1. For regular exempt employees, including faculty, who are paid through the payroll system, pay is considered to be remuneration for all work which benefits Stanford. For full-time employees, this is 100% Full-Time Equivalence (FTE).
   

   Note: 100% FTE does not equate to any set number of hours, e.g., 40 or 50 hours per week; it equates to the totality of University-compensated effort. Although the PeopleSoft system uses standard hours of 40 to indicate 100% FTE, 30 hours to indicate 75% FTE, etc., this does not mean that exempt employees, including faculty, who are 100% FTE, work only 40 hours per week.
   
   Faculty are not paid by the University for personal time devoted to external consulting.

2. Each month, the University's payroll system permits charging salary earned by employees to the proper Project/Task/Award records (PTAs), based on the nature of the work performed. For example, if the work of a full-time exempt employee (100% FTE) is devoted entirely to teaching, 100% of the earned salary should be charged to Project PTAs associated with instruction, e.g., 1234567-1-ABCDE (Instruction and Departmental Research service type).
   
   The key assumptions underlying this seemingly mundane process are:
   1. the basic service type of instruction has benefited 100% from the employees work, and
   2. the basic service type of instruction is allocated 100% of the employee's salary charges.
      
      
   Similarly, if the employee's effort is devoted half time (50% FTE) to teaching, and half time (50% FTE) to work on sponsored research projects, half of the salary should be allocated to an Instruction and Departmental Research service type, and half to a Sponsored Research service type.
   
   
3. The Oracle Labor Distribution Schedules control the percentage of salary allocated to each major service type, and within each service type, to specific project PTAs. For example, the Oracle Labor Schedule for a faculty member who devotes half time to teaching and half time to three sponsored research projects might distribute salary charges as follows:
   • 50% to 1234567-1-ABCDE (Instruction and Departmental Research service type)
   • 20% to 2345678-1-EFGHI (Organized Research service type)
   • 20% to 3456789-1-EFGH (Organized Research service type)
   • 10% to 4567890-1-EFGHI (Organized Research service type)
   
   
   This distribution is normally set up at the beginning of an academic period, based on a presumption about how the employee's effort is going to be allocated. If the actual distribution of effort differs significantly from this presumed distribution, University policy requires that journals be made in the Oracle Financials System to reflect the actual distribution. The Oracle Labor Distribution Schedules should be changed if FUTURE effort is expected to be distributed differently; they cannot be changed retroactively.
   
   For more information about Labor Distribution, see the Controller's Office Assigning Pay Allocations page.
   
   
4. Government sponsors expect to pay only for those portions of employee effort that are actually devoted to their projects. Periodically, government and internal auditors review our payroll charges to enforce this expectation. In conducting these audits, called "labor floorchecks", they are assessing whether the salary charged to project PTAs is for effort that appropriately benefited those projects over the span of an academic period (e.g., academic quarter). In other words, the auditors are checking the accuracy of our payroll charges by verifying that the percentage of the employee's salary charged to a sponsored project PTA reasonably approximates the actual proportion of the employee's FTE effort which was devoted to that project.
   
   
5. As a general rule, exempt employees should understand how their salary charges are being distributed, and should verify for themselves that there is a reasonably close relationship between that and the actual proportion of their effort devoted to the functions and projects being charged. For Research Assistants and support staff, these allocation decisions are often made by faculty Principal Investigators, who are assumed to be most knowledgeable about the relationship between effort devoted and benefit received. Review a copy of the document which shows how your effort is charged (Labor Distribution reports) to verify this relationship. If it is incorrect, it should be changed, and any prior erroneous charges should be corrected via an expense transfer.
   
   
6. Faculty members on an academic appointment (9 or 10 months) may elect to be paid over a full year (12 months). Sponsored projects require that salary be charged as it is earned, rather than as it is paid, or have salary limitations. For more information, see Overview: Faculty Specific Payroll Administration.

