The Connection: Cost Sharing and Effort Reporting

Why are we combining these two areas in one section of the RAMP Guide under the broad title of Cost Sharing and Salary Management? Both Cost Sharing and Effort Reporting have specific purposes, regulations, and procedures, but both are part of many projects that we manage here at the university. Because of this dual presence in numerous projects, many of the procedures become intertwined, so it is best to review the concepts and required actions together.

Review the following brief introductory definitions before delving deeper into each topic:

Effort Reporting: As part of federal requirements related to employees working on sponsored projects, our faculty must estimate, periodically review, and certify the percentage of effort they accrue on each project, whether their salaries are being paid by the sponsor or cost-shared by the university. Effort Reporting is covered in greater detail in the second half of this section.

Cost Sharing: Cost sharing is the portion of project costs not reimbursed by the sponsor and may be in the form of cash or in-kind contributions. Cost sharing is most commonly required under federal grants and becomes a binding commitment once an award is made. The college/department is responsible for tracking and documenting the cost-share amounts throughout the life of the project. Cost Sharing is covered in greater detail in the first half of this section.

The Consequences: Common Mistakes in Cost Sharing and Effort Reporting

Pay particular attention to this list of common mistakes made at some universities and their potential consequences before you review the rest of this section.

Let's do our best to avoid these mistakes – lessening our chances of the potential negative consequences listed above!

Auditors in the House!

To put the Effort Reporting rules and procedures that you'll be reviewing in this section into perspective, it may also help to know what to expect from an audit.

Here are a few important facts to keep in mind as you review the legal pad list on the right:

• State Auditors review effort report certification annually.
• Auditors from specific sponsoring agencies may review effort report certifications during audits.
• DHHS Auditors may review effort report certifications during any audit.

Be sure to keep these facts in mind as you review the information in this important section of the guide.

To review all of the materials, scroll through this page. To jump to particular sections, click the linked titles below or use the menu bar at the top of the screen.

Cost Sharing – Overview

Cost sharing is defined as the portion of project costs not reimbursed by the sponsor. In most cases, the cost sharing source will be university funding, but other sources are also used to meet the university's cost share obligation.

Example
A typical example of university cost sharing (illustrated below) might be:

• Total cost of a project is $150,000
• Sponsor requires that the university contributes 25% of the total project cost ($37,500)
• Sponsor provides the balance ($112,500)
• The $37,500 contribution to the project is the cost sharing obligation of the university

Continuing with this example, the $37,500 cost-share contribution can come from a number of sources, including actual cash funds from the university or other contributors as well as in-kind contributions.

Sources of Cost Sharing
The following are some examples of cost-sharing sources other than direct university funds that might be used to meet our cost share obligation:

• Facilities or equipment use
• Personnel assigned from any private or non-sponsored source
• Goods and services directly benefiting and specifically identifiable with the project
• Portion of work performed by employees on sponsored projects not paid by the sponsor, i.e., salary that is funded by the University or by some other funding source

Show Me the Money!

The pie-chart below illustrates another type of cost sharing arrangement including a second university and a private company.

Remember the following important points to understand the true nature of Cost Sharing:

• Cost Sharing is real money charged to and paid from other funding sources.
• Cost sharing commitments are not met until someone from each area spends or donates!

And watch out for the following non-compliance problems and potential consequences:

• Failure to meet cost sharing obligations
• Failure to adequately document cost sharing

WHICH CAN LEAD TO...

• Project sponsors withholding funds
• Audit Findings
• Risk for future funding opportunities

How Cost Sharing Originates
Cost Sharing can emerge in a number of ways. The following are typical scenarios that result in a cost sharing obligation for the university:

• Mandatory/Involuntary (Sponsor Driven Requirement) – required by the sponsor, generally stated in the Solicitation or program announcement, and the cost share component must then be included in the university's proposal and budget
• University acceptance of an award that does not include salary payments for PI or key personnel – may not include any effort payment or no payment beyond a 3-month time frame (Summer Effort)
• University acceptance of an award for a lesser amount without a revised scope of work or budget – university then becomes obligated to cost-share the remaining balance
• Voluntary Uncommitted (Recipient) – commitments not offered by the university in the proposal narrative/budget but occur during the life of the award (example: sponsor not paying for some equipment that was unanticipated but needed after the project is under way)
• Voluntary Committed – not required by the sponsor, but a cost share amount is included in the university's proposal, budget, or budget narrative and then becomes mandatory when the award is granted (SEE NOTE BELOW)

Don't Volunteer!
The university strongly discourages voluntary cost sharing at the proposal stage. Some researchers mistakenly believe that sponsors are more likely to make an award if the institution commits some cost sharing up-front, but this is not true. It is best not to include any voluntary cost sharing at the proposal stage, knowing that the sponsor can respond with a lesser award amount if necessary and cost-sharing can then be arranged.

