Budget & Financial ServicesUniversity of CincinnatiDivision of Administration and FinanceBudget & Financial Services

Budget & Financial Services

GCC Frequently Asked Questions

Labor Verification

9 Month Faculty Compressed Effort

Institutional Base Salary

Salary Cost Transfers

Service Centers

Labor Verification

What is a Labor Verification Statement (LVS)?

The LVS is a certification which is used to document the amount of effort actually spent on a project.

Why do we have LVSs?

LVSs are required by federal regulations found in OMB Uniform Cost Principles.  Auditors from the agencies that give UC money use LVSs to verify that the percent of salaries charged to the project, or cost-shared, are justified.  The LVS serves as the certification for salary expenses. If, for example, an auditor could not find an LVS, or the percentage of salary charged to the project is more than the percentage of effort reported in the LVS, the auditor will request a refund of the difference.

How often are LVSs required?

Once each academic semester (3 per year)

Who has to complete an LVS?

Only those with salary charged, or committed as cost sharing, to sponsored projects.  Usually these projects are within the account series G10000 – G49999.

Describe the LVS Types.

Type 1:  Statements are grouped by project (SAP grant number), rather than by employee.  They include the effort for every employee who worked on a particular grant during the period.  The PI, whose name appears at the top, signs one time for the entire group.  There is an additional section on the bottom of these statements that displays full-time faculty effort on the project.  This is for the PI's reference, as the PI does not certify for these employees.

Type 2:  Statemenst are for full-time faculty and most academic director positions (i.e. President, Provost, Deans, Dept. Heads, and Directors Academic).  They appear similar to the statements you have seen in the past, and cover 100% of the effort for each employee.  These statements are routed to the home department of the employee, who should sign and date accordingly.  Please note that there is now only one signature line on each statement to eliminate any confusion.

Type 3:  Statements are limited to one per department.  This statement covers the non-sponsored effort (referred to as "all other" effort on past statements) for part-time faculty, staff, and students who worked on sponsored programs.  In the past, the "all other" section for part-time faculty, staff and students was signed by an individual (often the department BA) to certify that the amount listed was a reasonable estimate of time spent on non-sponsored activities.  This will still be the case, but now, the effort for all part-time faculty, staff, and students will be covered by this single statement, and the non-sponsored effort for these employees will be certified on the Type 1 Statement described above.

back to top

How do I complete the LVS?

Verify the percentage of effort actually performed during the semester. Then sign, date and return the LVS to GCC. The total effort reported for all projects MUST TOTAL 100%.

What if a restricted project doesn't have an account yet or the account doesn't appear on the LVS and you are working on it?

Notify GCC.

back to top

Who can sign an LVS?

  • Principal Investigators (PI's): PI's must sign a Type 1 LVS for each project during the period.  The Type 1 lists the effort for all Part-time Faculty, Staff and Graduate Students with effort on the grant.
  • Full-time Faculty (Non-PI's): should sign their own Type 2 LVS's.
  • In those rare circumstances when the above guidelines cannot be met, a department chair may sign the LVS's if they have suitable means of verification that the work was performed as indicated by the percentages in the LVS.
  • Why the PI? Because only the faculty member can contradict the effort reported on the LVS thereby putting the department at financial risk for audit disallowance.

What if the appropriate signatory is unavailable?

  • If the appropriate signatory is temporarily unavailable for a brief time (e.g., on vacation), you should wait until they are available, and then have them sign the LVS.
  • If the appropriate signatory is temporarily unavailable for a considerable time (e.g., on sabbatical or long-term sick leave), you should send the document to them via fax or email, to be signed and faxed/emailed back to you.
  • If the signatory is permanently unavailable (e.g., they have left the University and are out of contact), a department chair may sign if they have suitable means of verifying the effort.

How should the information on the LVS be verified?

The information on the LVS should be verified by comparing it to the appropriate grant budgets (committed effort) and to the labor history found in SAP Business Warehouse (BW) report LH100E – Labor History by Employee.  The LVS should not be signed until someone has reviewed and verified the amounts.

What types of pay are included on the LVS?

Basic pay (including sick leave and vacation pay), Administrative Stipends, and Summer teaching (for AY faculty) are included on the LVS.   Awards, Bonuses, Additional Pay (ADL), Work Study pay, and Intercession Pay (EXC) are not included.

What if the amount reported on the LVS do not refelect actual work performed?

