EFFORT CERTIFICATION The University of Texas of the Permian Basin December 2015

PURPOSE Federal regulation and UT System policy requires UTPB to deliver training to people involved in the Effort Certification process. The UTPB Office of Graduate Studies and Research has assigned this training to you because you are a principal investigator (PI) receiving research funds, and that means you must follow Effort Certification policies. This training gives an overview of your Effort Certification responsibilities.

BACKGROUND ON EFFORT CERTIFICATION Effort Certification is a Federal law; it is not optional. If you have grants funded by the government, it is a condition of accepting those funds that you certify your effort. The Effort Certification process is used by the University to certify effort of all personnel working on sponsored activities. Not certifying effort in a timely and correct manner has serious consequences for the researcher. Failure to complete the Effort Certification report during the required time period can result in a PI’s research funds being frozen. Salaries and wages typically comprise approximately 2/3 of the direct costs charged to sponsored projects. Appropriately, certified effort reports provide auditable documentation to demonstrate to the University’s research partners that the sponsor did, in fact, receive the level of effort described and expected through the proposal process, the award process, and all-post award communications with the sponsor.

BACKGROUND ON EFFORT CERTIFICATION CONT. Federal and state agencies, private foundations, organizations, and industry sponsors provide significant funding to enable The University of Texas of the Permian Basin to conduct research, public service, and training projects. The University’s effort reporting system provides the principal means for certifying that the salaries and wages charged to, or contributed to, sponsored projects are reasonable and consistent with the portion of total professional activity committed to the projects. Section J.10 of OMB Circular A-21 provides the framework for acceptable methods of documenting after-the-fact confirmation of the effort that employees spend on sponsored projects.Section J.10

OBJECTIVES After completing this training course, you will be able to: Define Effort and Effort Certification Identify the importance of completing Effort Certifications Understand Committed Effort Define the categories of Effort Identify how to report actual Effort on the online Effort Certification cards Gain an understanding of the most common Effort situations

WHAT IS EFFORT? Effort is the proportion of time spent on any activity that is related to the terms of your employment. The online effort certification card, discussed later, documents the proportion of work time devoted to:  Sponsored projects (i.e. contracts and grants)  Teaching and non-sponsored research  Clinical practice  Administration  Other institutional activities Activities typically not included in the terms of your employment are:  Outside consulting  Stipend payments  Additional payments  Other employers who pay you directly (i.e. the Veterans Administration)

HOW EFFORT IS CALCULATED Effort is expressed as a percentage of the total professional activity for which an individual is employed by the University and is not reflected in hours. The total effort expended cannot be more than or less than 100%. Because Effort is expressed as a percentage, it is not calculated on a 40-hour workweek. If an investigator works 80 hours in a week, 40 hours represents 50% effort. The total time employed constitutes 100% effort so the total effort must equal 100% regardless of part-time or full-time status. For example, a graduate student who is employed for only 10 hours per week would have a 100% effort of 10 hours.

TYPES OF COST SHARING Mandatory  Required by the sponsor as a condition of obtaining an award.  Must be included in the contract or grant proposal to receive consideration from the sponsor. Salary-cap  Results when an individual’s Institutional Base Salary exceeds a sponsor’s salary limitation or “salary cap”.  The prorated excess is a form of mandatory cost sharing that must be funded by an appropriate and allowable non-sponsored source. Voluntary Committed  Represents effort proposed that was not required by the sponsor and that is in excess of effort paid by the sponsor and or mandatory cost sharing.  Becomes an obligation once the proposal is awarded.

DIFFERENCE BETWEEN PAYROLL AND EFFORT Payroll distributions describe the allocation of an individual salary, while effort distributions describe the allocation of an individual’s activity to individual projects “independent of salary.” Effort is not a verification of our payroll system’s accuracy. Our effort reporting process relies on payroll distributions to provide a general reminder of the projects on which an individual’s salary was charged during the certification period. Whenever payroll does not accurately reflect how the employee spent his or her time, the effort must be corrected on the online effort certification card. Individuals completing online effort certification cards are required to identify other areas where they provided effort with no sponsored salary support and to ultimately report the appropriate distribution of effort over all activities.

WHO IS RESPONSIBLE FOR EFFORT REPORTING? Faculty members must certify their own effort except in limited circumstances. For all other employees, effort reports must be certified by the Principal Investigator (PI) or by a responsible supervisory official having suitable means of verification of all the employee’s professional activities under our employment.  A PI is the primary individual in charge of a research grant, cooperative agreement, training or public service project, or other sponsored project.  Therefore, faculty members may also be required to confirm the effort certifications for people who work in their labs, provided the faculty member has knowledge of all the employee’s professional activities. In addition, faculty members are responsible for the timely completion of these effort statements.