Specifically, the university's principal of limiting cost share commitments contains the following recommendations:

• Cost share only when specifically mandated or required by the sponsor in the RFP.
• The Department/College should scrutinize cost sharing included in excess of the minimum required by the Sponsor.
• If obligations are not mandated, do not list on budget pages or note in budget narratives.

The Big Picture - Types of Cost Sharing

Before reading the specifics that follow, review the chart below. The chart illustrates the types of Cost Sharing and gives you some specific notes on each type.

Following the Rules

We must make sure that all of our cost sharing dollars meet certain requirements from OMB A-110 Requirements/Regulations: (SubPart C-.23).

The following chart summarizes the main points. (Click link above to review the federal language).

Cost Sharing Procedures - Who Does What?

The following charts summarize the responsibilities of the university level Office of Contracts and Grants and the direct College or Department level responsibilities.

Click each title bar below to open the charts for review.

Beyond the Charts – Key Points

Remember the following key points regarding Cost Sharing. (A number of these points are also contained in the Cost Sharing Top 10 Reminders Quick Reference Guide linked below this bulleted list.)

• Incurring Costs:
  We do not incur/recognize cost sharing until actual funds are expended.
• Claiming Cost Sharing:
  We cannot claim cost sharing for CAS covered awards unless we could have charged the same costs under OMB A-110 criteria, including the allowability test and meeting the definition of a direct charge.
• Accounting System:
  Cost Sharing amounts are not tracked/recorded by the University's financial accounting systems.
• Tracking:
  It is the College's/Unit's responsibility to document, track, and meet cost sharing requirements.
• Updating TEARS:
  Cost shared effort is defined as work performed by employees on sponsored projects that are not paid by the sponsor (i.e., the salary is funded by the University or by some other funding source). Cost shared effort must be included on the effort report since it is a component of the total effort that an employee works. It is the College's/Unit's responsibility to update the effort reporting system (TEARS) to capture/certify cost sharing in the effort cost category.
• Leading Collaborative Effort:
  If your College is the lead on a collaborative effort, ensure that the other Colleges/Units involved in the cost sharing commitment understand their responsibilities and roles in capturing this information.
• Affecting F&A Rate:
  Cost Sharing affects the University's research cost base in the development of the Facilities and Administrative Cost Rate.
• Submitting Revisions:
  Revised budgets and statements of work should be submitted and accepted by the agency for any differences between the original proposal and the actual award amount if not to be considered as committed cost sharing.
• Not Meeting Cost Share Commitments:
  If you learn that Cost Sharing commitments may not be met, contact the Fiscal Manager in C&G for assistance PRIOR to the end of the agreement. Rarely, some Sponsors may, with written and adequate justification, release/reduce the recipient's cost sharing commitment.
• Claiming F&A Costs:
  F&A Costs may be claimed/used (if not prohibited by the Sponsor) as added cost sharing on any F&A-bearing direct costs used as cost sharing (normally all costs except equipment, tuition/fees, & Subcontractors).
• Claiming under-recovered/waived F&A costs:
  Under-recovered/waived F&A costs, if approved in advance by the sponsor and specifically noted in the proposal/budget, can be calculated on the modified total direct costs and claimed as additional cost sharing. Contracts and Grants will calculate the amount of any under-recovered/waived F&A to be claimed/reported at project closeout based upon submission of final cost sharing figures by the College.

Cost Sharing Top 10 Reminders for Colleges

The following Quick Reference Guide summarizes some of the points listed above as well as other tips for handling Cost Sharing and TEARS procedures. Click on either section below to open a PDF copy to adjust the print size, print or bookmark for future reference.

Cost Share and TEARS Set-Up, Monitoring, and Closeout

You are probably aware of your college's procedures and "who handles what" related to TEARS cost-sharing set-ups, monitoring, changes, and effort certification. If not, be sure to check with other administrative staff in your college or department for the specifics. You may also want to check the TEARS Coordinator list if you are not aware of who handles the role of coordinator in your college or department.

Regardless of your role, review the checklist below or click either section to open this checklist as a PDF document to adjust the print size, print or bookmark for future reference.