DO NOT SIGN THE LVS if you do not believe it to be correct.

If the actual work performed differs from the effort listed on the LVS, the department should initiate a change to the labor history by submitting a Personnel Change Request (PCR), as well as a salary Cost Transfer Request (CTR) if necessary.  Once these have been approved and the changes posted to payroll, a new LVS will be issued and can be signed.

How are changes made to Labor History?

The appropriate administrator (generally either the BA or someone assigned by the BA) issues a Personnel Change Request (PCR) to cover the time period to be changed.  If funds are being moved on to or off of a grant account, a Cost Transfer Request (CTR) must also be completed and approved by Sponsored Program Accounting (SPA).

What if the amounts reported on the LVS do not match the Labor history?

DO NOT SIGN THE LVS if you do not believe it to be correct.

Please contact GCC, and we will review the information and, if necessary, issue a new LVS.

Should I use a 40 hour work week as a base for computing the effort percent to be reported on the LVS?

You should calculate the effort percent based on the time it took to perform the duties for which you were paid.  If, for example, an individual can fulfill his/her obligation to the University in a 50 hour work week the LVS needs to be completed, adding up to 100%, based on the distribution of those 50 hours.  If an individual needs a 60 hour work week to fulfill his/her obligation, the LVS needs to be completed, adding up to 100%, based on the distribution of those 60 hours. 

If I have a half time appointment, should the LVS total 100%?

All LVSs should total 100% regardless of percent employment or percent of the semester worked.  If a person only worked two weeks of a semester, the LVS should still total 100% (based on the distribution of those two weeks).

Back to Top

When I sign the LVS, what am I agreeing to?

You are certifying that you spent at-least as much effort as the effort reported in the LVS for the report period.  Auditors sampling the accuracy of the LVS will begin their review with the person that signed the LVS.

If pay is moved to the long-term sick pool or faculty sick pool, is it included on the LVS?

No.  The long-term sick pools are considered fringe benefits, not salary, and the LVS is intended to track salary/wage payments only.  Therefore, charges to the long-term sick pools are excluded from the LVS.  If transfers to the long-term sick pools affect the stated effort percentages on a project, it is recommended that a copy of the labor history, showing the transfer to the benefit pool, is included with the statement.  If effort was previously certified, a new LVS will be issued for signature.

back to top

9 Month Faculty Compressed Effort

If a 9-month faculty member is going to be assigned to a sponsored program for a term of less than 1 year, how should  we account for their effort?

9-month faculty are appointed for only 2 academic semesters each year, but are paid over a 12-month period, and receive pay during their recess period for time worked during their period of appointment.

When a 9-month faculty member is assigned to a sponsored program for a period of less than 12 months, this can create a disconnect between their assigned effort and the actual cost of that effort. For example:

Professor Smith earns $90,000 per year. She is paid $7,500 per month, but is only on appointment for nine months, and therefore earns $10,000 per month of her appointment.  If she is assigned to a sponsored program at 10% effort for 2/3rds of her period of appointment (6 months), that is worth 10% of 2/3rds of her salary - $90,000 * 10% * 67% = $6,000.  However, in those six months she will only be paid (7,500 * 6) $45,000.  If a PCR is entered to pay 10% of her salary during the six months, it will only come to $4,500, which equals 10% of her pay for the period, but not 10% of the value of her appointment.  In order to generate 10% of the value of her appointment, the effort level on the PCR would need to be (6,000 / 45,000) 13.33%.back to top

The question has been raised: is it appropriate in such a situation to charge 13.33% effort rather than 10%, in order to compress the payments into the allotted time, or should only 10% be charged, in order to match the PCR (and LVS) to the budgeted effort?

In these situations, it is recommended that the effort charged to the project be compressed to ensure that the entire value of the effort is charged to the project (in the above example, 13.33% over six months). This only applies to 9-month faculty assigned to a project for a term of less than one year, when the length of the assignment is known in advance.

Using this method ensures that the university is properly compensated for the actual time committed. While this does mean that the effort percentage listed on the PCR (and subsequently on the LVS) may not match the percentage as budgeted, the total dollar amount charged to the grant will be appropriate and will be considered accurate. 

This method should only be used in situations where an assignment of less than one year for a 9-month faculty is known and calculated in advance. In cases where a faculty member unexpectedly leaves a project for any reason, you should not attempt to process cost transfers to retroactively increase the amount of pay charged to the grant for past periods.

