EAST CAROLINA UNIVERSITY OFFICE OF GRANTS AND CONTRACTS Updated 4/26/2010 COST OVERRUNS (DEFICITS) AT-A-GLANCE The following is provided as a brief outline of the basic requirements for ECU’s Overrun Policy. For questions or additional information about the policy, contact your OGC representative or

COST OVERRUNS POLICY: DEFINED  This policy applies to “true” deficits and overruns- Not claims on cash caused by timing differences in payments or award notifications from the sponsor.  This policy applies whenever expenditures exceed the real or anticipated total funding from the sponsor for the award.  PIs/DAs should monitor their awards and review accounting transactions, on a monthly basis, to avoid deficit spending.  See also Collection Policy.

GENERAL REQUIREMENT  OGC has established a special fund for each School/College that may be used by OGC for deficit clearing.  When the PI/DA do not clear deficits on a timely basis, OGC may unilaterally fund the deficit from this fund.  OGC will coordinate with the Special Funds Director on fund availability for any action taken.  The Dean will coordinate with the Chair and PI to determine a method of payback to the School fund.  Once costs have been moved to the overrun fund, they cannot be transferred, at a later date, to another sponsored fund.

FUNDING OVERRUN ACCOUNTS  The PI/Department is responsible for funding the cost overrun accounts; unless otherwise authorized by the Dean.  Overrun accounts may not cross a fiscal year in deficit. Overrun accounts must be fully funded prior to each year-end, 6/30; unless otherwise authorized by Special Funds.  Overrun accounts may not be funded by sponsored projects.

GENERAL ACCOUNTING REQUIREMENTS  Cost overruns on sponsored projects should be cleared as soon as possible.  Routine correction of accounting errors and clearing deficits should occur no later than 90 days from the time of the deficit or the budget end date, whichever is first. (See also Cost Transfer Policy.)  All deficits must be cleared, one way or another, within 90 days.

GENERAL ACCOUNTING REQUIREMENTS cont…  OGC may unilaterally clear overruns if deficits are not cleared by the department within: 60 days of notification from OGC re possible deficit status or 90 days of deficit occurred or 90 days of budget end date Whichever occurs first.  Once costs have been cleared to the overrun accounts, the costs may not be transferred to another fund. The costs must be funded within the overrun account.

SPECIAL NOTES  Pre-award spending or accelerated spending will be reviewed under this policy.  Expenditures incurred prior to an authorized pre-award period may be treated as an overrun, in conformance with applicable agency terms, as follows.

SPECIAL NOTES: PRE-AWARD OVERRUN Pre-Award Overrun :  For non-NIH/NSF Expanded/FDP – usually applied at new and annual/continuation 90 day requirement.  For NIH/NSF Expanded/FDP - 90 day requirement only applies with new awards and the competitive renewal period.  For non-federal and all non-Expanded/FDP - specific agency authorization normally required for any pre-award spending.

SPECIAL NOTES  When the sponsor has specific line-item rebudgeting requirements (e.g., maximum 10% line-item deviation), overages are considered overruns.  When the sponsor has specific line-item budget requirements (e.g., line category must be approved), expenditures without approval are considered overruns.  Line-item deviations/deficits will be reviewed under this policy. Examples: Some State of NC contracts, some Foundations, AHA

SPECIAL NOTES When significant rebudgeting or line-item rebudgeting or pre- award spending requires agency authorization: The authorization request must be submitted within 30 days of the notification from OGC or the discovery that such a condition exists. If the agency request is not submitted in a timely manner, OGC may treat the item as an overrun under this policy.

SPECIAL NOTES  If the agency subsequently denies the rebudgeting or pre- award request, the costs involved in the request may not be transferred to another sponsored project.  Upon notification of the denial, the PI/Department must clear the disallowed cost within 30 days or the costs will be transferred to the overrun fund.

PROCEDURES  A PI/department should voluntarily clear a deficit situation, upon discovery. The PI/DA should contact OGC to initiate appropriate cost clearing transactions, as soon as possible.  OGC will contact the PI/DA upon discovery of what appears to be a deficit.  OGC will contact the PI/DA in writing, outlining the situation and giving the department a 30 day period to respond, correct/clarify the situation, or authorize a transfer to an appropriate FOAP.

IMPLEMENTATION PROCEDURES  If the costs aren’t cleared within 30 days, OGC may implement the overrun procedures.  The PI/DA will be notified and the Chair and the Associate Dean for Research will be copied whenever OGC initiates a true overrun notification.  If there is no response or resolution within the time specified on the notification, OGC will initiate an overrun transfer in conformance with this policy. The PI/DA, the Chair and the Associate Dean for Research will be notified that the transaction is being processed.  At any time before the transfer, the PI/DA/Chair/Dean or Special Funds Director may authorize an alternate non-sponsored fund to be used for clearing the deficit.

OVERRUN DATA  All deficits must be cleared (one way or another) within 90 days of notification or the budget end date; whichever comes first.  The data (costs) captured in the overrun account must be maintained by OGC for audit review and for inclusion in the indirect cost proposal.  Once costs have been moved into the overrun account, they cannot be transferred to another FOAP. They must remain in the overrun status for audit and indirect cost purposes.  The deficit in the overrun account must be funded from non-sponsored funds.

QUESTIONS? For questions about the basic requirements for ECU’s Overrun Policy, please contact your OGC Representative or