Notice the three-column format that allows you to use the same checklist for any project – through set-up, ongoing, and close-out reviews.

Cost Share Confirmation Process

Review the following chart on the confirmation process. If you are not familiar with the Cost Share Confirmation Memo referenced in the chart, follow the instructions in the Cost Share Confirmation memo segment below to view the form.

Cost Share Confirmation Memo

Roll your mouse pointer over this section of the Cost Sharing and TEARS checklist below to view a sample of the Cost Share Confirmation memo that the colleges receive from the Office of Contracts and Grants.

If the actual cost sharing dollars by cost category can be determined from the award documentation, C&G will complete these amounts in the left-hand column of the memo. If actual amounts cannot be determined, but a commitment is present, C&G will place an * by the proper cost category.

Cost Share Closeout/Reporting Processes

Review this chart on the Closeout and Reporting processes related to Cost Share.

Effort Reporting – Overview

Before reviewing the specifics related to Effort Reporting, you may want to watch this optional 48-second video from the National Council of University Research Administrators (NCURA). It is an introductory segment featuring a short commentary from another university representative sharing two concepts that matter most when it comes to understanding the basics of Effort Certification.

Note that these NCURA videos are useful as additional references on our RAMP Guide topics, but be sure to refer to our specific university policies, procedures, and contacts when making project decisions. (Take a moment before clicking the play arrow to grab your ear buds or adjust your computer's volume up or down to listen in your work environment.)

(Note: If the video does not download in the space above from the NCURA YouTube site, you can save this link to try again at a later time: http://www.youtube.com/embed/9LEKjVdYN6g.)

Federal OMB Circular A-21 (Cost Principles for Educational Institutions), section J(10) states that we must have a method to document all effort for sponsored agreements, whether treated as Direct Costs or Facilities and Administrative (F&A) Costs.

A-21 also states that we must certify this effort after-the-fact. At NC State University we use the "Plan-Confirmation" method.

Using this "Plan-Confirmation" method means that:

1. Personnel assignments reflect anticipated work distribution (percentage of effort spent on each sponsored project).
2. Assignments (and reallocation of funds) are updated timely to reflect changes.
3. Cost sharing is entered at the beginning of an award and updated as needed.
4. Effort Reports are certified at the end of the fiscal year.

Federal regulations require that employees engaged in sponsored activities periodically review and certify their effort if they have the following:

1. Direct labor charges to sponsored projects: Employees who work on sponsored projects and whose salary is funded by the sponsor.
2. Cost sharing on sponsored projects: Employees who work on sponsored projects but their salaries are funded by an entity other than the sponsor (may be another sponsor, the university, or a gift or foundation account).
3. Federal Appropriations: Employees who work in the College of Agriculture and Life Sciences and Natural Resources that are funded from certain Federal Appropriations or Ledger 4 funding.

IMPORTANT NOTES REGARDING BI-WEEKLY EMPLOYEES: Employees paid on a biweekly basis are exempt from effort reporting requirements because the timesheet that is completed and signed at the end of each two-week period serves as certification of effort. If there is a change in cost-share distribution, make sure that the time sheet reflects the change and it is:

• re-signed or initialed by the employee and supervisor, or
• the supervisor initials the timesheet if you cannot get both initials.

Survey Periods

• Survey Periods 7/1 - 6/30: This coincides with the University Fiscal Year.
• Survey period 5/16 - 8/15: Summer effort reports are only generated for 9-Month EPA employees who receive Summer Salary (Supplemental Pay) for work on sponsored projects during the summer months. This is identified by the 601 and 602 earnings codes. (See additional information on Summer Salary below.)

REMEMBER: The percentages of effort certified should reasonably approximate how much an employee actually worked on a project during a given period.

To clarify this concept, you may want to view the following optional videos from the National Council of University Research Administrators (NCURA).

• Part I: Three Mantras of Effort is a 3-minute segment that introduces some useful concepts when working with Principal Investigators (PIs) to estimate percentages of effort.
• Part II: Talking With Your Faculty About Effort is a 3:44-minute segment going into more detail on discussing effort with a faculty member.

Part I: Three Mantras of Effort

IMPORTANT NOTE ON PART I VIDEO CONTENT ABOVE: Remember that any hours that a faculty member spends on outside consulting (even if approved by his/her Department), is truly "outside the pie" (not compensated through NCSU payroll) and should not be considered as a percentage related to his/her NCSU hours/effort.