In order to calculate the compressed effort in these situations, multiply the stated effort by 12/9 (simplified to 4/3, or 1.33333).  In the case of an assignment of 10 or 11 months, the stated effort should be multiplied by 12/10 and 12/11, respectively.  An Excel calculator has been included to facilitate this calculation.

Back to Top

Institutional Base Salary

How should Institutional Base Salary be calculated?

  • For salaried employees, Institutional Base Salary (IBS) is calculated by taking an employee’s basic pay (0FAC/0SAL/0ADJ), and adding the annual rate for any administrative stipends (0ADM).  For example, an employee with a basic salary of $60,000 per year, plus a $1,000 monthly administrative stipend, would have an IBS of $72,000 per year ($60,000 + $1,000 * 12).
  • For hourly employees, the IBS is calculated based on the employee’s hourly rate, multiplied by 2080, the standard number of hours worked in a single year for a full-time employee (52 weeks, 40 hours per week).

How is IBS used?

  • IBS is used for two primary purposes.  First, it used when preparing budgets for sponsored programs, and paying employees from these programs.  If an employee commits 10% effort to a project, the project should pay the equivalent of 10% of the employee’s IBS.  Please note, however, that while stipends are included in the calculation of IBS, admin stipends cannot be paid from sponsored projects.
  • The second purpose of the IBS is to determine the basis for the estimated hourly rate for faculty when calculating Extra Compensation (0EXC) payments.  For more information on how to calculate the hourly rate for EXC payments, please see question #4 in this document.

Why does IBS include basic pay and stipends, but not other pay types?

IBS is designed to represent the amount paid to an employee for execution of their regular duties.  This includes their basic pay (0FAC, 0SAL, 0ADJ), plus any standardized, recurring payments for ongoing and significant tasks, such as stipends (0ADM).  These payments represent the total effort of the employee, per Federal guidelines.  Bonuses (0BNS), awards (0AWD), royalties (0ROY), additional compensation (0ADL), intersession compensation (0EXC), moving expenses (0MOV, 0MVT), housing expenses (0HOU), retirement pay (0RET), and cell phone stipends (0CEL) are not included because they are not paid for execution of normal duties, they cannot be accurately projected, and they are designed to be incidental in nature. 

How do I calculate hourly rates for Extra Compensation (EXC) pay?

  • When calculating faculty EXC pay, an average “hourly rate” must be determined, and then multiplied by the number of EXC hours worked. 
  • To calculate this, first determine the faculty member’s IBS, by adding their basic pay to the annual rate of any administrative stipends.  Then divide the IBS by 1,280 to calculate the hourly rate (9-month faculty are considered to have a 32-week appointment; 32 weeks * 40 hours per week = 1,280 hours)
  • For example, if a professor has an annual salary of $75,000, plus an academic-year stipend of $1,000 per month for 9 months, and a summer stipend of $1,500 per month for three months, their IBS is:
    • $75,000 + ($1,000 * 9) + ($1,500 * 3) = $88,500
    • $88,500 / 1,280 hours = an hourly rate of $69.14
  • Calculated hourly rates for faculty can change throughout the year, due to pay increases or the addition, deletion, or modification of stipends.  Therefore, the rate should be recalculated each time the faculty member completes an EXC form.

back to top

Salary Cost Transfer

What is a Salary Cost Transfer?

  • A Salary Cost Transfer is the reassignment of an expense to or from a sponsored project after the expense was initially charged elsewhere. Cost Transfers include reassignments of salary, wages and other direct costs.
  • Salary CTR is the acronym for Cost Transfer Request. The Salary CTR form is used to identify, explain, and justify cost transfers.

Where can I access the Salary CTR form?

Departments can access these forms from the SRS Web Site.

When is a Salary CTR required?

  • A Salary CTR form is required to move effort onto or off a sponsored project
    • Examples:
    • Effort is being moved:
      • From a Department Fund to a grant
      • From a Grant to a different grant
      • From a Grant to cost share
      • From Cost Share to a new grant

Who should complete the Salary CTR?

The department should complete the Salary CTR.

When should a Salary CTR be made?

A Salary CTR should be made as soon as a PCR has been submitted for the transaction. All Salary CTRs should be made promptly but no later than 90 days after the close of the month in which the transaction occurred.

Is justification required for a Salary Cost Transfer?

