Statement of the Problem/Issue

The Principal Investigator of an externally sponsored project is unwilling to certify the effort of his unclassified employee on an A-21 Effort Report because she will be on paid maternity leave during the affected quarter and in essence not "working" on the project. The grant under which she is being paid is one which involves billable hours. The employee is entitled to paid maternity leave, according to the Handbook for the Unclassified Staff because she will be using accrued sick leave.

The PI states that he cannot attest to the fact, by signing the A-21, that she "worked" on the project, although she will be fully compensated for her absence from the grant. To get the work done, other staff members on the project will have to "pick up the slack."

What reasonable efforts can be used to certify this employee's A-21 report?

Background

The employee in question was hired by Wright State University in April 1993. Prior to that, she was a graduate student in the A.B.S. Program, College of [ ]. She has been fully grant funded, starting from the time of her employment. She is currently paid from account no. [ ], an agreement with [sponsor] on a project entitled [title].

According to the Handbook for the Unclassified Staff, pages 20-21, "Sick leave may be requested for the following reasons: ... disability due to pregnancy and/or childbirth or related conditions." (See attachment 1.)

Office of Management and Budget (OMB) Circular A-21, "Cost Principles for Educational Institutions," establishes principles for determining costs applicable to Federal grants, contracts and other sponsored agreements with education institutions. Section J.8 of OMB Circular A-21, addresses the area of "Compensation for personal services." (See attachment 2.) According to Section J.8.a.:

Compensation for personal services covers all amounts paid currently or accrued by the institution for services of employees rendered during the period of performance under sponsored agreements. Such agreements include salaries, wages and fringe benefits. These costs are allowable to the extent that the total compensation to individual employees conforms to the established policies of the institution, consistently applied ...

An acceptable method for documenting the distribution of charges for personal services is the "after-the-fact activity record," which is used by Wright State University. The system at WSU reflects the "after-the-fact reporting of the percentage distribution of activity of employees." Charges are made initially on the basis of estimates made before the services are performed, provided that such charges are promptly adjusted if "significant" differences are indicated by activity records. These reports "reasonably" reflect employees' activity are they are compensated by WSU. To confirm that the distribution of activities represents a "reasonable estimate" of the work performed, WSU requires that the activity record must be signed by the employee and the principal investigator or responsible official having direct knowledge of the work performed, if the activity involved 6-ledger, or sponsored programs effort. Other effort (not involving 6-ledger accounts) requires only the signature of the responsible official. The activity reports are issued each quarter, in keeping with OMB Circular A-21, which requires that the "report will be prepared each academic term, but no less frequently than every six months."

Attachment 1

Sick Leave

Paid sick leave is earned by all university employees. The rate of accrual for full-time unclassified staff is 10 hours or 1.25 days per pay period when in an active status.

Sick leave with pay may be requested only for sick time already earned. Supervisors have the right to approve or reasonably disapprove sick leave usage. All sick time should be recorded and a Sick Leave/Vacation Request form should be completed by the employee and signed by the supervisor each time sick leave is used. Sick leave may be requested for the following reasons:

• illness or injury of the employee; illness or injury of member of employee's immediate family that requires attendance of the employee (a physician's note may be required). Immediate family normally includes spouse, child, father, mother, brother, sister, grandparent, grandchild, parents-in-law, brother-in-law, sister-in-law, legal guardian or person who stands in place of the parent, and a registered domestic partner

• exposure of the employee to a contagious disease which could be communicated to and jeopardize the health of other employees. Such a request for sick leave must be reported to the Department of Environmental Health and Safety

• medical, psychological, dental, or optical examination of the employee; medical, psychological, dental, or optical examination of a member of the employee's immediate family that requires the employee's attendance. The supervisor may request proof of required attendance

• death of an employee's immediate family member. Paid sick leave usage is limited to five days

• disability due to pregnancy and/or childbirth or related conditions

The university may require a physician's certificate after an absence of five consecutive days, when the physician has been seen, or in cases of patterned or excessive use. The certificate should include the reason why the employee is or was unable to perform his/her essential job duties.

Accrued sick time is transferable from one Ohio state agency to another provided that the time between separation and reappointment does not exceed ten years.

With ten years of service and upon retirement or death, an employee or the employee's estate receives a cash settlement equivalent to one-fourth of the value of accrued but unused sick leave up to a maximum of 240 hours. Payment is based upon the employee's salary at the time of retirement or death. Such payment eliminates all sick leave credit of the employee.

Cash payment is made to retiring employees one time only. Employees returning to state service after a cash payment has been made can accrue and use sick leave as before, but cannot receive a cash settlement for the unused sick leave at the time of a second retirement.

For additional information, refer to Wright Way policy #4202.

Attachment 2

OMB Circular A-21, Cost Principles for Educational Institutions
(Search in the page for "Compensation for personal services".)

