Extra Compensation Policy

Extra Compensation

Faculty and administrative staff can be compensated for assignments for which they are specifically qualified, which advance the mission of the university, but which fall outside the expectations associated with the employee's current job description. To avoid conflict of commitment, the additional duties must be feasible and must not interfere with or diminish the faculty or staff member's capacity to meet the expectations of the primary contract. The guidelines provided herein are not intended to redefine compensable activities, but rather to establish a means by which systematic authorization is received for such activities and to establish procedures to monitor the time commitment required to perform the extra assignment.

The following guidelines apply to all faculty, administrative, and supportive professional staff on contract, regardless of the duration of their contract:

Definition of Extra Compensation
Each employee has a monthly base salary for a specified contract period. The contract period includes weekends and university break periods. When an employee on a full-time (100%) contract with the university receives compensation from a university account during the assigned contract period which exceeds the assigned base salary, and when that compensation is offered in exchange for the performance of duties not legitimately required within the scope of the primary contract, this additional payment is defined as extra compensation. Extra compensation begins when the payment received from the university for any one month exceeds the faculty or staff member's monthly base salary.

Approval and Determination of Rate of Compensation
The rate of extra compensation shall be determined by the director of the source of funds with approval by the appropriate director/chair, dean and Provost or Senior Vice Chancellor. Extra compensation on externally sponsored projects is permitted if it is in accordance with the sponsor's rules and regulations. Any requests for extra compensation should be thoroughly explained and documented on the Transmittal Form in accordance with university policy regarding proposal development review and approval.

The Federal Government's Office of Management and Budget Circular A-21 applies to extra compensation paid in whole or in part from all federally funded projects including those for which funds received by the University are from another entity, e.g., from a state agency or other university that has received federal funds for the project in question. OMB Circular A-21 places certain restrictions on extra compensation paid from projects sponsored with Federal funds. The general rule is that Federal and/or state grant/contract funds may not be used to provide additional compensation at a rate that exceeds normal base compensation and requires that specific written approval from the funding agency person authorized to contract or sign agreements be obtained that specifies the activities and individuals for which extra compensation may be paid. If it is determined that a written approval from the sponsor is required, this letter must be coordinated through Sponsored Programs.

Circular A-21 states in part: "In no event will charges to sponsored agreements, irrespective of the basis for computation, exceed the proportionate share of the base salary for that period. The principle applies to all members of the faculty at an institution. Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member at the same institution. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his regular departmental load, charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically provided for in the agreement or approved in writing by the sponsoring agency."

In most cases, time spent on externally sponsored projects will be integrated into the individual's regular duties and responsibilities assigned by the University. This may warrant a reduction in duties and responsibilities assigned by the University, e.g., full time faculty members on nine-month academic year contracts may receive a reassignment from one or more academic assignments to perform the project. In the case of other non-faculty exempt persons, the duties and responsibilities of the externally sponsored project also may warrant a reduction in the regular duties and responsibilities assigned by the University. In both cases, the reduction in regular duties and responsibilities assigned by the University should be equivalent to the time expected to be spent on the externally sponsored project.

On those occasions when extra compensation paid from projects sponsored with Federal and/or state funds is warranted and approved, the dedication of time to this project will not be considered as warranting any reduction in the regular duties and responsibilities assigned by the University. Faculty or other exempt persons receiving extra compensation are expected to perform their regular duties and responsibilities assigned by the University.

In accordance with University regulations, payment of extra compensation from federally and/or state funded contracts and grants as governed by OMB Circular A-21 allows for such payments when all of the following conditions are met:

    • The work performed must be in addition to the faculty member's regular departmental load
    • One of the following two circumstances must exist:
      • The consultation is across departmental lines
      • The work involves a separate or remote operation
    • The work performed cannot conflict with the faculty member's regular University duties and assignments.
    • The consulting arrangement that specifies the activities and individuals for which extra compensation may be paid is specifically provided for in the written agreement with the sponsoring federal agency or otherwise approved in writing by an authorized representative of the sponsoring federal agency. If not specifically and explicitly provided for in the approved budget, this approval which must be coordinated through Sponsored Programs should be requested as soon as practical after receipt of the award, and before any work is done on an extra compensation basis.

Summary:
Federal rules and regulations, including OMB Circular A-21 and the NIH Grants Policy Statement, do not allow for an individual's institutional base salary to be increased as a result of obtaining grant funding. These federal rules and regulations also restrict the payment of overload, bonus or other payments outside the individual's institutional base salary. In addition to the University's general policy regarding the allowability of supplemental compensation, the following principles must be applied when salary is to be paid from a sponsored project.

Summary of OMB A-21 Principles:
Charges for work performed on sponsored agreements by faculty members must be based on the individual faculty member's regular compensation during the period of performance. Charges must be made at the allowable base rate; the faculty member cannot receive additional compensation for his or her participation in a sponsored project over and above the appropriate portion of the base salary allocated to the project.

The only exception to allow for compensation above the base salary during the academic year is a very specific exception for consultation across departmental lines. The general rules for faculty compensation during the academic year and the specific requirement for the exception to those rules are found in OMB Circular A-21, section J.10.d. and are as follows (emphasis added):

Salary rates for faculty members

  1. Salary rates for academic year. Charges for work performed on sponsored agreements by faculty members during the academic year will be based on the individual faculty member's regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his salary. Charges for work performed on sponsored agreements during all or any portion of such period are allowable at the base salary rate. In no event will charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. This principle applies to all members of the faculty at an institution. Since intra university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his regular departmental load, any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically provided for in the agreement or approved in writing by the sponsoring agency.

These rules are not applicable to summer salary for ten (10) month faculty. See OMB Circular A-21 section J.10d(2)(a). Research compensation during the summer months or other periods not included in the base salary period is to be calculated for each faculty member at a rate not in excess of the base salary divided by the period to which the base salary relates.

Reference:

OMB Circular A-21, Cost Principles for Educational Institutions
NIH Grants Policy Statement

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