YES! All Salary Cost Transfers must include adequate justification for the transaction. An explanation should include what caused the modification to be necessary and what steps are being taken to prevent such errors in the future.

What is a Late Cost Transfer, and what is the policy covering this possibility?

  • Late Cost Transfers are Salary CTRs that are not completed within 90 days after the close of the month in which the transaction occurred. Late cost transfers moving a charge to a grant must be approved by the Vice President and/or Associate Vice President for Research and will only be granted in extenuating circumstances. Extenuating circumstances DO NOT
  • Include limited responses such as:
    • Absences of PIs or responsible administrator
    • Shortage or lack of experience of staff
  • Late cost transfers that are moving a charge off the grant to a department account (not another grant) do require late justification but do not require the VP’s or AVP’s approval.

back to top

What is the process for completing a Salary CTR?

  • BA:  Complete PCR (or time correction form if hourly employee controlled via information type 9001)
  • BA:  Download Salary CTR workbook, save to local drive. Complete Salary CTR form. (Questions 1-4 are mandatory. Questions 5-6 are conditional. Answer N/A for question 4 if it doesn’t apply.)
  • BA:  Email completed Salary CTR form, a copy of the Labor History, and if applicable, agency approval, and/or time correction form, as attachments, to the PI(s) for approval. All PIs for all grants listed on the Salary CTR form must approve the transfer.

What information needs to appear in the Salary CTR email?

The subject line in the Salary CTR email that is sent to the Principal Investigator/Primary Investigator for approval must be completed as follows:

  • Department Cost Center #/Employee’s Last Name (Not PI, Not Grant #s) /SRSAD GA #(s)
  • If the subject line of the email differs from the format outlined above, the Salary CTR may not be received or processed.
  • The SRSAD GA #s can be found on the SRSAD Agency Assignment List tab in the CTR workbook, or in UCFlex using transaction GMGrantD (contacts tab).

Who should approve the Salary CTR?

The Principal Investigator/Primary Investigator on each grant affected by the reassignment of expense must approve the request. The Salary CTR must also be approved by the SRSAD GA for each grant and, if the request is over 90 days, it must also be approved by the Director of Sponsored Program Accounting, Vice President and/or Associate Vice President for Research.

Where is the Salary CTR sent upon completion?

Upon approval, the Principal Investigator/Primary Investigator must FORWARD the e-mail, leaving the subject line intact, with the Salary CTR and all supporting documentation attached, and must include a statement of approval within the body of the e-mail to CTR@uc.edu for review and processing.

back to top

Service Centers

What is a Service Center?

A Service Center is an institutional entity which provides a service or product to university users for a fee. The rates charged by the center are calculated so that the center recovers its costs. The University has two types of Service Centers:

  • University Service Center - A facility which provides a service or product on a continuous basis to the University community (including the public) and charges the user a predetermined rate calculated to recover the total cost (where the allocation of indirect cost is material) of operation over a period of time established in advance.
  • Departmental Service Center - A facility which provides a specific type of service or product to a limited segment of the University community; applies a rate to recover the direct costs of providing the service; and is not deemed a University Service Center.  Services may also be provided to the public but at a different recovery rate.

Does the university have a minimum dollar threshold before a department can set up a service center/recharge center, i.e. they must have charges totaling $10,000 or more before you will establish a service center?

UC unofficially has a threshold of $20,000, but that is not a consideration if there is a chance they will be charging federal funds.  At that point, the threshold does not matter.  back to top

Does a Service Center have to charge all users of the Service Center’s services or equipment?  Can students get free services?  What about faculty members who are working on grant proposals and don’t have funds yet?

All users of the Service Center’s services and equipment must be charged.  Otherwise, the preferred rate for that service becomes $0, and that is the rate that all customers, including the federal government would need to be charged. back to top

Can Service Center equipment be used by the department without charge for non-Service Center work?

No.  Equipment in the Service Center must be fully dedicated to Service Center work.  Either equipment is in the service center and rates are charged for its use, or it is not a part of the service center and it is used for free by all. back to top

Can we charge our department a special rate to use the service center equipment?

No.  The approved rates must be charged for all Service Center services and use of dedicated equipment within the Service Center. 

Who is eligible to be charged the Service Center’s internal /preferred rate?

All University of Cincinnati departments, scientists, students, Cincinnati Children’s Hospital scientists, all federal agencies, e.g. the VA, the EPA, the military, etc. back to top

A project was started based upon approved rates in FY 2012, and work continues into FY 2013.  We have newly approved rates in FY 2013.  Which rates should we use to invoice for the service completed in FY 2012?