Part II: Talking With Your Faculty About Effort

Effort Reporting – Types of Salary

Sponsoring agencies generally expect that key personnel on projects, i.e., Principal Investigators (PI's), are either paid directly from funded projects or paid through other funds as part of a cost sharing arrangements on particular projects. (Exceptions to this expectation include equipment awards and Department of Defense (DOD) student training rewards.)

There are three types of PI direct salaries that can be charged to a sponsored project (listed below with #'s from expenditure accounts on HR personnel actions):

• Other Salaries – 51119
  • Directly charged to a project instead of department funds
  • Available department funds can be used only as lapsed salaries
• Release Time – 51118
  • Defined as the time the department releases the PI from normal departmental duties (teaching, public service, research, etc.) to perform research
  • Directly charged to a project instead of department funds
  • Release Time can be returned to department to be used for non-salary funds (specific policies at the College/Department's discretion)
• Summer Salary – 51116
  • Directly charged to a sponsored project for a 9-month PI who works during the summer period, 5/16 – 8/15

TEARS - The Employee Activity Reporting System

We use the TEARS system to report and certify our Effort on Sponsored Projects at the university. Click the PDF or Brochure format section of the image below to open and review this Quick Reference Guide for PI's.

It is a good introduction to the basics and overview of the way we use the "Plan-Confirmation" method of Effort Reporting as described in the introductory segment above.

Cost Share and TEARS Set-Up, Monitoring, and Closeout

You are probably aware of your college's procedures and "who handles what" related to TEARS cost-sharing set-ups, monitoring, changes, and effort certification. If not, be sure to check with other administrative staff in your college or department for the specifics. You may also want to check the TEARS Coordinator list if you are not aware of who handles the role of coordinator in your college or department.

Regardless of your role, if you did not review this checklist when going through the Cost Sharing segment above, be sure to review the checklist below or click either section to open this checklist as a PDF document to adjust the print size, print or bookmark for future reference.

Notice the three-column format that allows you to use the same checklist for any project – through set-up, ongoing, and close-out reviews.

TEARS System Access and Instructions for Certifying Effort

Review the following summaries and links that can also be accessed from the CNG site Cost Sharing and TEARS Index web page.

TEARS Coordinator Instructions

The TEARS Coordinator instructions contain detailed instructions on Cost Share Set Ups, Cost Share Reports, Effort Reports, and Administrative Reports.

• TEARS Coordinators should complete Cost Share Set Ups when there is a cost share commitment or when effort is not being reimbursed by the sponsor.
• The Set Ups establish Cost Sharing in the system before Effort Reports are created.
• The Cost Share Set Ups are required for accurate reporting.

Click to access the instructions manual illustrated below.

Effort Certification for PI's

The annual deadlines for certifying Effort Reports are the same every year – September 30th for fiscal year effort reports and December 31st for summer effort.

Our employees receiving Effort Reports will automatically be granted access to certify their effort reports as an option under Employee Self Service in the MyPack Portal. They need Internet access and a Unity ID and password.

If they have forgotten their Unity IDs and/or passwords, or need other assistance with their network security, they should contact the ETSS Solutions Center at 515-4357 or by e-mail: etss_help@ncsu.edu.

Access to Dean, Department Head, and Administrative/TEARS Coordinator security roles must be submitted through the Security Access Request System (SARS).

PI Instructions for Certifying Effort Reports

Click to access the instructions illustrated below.

Department Head Instructions for Certifying Effort Reports

Click to access the instructions illustrated below. Review the note pad cautions below also.

Effort Report Sample

Please review the following sample of an Effort Report.

Click the title bar below to open the related "Sources of Information" chart for review. If you work with these Effort Reports, be sure to open and review this chart for specific instructions on where to find the information needed to correctly complete the Effort Reports.

"After the Fact" Cost Share Documentation

We use an "After the Fact Cost Sharing Memo" for verification of cost-shared effort in two types of situations:

• Situations that cannot be documented in TEARS (as listed on the "Don't" side of the image below)
• Regular Cost Shared Effort that was not entered into TEARS for a past fiscal year

For specifics on the two types of After the Fact memos and details on how to handle the Cost Share Effort reporting that is not entered in TEARS, click the web page excerpt below to review the specifics.

