negative budget allocation to balance the budget with the cash received. – The budget will then appear on the deficit report.

Grant & Contract Deficit Resolution Departmental action: – Clear the deficit in a timely manner – If the deficit cannot be cleared within 30 days provide GCA with a deficit resolution plan as provided for in the deficit resolution policy. Departmental action: – Clear the deficit in a timely manner – If the deficit cannot be cleared within 30 days provide GCA with a deficit resolution plan as provided for in the deficit resolution policy.

Grant & Contract Deficit Resolution Disallowed Costs: When disallowed costs are determined after the end of the budget period and it is not possible to extend the budget period departments are to promptly, upon notification transfer the cost to non-sponsored funding. It is not appropriate to use a deficit transfer in this situation. The specific disallowed cost must be transferred using the MyFD cost transfer process. Disallowed Costs: When disallowed costs are determined after the end of the budget period and it is not possible to extend the budget period departments are to promptly, upon notification transfer the cost to non-sponsored funding. It is not appropriate to use a deficit transfer in this situation. The specific disallowed cost must be transferred using the MyFD cost transfer process.

Grant & Contract Deficit Resolution Disallowed Costs: GCA will notify the department of disallowed costs upon final determination and request that the cost be transferred to non-grant & contract funding as soon as possible. If the budget is closed, GCA will enter a negative budget allocation to bring the total budget allocation in balance with allowable costs. Any resulting positive cash balance will be refunded to the sponsor. Disallowed Costs: GCA will notify the department of disallowed costs upon final determination and request that the cost be transferred to non-grant & contract funding as soon as possible. If the budget is closed, GCA will enter a negative budget allocation to bring the total budget allocation in balance with allowable costs. Any resulting positive cash balance will be refunded to the sponsor.

Grant & Contract Deficit Resolution Disallowed Costs: In all cases if the disallowed cost is not transferred off the sponsored budget within 30 days of when the notice of disallowable cost is sent to the department GCA will contact the Deans’ office for assistance in removing the disallowed cost. Disallowed Costs: In all cases if the disallowed cost is not transferred off the sponsored budget within 30 days of when the notice of disallowable cost is sent to the department GCA will contact the Deans’ office for assistance in removing the disallowed cost.

QUESTIONS?