WHO IS RESPONSIBLE FOR EFFORT REPORTING? CONT. Faculty members are also responsible, with assistance from University administration, for monitoring their effort commitments.  For the majority of sponsored projects, the researcher and the University commit to levels of effort through the proposal. If the receipt of an award increases an investigator’s committed effort to greater than 100%, the investigator must work with administration to revise the level of effort required through communication with the sponsors, reduce effort on other activities, or refuse the award. The University must be consistent with how it proposes effort levels on sponsored awards and how that same effort and related salary will be charged and certified.  Proposals, like effort certification, should not be based on a standard 40-hour workweek. If an individual routinely works 80 hours a week, 8 hours a week is 10% effort, not 20%. The 80-hour base is how effort should be proposed, salary charged, and effort certified. The faculty member is responsible for proposing effort at a level consistent with the time available considering all other effort commitments.

WHY? Effort Certification cards provide documentation to support the level of effort performed on each award and University activities. This documentation supports the salary charges on the sponsored accounts. In essence, the effort form is the “invoice” for the salary charges on the award. Most of the University’s sponsors consider the online Effort Certification card to be the primary auditable document to support salary costs on an award. Additionally, the effort levels must be documented to support the University’s assertion that it is meeting the effort levels to which it committed to through the proposal/award process. The online Effort Certification card proves to the sponsor that it is receiving the level of effort it is paying for and the level of effort it is expecting to receive based on the proposal/award process. In some instances, the University agrees to perform a level of effort without a corresponding salary reimbursement. The online Effort Certification card will document this level of committed cost sharing as well.

FEDERAL REQUIREMENTS The Federal Government’s OMB Circular A-21, Cost Principles for Educational Institutions:OMB Circular A-21  Defines what costs are allowable and allocable to federal agreements  Indicates criteria for acceptable methods for apportioning salaries and wages  Requires a payroll distribution system to initially charge the salaries to the various awards and accounts according to a plan or estimate of how the individual will spend his or her effort during the period  The after-the-fact activity report must be performed regularly and must be certified by an individual who has suitable means of verifying 100% of an employee’s activities.  Any differences between the estimate in the payroll distribution and the after-the- fact activity report must be resolved by adjusting the costs on the award.

RISKS OF NON COMPLIANCE Since Effort Certification cards provide the documentation necessary to support the salary charges on awards, both direct and indirect costs may be disallowed and penalties imposed after reimbursement if auditors find such documentation to be inadequate. Some reasons why an auditor may find an Effort Certification form to be inadequate include:  It was certified by an individual who did not have suitable means of verification of 100% of the individual’s activity.  It did not encompass all of the activities performed by the individual under the terms of their employment at the University.  The levels of effort do not appear reasonable, given other conflicting documentation (i.e. clinical schedule, administrative duties, other research grants, etc.) that substantiates the responsibilities of the individual.  In addition, if an effort form is found to be falsified, criminal charges may be brought against the individual certifying the falsified effort certification. As the primary award recipient with oversight accountability to the research sponsor, UTPB may suspend the research rights and privileges enjoyed by the Principal Investigator (PI) and the research staff when they do not adhere to this policy. If a PI does not adhere to the effort reporting policies, UTPB may not submit proposals for the PI and may inactivate existing accounts in the accounting system. Disregard of these policies may also lead to other disciplinary actions in accordance with the faculty appointment policies.

DETERMINING THE COMMITTED LEVEL OF EFFORT The majority of sponsored projects are cost-reimbursable agreements obtained through a proposal process that describes the level of effort the PI and other key personnel will devote to the project. If an award is accepted, the University is committed to providing this level of effort. In most instances, only changes authorized by the sponsor can reduce this commitment. The University must monitor whether it is meeting the level of effort it committed to in the proposal/award process. If there was no level of effort described in the proposal, we require a minimal commitment of 1% on the part of the PI and other key personnel during the period of the project. This minimum requirement does not apply to:  Equipment grants  Dissertation support  Other awards intended as “student augmentation”  Limited-purpose grants such as travel grants or conference support Co-investigators and other “key personnel” must meet the proposal/award effort obligations for each sponsored project or arrange with the PI to amend their effort commitments with the sponsor as needed.

UNDERSTANDING EFFORT COMMITMENTS The effort level committed in the proposal/award process is for the entire award period. The effort level may fluctuate during the award period and effort should be certified according to the effort performed during the effort reporting period. When a faculty member certifies a lower percentage of effort than was committed, the faculty member and the department administrator need to determine whether the reduced effort for the total funding period is likely to be greater than 25% of the level of committed effort. OMB Circular A-110 (Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, Hospitals and Other Non-profit Organizations) would consider such a reduction of effort a change in scope for the project.OMB Circular A-110 If there is a greater than 25% reduction from the committed effort, the faculty member and the department administrator should talk to their Research Administration office to notify the sponsor to revise the level of committed effort. It should be noted that the 25% guidance in OMB Circular A-110, may not apply to federal contracts and non-federal sponsors. The terms of these awards may require communication with the sponsor for smaller reductions in effort levels.

MONITORING EFFORT Total effort encompasses both effort devoted to sponsored projects and the effort devoted to University activities. The total effort cannot exceed 100%. Generally, most faculty members have responsibilities for teaching, administration, or patient care that would preclude them from devoting 100% of their time to sponsored research. Accordingly, department administrators and faculty should review all proposed sponsored effort to assure that there are no other activities required of faculty members that would reduce the effort available for sponsored activities. Exceptions to this include junior faculty on career development grants who have no other teaching, administrative, or clinical responsibilities and key research staff without other responsibilities.