TEARS Cost Sharing Reports

Keep the following in mind when reviewing Cost Sharing reports (sample on the left):

Monthly Cost Sharing Reports:

• If cost sharing is set up for a month and the funding source used is not funded (i.e., there were no earnings for that particular month) the monthly report will show $0.
• When entering multiple cost sharing set-ups for the same funding source, make sure there are enough dollars in the funding source for all cost sharing set-ups. The monthly report is referencing the funding source on a set-up-by-set-up basis, not overall.
• For a 9-month employee, on the monthly report only, we are annualizing the monthly amounts.
• For a 9-month employee, there is no monthly cost sharing report for those employees during the months of June and July because theoretically, they are paid from 08/16/XX - 05/15/XX.
  • Therefore, cost sharing for the month of May (05/01/XX - 05/15/XX) and August (08/16/XX - 08/31/XX) may seem a lot smaller than it will at the end of the year.
  • This is due to the way the calculations are handled (prorated) in different reports.
• Make sure that cost sharing dates reflect actual cost sharing. If a project ends on 03/15/XX, the set-up should reflect the 03/15/XX date.
• The monthly reports are static, reflecting only the amounts processed through that particular month (as of the payroll run date) and are not updated to reflect any subsequent redistributions. For example, if a redistribution is processed after the May monthly payroll was run and you run the May report in June after the redistribution was processed, the May report will not include the revised amount based on the redistribution since the monthly reports are not updated retroactively to reflect any redistributions.

Fiscal Year Cost Sharing Reports:

• If at the end of the Fiscal Year there was enough money in the funding source to fund the cost sharing, there will be a dollar amount for that project in the Fiscal Year Cost Sharing report.
• The annual reports are updated as changes are made to the effort report. When a change is made to an effort report an asterisk will appear on the report. The asterisk indicates that the dollar amounts may not agree with labor distribution. The asterisk will no longer appear once the next payroll has been processed, as long as any necessary payroll redistributions have been processed.

 

TEARS Frequently Asked Questions

Click the image below to access this Frequently Asked Questions CNG web page for a good review of the information in this section.

Remember, there is also a TEARS FAQs for PI's Quick Reference Guide that was linked near the beginning of this section if you'd like to review that one again or save that link now.

If you have additional questions, please click the "Ask the Expert" button below to send us an e-mail.

Summer Salary -- Tell Me More!

Summer Salary refers to any earnings paid through NC State University for work performed by 9-month faculty during the period between May 16 through August 15. During the summer, a 9-month faculty member may be paid no more than a total of 33.33 % (based on 1.0 FTE equivalent) of his or her nine-month base salary from all sources of funds. Exceptions beyond the 33.33% summer-earnings maximum must be approved in advance by the Dean/Vice Chancellor (not his/her designee).

Some Points to Remember:

• Faculty summer salary must be for work performed during the summer period (May 16 – August 15) and for work performed on the specific project to which the salary is being charged.
• The rate of pay for faculty summer salary charged to sponsored projects is based on the academic year base salary.
• Time taken for vacation may not be charged to sponsored projects, and is not compensated for faculty on nine month appointments.
• Salary received for summer effort not actually expended on a sponsored project, or for an amount of effort less that that originally anticipated, must be refunded to the sponsored project.
• A faculty member may not receive pay from sponsored projects for non-sponsored research activities. This includes preparing for or writing proposals for future funding and any other administrative duties. Writing technical reports for existing projects is allowable.

Review Summer Salary Web Page

Review the C&G Summer Salary web page, including a Summer Salary Calculation Tool (pictured/linked above), best practices, Standard Operating Procedures, and more for complete information on this topic.

Redistributions and Effort Reporting

Personnel Actions and Payroll Redistributions directly affect Effort Reports.

If you are unfamiliar with Redistributions, click the Redistributions index page linked below to review the basics.

If a Payroll Redistribution is made, remember to make any necessary adjustments to the employee's Effort Reports. If an Effort Report does not match the actual labor distribution reported for the employee, a variance is created and must be corrected.

If the Payroll Redistribution is not completed within 90 days, the college must submit a Redistribution Adjustment form to the Office of Contracts and Grants for approval. You can find specific instructions and more information linked from the Redistributions index page illustrated above.

If your College Business Office cannot help on related questions

To report broken links or make suggestions for improvement

• Cost Sharing Top 10 Reminders for Colleges
• Cost Sharing & TEARS Checklist
• TEARS FAQ's for PI's – Regular | Brochure Format
• TEARS Coordinators' User Manual
• PI Instructions for Certifying Effort Reports
• TEARS Department Head Instructions
• After the Fact Cost Sharing Guidelines
• TEARS Frequently Asked Questions
• Summer Salary Form | Information | Tutorial
• Redistributions CNG Index | Form

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