As the new finance person for a center, I have some questions that have come up over the past few weeks that I’d appreciate getting your input on.

  • Currently allocations are based on wages paid by the grant that the work is connected to. Is it required to be based on wages rather than hours worked?
Photo of a bill with a stamp and marked paid.

Answer: Allocations must be based on your approved Indirect Cost Rate proposal, which specifies how this is done. I have seen wages, FTEs and hours used as a base by different organizations.

  • We asked other CIL’s how they handled attributing PTO type hours for staff who work under multiple programs. Answers varied greatly but the method that was used by the highest percentage was one where the pay period (usually two weeks) in which the PTO took place was looked at and the program of majority of hours worked was also attributed the PTO. If I was to use this method, which I am hoping you can make a better suggestion, I think the PTO should at least be split amongst the programs worked. Any guidance here would be appreciated.

Answer: Paid time off is generally treated as payroll overhead. So if payroll is direct (time actually worked) then a portion of the paid time off will be allocated to the direct payroll and if the payroll is indirect, a portion of the PTO will also be applied to that payroll.

  • Does it make a difference what type of PTO it is? Vacation, sick time, holiday, snow day, bereavement, etc.

Typically all PTO is treated the same regardless of its type. See if treating it all as overhead works. I’m not sure it is doable to track what you describe.

  • We have a few small grants that will pay a portion of wages, specific printed materials related to that program, etc. but they do not pay for rent and other expenses. What is the best way to handle their effect on allocations to the larger grants?

Answer: Smaller  grants which supplement the purpose of IL, don’t have to be included in your proposal or your calculations.  However if they pay any wages, unless they pay all related staff costs,  that throws them into grants that must bear their fair cost of expenses including indirect costs. If I were doing it I would probably make the grant budgets around all other expenses but salary, and let the Title VII grants pick up the pay. This assumes, of course, that the smaller grant is clearly consistent with the purpose of the Title VII grants and can be used for expenses other than salary.

  • Eventually we would like to give staff pay increases and possibly bonuses. Our management team’s thought is that it is difficult to take back a pay raise if funding gets cut but a well-timed bonus can be a great thing and from a business standpoint costs pretty much the same thing in the long run. Is there an allowable way to build a “bonus fund”? Would you have any other recommendations regarding this?

Answer: Bonuses are allowed, and can be in your budget, if they are established in a policy and based on performance goals. In the past some CILs have paid out of year end money, meaning in late September, based on how much money they have left to spend. That practice is not allowed. You can, however, include in your policy that the bonuses will be based on available funds and given September 29 (September 30 is actually next fiscal year) and will be based on the performance goals established for each employee.

  • The past Finance Director used the 10% for the indirect cost. Can you provide some guidance regarding increasing this?

Answer: The 10% de minimus rate is an option for nonfederal entities that have never had a negotiated indirect cost rate, unless you receive more than $35 million in direct federal funding.  You can continue to use the 10% and are not required to submit an indirect cost rate proposal, but once you submit an ICR proposal you can no longer use the 10%.  The de minimis rate is not exactly a straight 10% and is much less complex than negotiating an indirect cost rate.  If you  choose it, you must apply it the same way to all your funding sources (unless they are small supplemental awards discussed above.)  The 10% is based on a modified list of indirect costs that are carved out as indirect and charged back proportionately to the various grants. Those are: direct salaries and wages (those captured on your time sheet or PAR as administrative or indirect), applicable fringe benefits, materials and supplies, services, travel and up to the first $25,000 of each subaward. It excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward greater than $25,000. Other items may be excluded if they result in a “serious inequity in the distribution of indirect costs”. This is addressed in 2 CFR 200.68.

New fiscal director’s questions

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.