2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance
State Agency: Utah State University Research & Development
Federal Agency: Various
1) Potential Financial Impact
USU retained Huron Higher Education Consulting to conduct a Uniform Guidance compliance r...
2024-018. USU Extension Extra Services Compensation Program Non-Compliance with Uniform Guidance
State Agency: Utah State University Research & Development
Federal Agency: Various
1) Potential Financial Impact
USU retained Huron Higher Education Consulting to conduct a Uniform Guidance compliance review of compensation costs charged to federal sponsors. Huron Consulting routinely works with Carnegie R1 institutions to review research compliance issues. Huron conducted a detailed review of an extensive data set for ESC payments made to USU employees, focusing on employees who had salary charged to federal grants or designated as a grant cost share.
This review identified limited instances (1) when salaries directly charged to sponsored projects included extra service compensation in the institutional base salary and (2) when extra service compensation was charged to federal sponsors. Overall, the review found that the vast majority of USU ESC payments (referred to as secondary payments in the internal audit) were not charged to federal sponsored awards.
Out of a total population of $5.8 million ESC payments reviewed, the unallowed compensation costs related to ESC is approximately $140,000. USU is in the process of addressing the unallowable compensation costs by removing unallowable charges on open awards and refunding unallowable charges on closed awards.
2) Policies and required documentation for ESC.
ESC Policies: USU is reviewing its policies associated with ESC and institutional base salary (IBS) (both currently defined in USU Policy 376: Extra Service Compensation). A working group has been established that includes the Provost’s Office, the President’s Office, the Office of Research and Human Resources to develop updated procedures for requesting ESC. Once in place, a new Extra Service Compensation website will be rolled out that will provide guidance on the policy, acceptable uses of extra-service Compensation, and training materials. In conjunction with the website development, a communication plan to inform stakeholders, especially approving department heads and administrators, will be developed.
Institutional Base Salary Policy and Procedures: USU will create and implement an Institutional Base Salary policy that aligns with federal requirements and industry best practices and specifically defines salary components and the associated pay codes that are included and excluded from an employee’s institutional base salary. USU will also update its time and effort certification system with correct institutional base salary mapping.
3) Internal controls for sponsored program compensation
USU will implement the following improvements in its internal controls:
Revised ESC Form. USU has revised its ESC Form to include documentation / calculation demonstrating payment is commensurate with institutional base salary.
Revised ESC Application and Approval Process: USU has already updated the internal ESC review process to include appropriate controls to ensure that all ESC requests are reviewed for Uniform Guidance and USU policy requirements. In this regard, all ESC requests at USU are now reviewed by the Office of Sponsored Programs in the context of all funding sources associated with the applicant (including cost share indexes). This change directly addresses prior routing based on the source of funding which resulted in the Office of Research/Sponsored Programs being bypassed for state-funded ESC requests. Certification language has been inserted at appropriate approval levels to ensure that employees are not receiving ESC related to their primary position/workload.
Improved Definitions of Primary Work Statement: USU has initiated a collaborative effort between Human Resources, the Provost’s Office, and the Office of Research to clearly define the primary work assignment for faculty via the role statement or annual work plans to clarify the full workload associated with the IBS.
Increased Compliance Monitoring: After-the-fact monthly review of ESC payments is being collaboratively performed between the Office of Research and Provost’s Office. Additionally, USU has reorganized its operations to house post-award research administrators within the Office of Research and added an additional supervisory position to manage post award compliance and management. USU will charge central-post award research administrators with monitoring salary charges to sponsored awards and cost share accounts as a secondary internal control.
Research Incentive Programs: The Office of Research will establish permissible conditions and components for research incentive programs and any and all proposed programs will be reviewed and approved by the Office of Research before implementation.
4) Adequate training to university personnel regarding sponsored programs compensation compliance.
Uniform Guidance training for faculty and staff: USU is building and incorporating new training modules for those managing federal awards which will include guidance on allowable compensation costs and determining institutional base salary.
ESC Training: USU has developed a new required annual training for anyone requesting or approving ESC from all types of funding sources at USU (delivered via USU’s Learn Blue system). This training addresses requirements for ESC and employees’ role and responsibilities for compliance requirements. Additional training regarding time and effort certification will be developed.
Pay Code Training: USU will provide additional training and education for departmental and payroll staff responsible for coding and processing salary across the institution.
Responsible Person:
Lisa M. Berreau
Vice President for Research
Utah State University
435-797-3509
Anticipated completion date of corrective action plan: Actively in progress and full completion by Jan. 1, 2026.