COMPLETING THE ONLINE FORM UTPB has implemented the following Effort Certification Procedure for federal and state contracts and grants. Our institution uses the after-the-fact method of effort reporting. The process begins with an initial (before-the-fact) estimate of the effort percentage that an employee will contribute to each project to which they will be assigned. The initial estimate is entered in the Human Resources system when the administrative staff submits a “PO”1 or “Additional Payment” form for the employee. This enables employees to be paid and salary costs charged to the account. The Office of Sponsored Projects & Research monitors the system at UTPB. By clicking on the certify button, the PI certifies that the employee reflected on the report actually performed work on the indicated account(s) and in the percentage of effort noted.

COMPLETING THE CARD Twice a year, PIs are required to log into the ECRT system to certify their effort and the effort of their support staff. The ECRT system and instructions are both available in the Time and Effort section of the Office of Research website. The online certification period lasts one month. Any cards not certified at the end of the period are out of compliance. The system is supposed to be updated monthly, but this does not always happen. It can, however, be reviewed at any time. PIs are strongly encouraged to check the system every 90 days to make any changes to payroll.

EXAMPLE CASE #1 During the last effort reporting period, Dr. Harrison worked an average of 60 hours a week. She estimates that she spent 15 hours a week on grant X and 21 hours a week on grant Y. Dr. Harrison also spends one day a week (or about 12 hours per week) teaching a math class. Dr. Harrison is also busy with other projects, as well: She is listed as an internal consultant on Dr. Chandrasekaran’s UTPB grant, grant Z. She estimates that she worked an average of 3 hours per week on this consulting. Dr. Harrison also spends time on new research areas, research administration, and assisting another colleague with his grant. Here is how she should account for her time: Sponsored Activity Grant X: 25% (15 hours of her 60-hour week) Grant Y: 35% (21 hours of her 60-hour week) Internal consultant for Dr. Chandrasekaran’s grant Z: 5% (3 hours of her 60-hour week) Total sponsored activity = 65% Departmental Activity Instruction & university-supported academic activity: 20% (12 hours of her 60-hour week) Departmental/university administration and support services = 15% (the remaining time) Total departmental activity = 35%

EXAMPLE CASE #2 Dr. Stemke received salary support from Awards A (25%), B (30%), and C (45%), but not for Award D (Award D was received from the sponsor with no salary provided for Dr. Stemke). At the end of the period, Dr. Stemke estimates the effort he spent on each award as follows: A: 25% B: 30% C: 30% D: 15% Dr. Stemke also spends one day a week (or about 12 hours per week, assuming a 60-hour work week) in a clinic, and averages 9 hours seeing patients and 3 hours teaching interns and residents. When Dr. Stemke received his effort report from his Effort Reports Coordinator to certify his effort, Award D was not listed. Here is how Dr. Stemke should handle Award D. Dr. Stemke should add his percentage of effort for Award D in Part II of the Effort Certification Form. Even though there was no salary support from Award D, it is important for Dr. Stemke to certify the effort he spent on this award. Then, Dr. Stemke should ask administrative staff to process appropriate Human Resources forms in order to make the adjustments in the payroll distribution system.

EXAMPLE CASE #3 Dr. Rosenbluth works about 54 hours a week. Her payroll is set up so she receives 40% of her salary from grant A and 60% from grant B. Even though Dr. Rosenbluth’s payroll is set up for her to receive 100% of her salary from sponsors, she is not spending 100% of her time on these projects. During the last reporting period, she averaged 20 hours per week on grant A and 30 hours per week on grant B, but she also worked an average of 4 hours on various committees and other university commitments. Dr. Rosenbluth needs to certify the time that she works on non-sponsored activities. Here is how she should account for her time. Grant A: 37% (20 hours of her 54-hour week) Grant B: 56% (30 hours of her 54-hour week) Departmental/university administration and support services: 7% (4 hours of her 54-hour week) Dr. Rosenbluth and her administrator should try to identify situations like this during the reporting period so that payroll can be distributed correctly.

EXAMPLE CASE #4 Dr. Wayer was named a department head at the start of the fiscal year, which increased his departmental activities to 45% of his time. He also has an award, Award A, with 40% committed effort. A month later, Dr. Wayer received a new Notice of Award for Award B that included a 25% effort commitment. Given that Dr. Wayer already has an 85% time commitment (45% as department head and 40% for Award A), this 25% from Award B would increase his committed effort to greater than 100%. Here is how Dr. Wayer should handle the situation. Dr. Wayer should talk to his administrator to determine if they will either: Attempt to revise the level of effort requested by communication with the sponsor Reduce the effort on other activities Refuse the award

FOR MORE INFORMATION If you have questions regarding Effort management, contact: Steve Dunkley, Grant Services Manager Phone The UT System and UTPB policy and regulations can be found on the UTPB Research & Grants website.UTPB Research & Grants website.