Proposals should accurately represent the amount of time that key personnel are committing to the project. It is not appropriate for Stanford Principal Investigators to submit proposals for research funding without specifying some commitment of their effort to that project. Stanford University requires a commitment of at least 1%FTE on the part of the Principal Investigator during the period in which effort is devoted. This effort may be expended during the Academic Year, Summer Quarter only, or both. If it is not going to be paid for by the sponsor, then it must be cost-shared by Stanford. Exceptions to this requirement are allowed only in specified situations or with OSR approval. See Salary charges for Principal Investigators on research projects, March 9, 2001, for further explanation.

If you have questions about any of this material, contact Ann George, Assistant Dean, Research and Graduate Policy.

The following Stanford policies relate to this subject:

• Fiscal Responsibilities of Principal Investigators,
  Research Policy Handbook 3.1

  Defines requirements for the commitment of effort in project proposals, and for the ongoing management of project expenditures.

• Cost Policy,
  Administrative Guide Memo 34.5

  Outlines general policies on expense reimbursement by the federal government and discusses the importance of assigning correct Project/Task/Award records (PTAs) and Expenditure Types to expenses.

• Cost Sharing,
  Research Policy Handbook 3.5

  Describes requirements to separately budget and account for project expenses, including salaries, which would normally be expected to be paid by the sponsor, which Stanford commits to pay instead.

• Authorizing Expenditures,
  Administrative Guide Memo 36

  See in particular, the section on "Expenditures of Restricted Funds"

• Cost Transfers,
  Administrative Guide Memo 38

  Defines policy and procedures for after-the-fact reallocation of the cost associated with a transaction from one PTA to another. Establishes the time limits in which such transfers must take place.

Stanford is governed by Federal Regulations, in particular, those dealing with federal funding for academic institutions. One of the relevant Circulars, published by the Office of Management and Budget (OMB) is OMB A-21, PRINCIPLES FOR DETERMINING COSTS APPLICABLE TO GRANTS, CONTRACTS, AND OTHER AGREEMENTS WITH EDUCATIONAL INSTITUTIONS.

In January 2001, OMB issued a clarification of Circular A-21, confirming that voluntary uncommitted effort should NOT be accounted for separately and included in the calculation of indirect costs. That clarification reinforces the expectation that PIs WILL make a commitment of effort to their research projects.

Stanford's Audit Survival Guide has been prepared to assist faculty and staff in dealing with A-21 and audit-related questions.

A Self-Audit Program for Operating Unit Compliance Audits is also available.

Here are some additional resources on this subject:

• Clarification of Stanford Policy Regarding Proposing, Charging for, and Reporting Faculty Effort, a summary of policy requirements and their implications for record-keeping (part of the Stanford PIship tutorial)
  
  
• Salary charges for Principal Investigators on research projects, a memo from Charles Kruger and Geoff Grant dated March 9, 2001, describes the requirement for a commitment of PI effort on research projects.
  
  
• Charging of Deans' Effort/Salary, a memo from Charles Kruger and Geoff Grant dated March 5, 1999, provides guidance on this specific subject.
  
  
• Monthly Review and Quarterly Certification of Sponsored Project Expenditures, a memo from Charles Kruger and Geoff Grant dated September 25, 1999, explains a change made in 1999 to this process.
  
  
• Stanford's Payroll Administration site provides procedural information about administration of the pay of employees at Stanford.
  
  
• Stanford's Controller's Office Job Aids page provides downloadable Excel spreadsheets to calculate appropriate salary charges in situations where the NIH salary cap applies and/or when faculty on academic-year appointments elect to be paid over 12 months. The Controller's Office also provides:
  
  
  • a sample Effort Reporting Memorandum, illustrating the allocation of effort to a relatively small number of projects
    
    Note: This last example is an illustration only. More or less complex situations may call for more or less complex tracking methods.

• Take a PRACTICE QUIZ.
  
  

  You do not need to identify yourself, and no record of any scores will be kept. Go ahead, mark wrong answers! Nobody knows, nobody cares! The quizzes actually function better as tutorials if you get a few questions wrong.
  
  The quiz will open in a separate browser window.