Analysis

What is the definition of "significant" in terms of prompt adjustment of "significant" differences in an employee's activity? One acceptable method of payroll distribution, according to A-21, is the "Plan-Confirmation." One of the standards of this system is that "short term (such as one or two months) fluctuation between workload categories need not be considered as long as the distribution of salaries and wages is reasonable over the longer term, such as an academic period." In this case, a six week maternity leave would be considered a "short term" fluctuation, as the long-term distribution of salaries and wages (the other 46 weeks of the year) is reasonable.

In addition, OMB Circular A-21 addresses the subject of "fringe benefits," in Section J.8.f.(l):

Fringe benefits in the form of regular compensation paid to employees during periods of authorized absences from the job, such as for annual leave, sick leave, military leave, and the like, are allowable, provided such costs are distributed to all institutional activities in proportion to the relative amount of time or effort actually devoted by the employees.

The recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, reasonable and consistently treated under the cost principles of OMB Circular A-21. (See attachment 3.) Do the costs meet the test?

Allowable: The Handbook for the Unclassified Staff specifically allows accrued sick leave to be used for disability following childbirth (with a physician's statement, which in this case, will be provided to the employer).

Allocable: Is the cost of the leave allocable to a particular sponsored agreement? This is a bit trickier, as the sick leave has been accrued over a period of months, and the employee has been paid from different sources, some of which have now expired. The cost of six weeks' leave of absence, at an annual salary of $38,038, is $4,387 in salary plus $1,148 in fringe benefits.


Reasonable: The costs are reasonable with respect to the leave time authorized by physicians for the birth of a child and recovery from childbirth.


Consistent: WSU consistently treats the payment of leave time for childbirth in the same manner, as indicated by the policies and procedures of the institution.

To assist me in analyzing this situation, I posed the question of the "PI unwilling to certify effort" to my former supervisor at the San Diego State University Foundation and to the research administrators' discussion group. I received nine responses, either via the group or by telephone, ranging from outrage at the supervisor's "contempt" to the unfairness of charging one project solely for leave time accrued on other sponsored agreements.

The most popular suggestion was the establishment of a "leave pool" account for sponsored agreements. As employees earn leave (vacation and sick), the project from which they are paid is charged for the expenses and the funds are transferred to the "leave pool" account. When the leave is actually used, the pool is then charged for the cost of the wages and concomitant fringe benefits, and no one project suffers from being hit for all expenses for an extended paid leave, such as the absence for maternity leave.

While the "leave pool" concept is something that WSU may want to consider for the future, the situation facing my "unwilling PI" must be resolved rather quickly. Several of the discussion group respondents suggested that the employee's department chair or dean might be asked to sign the effort report.

Thus, I would suggest that the costs for the employee's maternity leave are allowable under the tenets of A-21. In the absence of a "leave pool" system or any other method, the payment for the leave will be distributed fully to the sponsored programs account under which she has been employed. In essence, just because the employee is not technically "working" on the project, but is being paid, does not mean that the costs for the leave are not allowable. The PI can certify the effort report by signing it and noting "Maternity Leave, dates: ___ through ___" or asking the chair or dean to sign.

Attachment 3

OMB Circular A-21, Cost Principles for Educational Institutions
(Search in the page for "Factors affecting allowability of costs".)

Outcome

The purpose of this project is to provide a "researched" response to the PI's concerns about certifying his employee's A-21. Attachment no. 4 is a draft memo to the PI summarizing the principles of the effort reporting system and (with luck) giving him enough information or options to give him a comfort level in signing his employee's effort report.

Attachment 4 - DRAFT MEMORANDUM

Date: March 31, 1997

To: [Principal Investigator]

From: Ellen Reinsch Friese

RE: Effort report certification

As you requested, I have further researched the question you posed with respect to certifying an effort report for your employee, [ ], who will be on paid maternity leave for six weeks of the effort reporting period.

As you are aware, Wright State University policies and procedures, as outlined in the Handbook for Unclassified Staff, allow this classification of employee to use earned sick leave for "disability due to pregnancy and/or childbirth or related conditions." Thus, the expense itself is an allowable one by university policy. As I understand from our conversation, you have no argument with the payment of the accrued sick leave for this purpose.

Wright State University is guided by the Office of Management and Budget (OMB) A-21 "Cost Principles for Educational Institutions." The university is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, reasonable and consistently treated, as defined by OMB A-21. In addition, the effort reports are a direct outgrowth of these principles, requiring Wright State University, as the recipient institution, to document the distribution of charges for personal services by using the "after-the-fact activity record." Thus, WSU faculty and unclassified staff face the challenge of documenting their percentage distribution of activity at the conclusion of each academic quarter. Now you know why!

Payment of accrued sick leave during a maternity leave is an allowable, allocable, reasonable and consistently treated expenditure, in accordance with university policy and OMB A-21. The fact remains, however, that you feel uncomfortable certifying the effort of this employee during the quarter in which her maternity leave will fall. One option would be to sign the effort report and add the statement, "Maternity leave" and give the dates of the leave. Another option would be to ask your supervisor/dean to sign the form on your behalf.

I hope this additional information will be helpful to you. If you would like to discuss the issue further, please contact me at Research and Sponsored Programs, ext. 2425.

cc: [college business officer]