The approved rate at the time of the original quote and agreement should be honored and charged, unless the quote/agreement contained a disclaimer that allows the center to use the new approved rate. back to top

The Service Center accidentally quoted the wrong price for a service.  The work is now completed, and we are ready to invoice.  What price should be used?

The PI should be invoiced for work that is now complete using the approved rate.   Previous correspondence re the need for a change order to the PO to rectify the mis-quoted price can be attached as backup to the invoice. back to top

Can the Service Center purchase Capital Assets? 


How can the Service Center replace equipment if it doesn’t have sufficient funds available?

Acceptable methods of acquiring equipment for a core facility or Service Center include:

  • Depreciation (straight-line method) on existing equipment can be recovered through user fees and transferred to the associated plant fund where these assets are held.  The accumulated funds from this portion of the service rates can be used toward purchase of new equipment.
  • Institutional or other funding
  • Shared instrumentation grants or other grant programs designed to establish or support shared resources.  Note: the cost of equipment supported on these programs cannot be recovered as depreciation on rates applied for the facility.  back to top

What equipment can the Service Center depreciate? 

The Service Center can fund depreciation of capital assets purchased with non-federal funds by the Service Center’s associated plant fund (P6). 

Should we include all expenses of running the Service center on the questionnaire, even if they are not fully paid by the Service Center? 

Yes  back to top

Who can be paid from the Service Center fund? 

Salaries and fringe benefits of employees who perform the services of the Service Center may be paid from the Service Center fund.  back to top

What types of costs are unallowable or excluded for determining rates? 

A partial list:

  • debt principal payments
  • advertising
  • alcoholic beverages
  • contributions and donations
  • entertainment expenses
  • fund raising
  • public relations
  • see OMB Uniform Cost Principles Code of Federal Regulations:  Part 200 for more details  back to top

What about travel?

Travel for training can be expensed to the Service Center.  Travel for professional meetings is not acceptable.

What amount of a fund balance may Service Centers carry from year to year? 

Service Centers are allowed to recover operating expenses, but not to make a profit.  If the fund balance increases, lower rates should be proposed for approval so that the university community will realize a reduction in expenses.  back to top

What is a departmental subsidy? 

If the institution contributes funds to the operation of the Service Center, this is a subsidy.

Our Service Center provides a projectlevel service that may take months to complete, and may be subject to change in scope or cost as the project moves forward.  How can we develop an acceptable system of custom charges?

It is understandable that at a project level, there may be services for which it is difficult to determine a standard rate to charge per project.  However, the core may establish definable billable units of service or set up accounts to accumulate costs that can be accumulated into a specific project cost.  Each billable unit is subject to the federal cost principles outlined in OMB Uniform Cost Principles Code of Federal Regulations: Part 200, and should consist of a definable service and appropriately identified and allocated costs.  By documenting each billable unit as part of regular rate review/development and consistently using these units and other allowable costs to build a custom project-level service, the core will be in a position to support specific charges to projects benefiting from the service. back to top

What information should be included on our invoices?  How frequently can we bill our customers? 

  • Itemized invoices should include approved rate for the service X units = total cost.  Contact GCC for a sample invoice. 
  • Invoice customers as work is completed, keeping in mind customers’ grant end dates.  If the work is an ongoing project, invoice at billable phases. back to top

What is “business tax”?  How much is it? 

The University encourages the entrepreneurial activities of departments and/or faculty members but recognizes that many of these activities carry an overhead cost to the University.  While it is not intended to penalize the entrepreneur, it is necessary to take steps to recover a part of the costs associated with these activities.  In accordance with this philosophy, an assessment will be made against all cash transactions to cover a portion of the overhead associated with certain activities.  Outside revenue is cash received from external entities and deposited within the University.  This assessment is also referred to as a “business tax” and is currently levied at 4% of external recoveries.  back to top

What is the difference between an Internal/Preferred and an External Rate and who is in each group?

University of Cincinnati, Cincinnati Children’s Hospital, and all federal institutions are charged the internal rate.  All others are charged the external rate. back to top

We’ve been asked to provide a service but we don’t have a rate for this work.  What should we do?

Contact GCC and complete an updated Service Center Questionnaire that includes the new proposed rate.  Upon approval by the Recharge Council, the new service and rate can be used.  back to top