Transfer Policy

Types of accounts impact types of transfers, transfer activity, and also transfer allowability.

For non-sponsored awards, such as unrestricted gift funds (30 accounts), transfer activity often takes the form of moving funds around inside of the account -  such as from the 93 income subaccount to a 51 (expenditures) subaccount within the same account (or other subaccounts as appropriate). 

Transferring funds into or out of gift accounts is sometimes allowable, if funds are categorized as Various Donor/Various Purpose (VD/VP) gifts. When gift funds are designated for a specific intent, such transfers are typically not allowable, as there is often a donor or gift letter associated with the funds specifying the purpose -usually in support of a specific PI's research, or particular area of research. Check with the accounting contact who oversees the funds to make that determination.

Transferring 14 and 20 accounts aka state funds (inter-account and intra-account ? ) is a whole n'other ball game, with object codes under close scrutiny. These are funds given to the university by the State of Texas for educational and instructional purposes, so the concept of mix-n-match gets shut down quickly.

For sponsored awards, it is never allowable (or even possible) to move funds out of an account. And moving additional funds into a sponsored award is always attached to a modification of a contract of some type. Behind each sponsored award there is a fully executed, legally binding contract.

• This includes funds designated for subawards - they too have a contract, so again, we are required to follow specific guidelines when it comes to moving those funds. When a PI wants to move funds previously obligated for a subcontract, we have to seek what's called a formalized de-obligation (de-ob) confirmation from the subrecipient's contracting or billing team, or we have to receive a final invoice clearly marked as final for de-ob purposes.
   
• Any subaccounts with subcontract funds in them are required to have a zero or positive balance to move forward with the de-ob requist, which typicaly happens when the PI wants to move funds back out of that subcontract subaccount and into one or more of the others, often when an award is wrapping up and subaccounts need to be 'swept' together to clear out final expenses. 

Note: Sponsored funds belong to the sponsor until we (UT) spend them on project-allowable costs <-- They aren't our funds to re-direct to another purpose or to move around without permission, if sponsor has requested to be notified or to give approval prior to such requests. Visit the other links below to learn more about specific transfer policies. 

Let's tackle typical transfer policy for sponsored awards - this is important for grant management.

Sponsors give the university funds for PIs to conduct research. Some sponsors make mandatory that the costs (and types of costs) of the proposed research remain exactly as described in the budget. Others recognize it's tough to keep funds allocated exactly as first described - stuff changes in the course of a project and they allow some flexibility. We need to determine what, if any, restrictions exist before we start moving funds around.

A no-go for transfers: Anything that would change the scope of the project and/or statement of the work. These changes can impact the deliverables or goals of the work - the entire point of the research in the first place. In those cases, sponsor approval is always required. You can read OSP's wording on that here. 

Here are types of transfer restrictions often encountered in sponsored agreements:

• Not allowable
• Allowable only with sponsor approval
• Allowable, but limited to a certain percentage of the entire award
• Only allowable in certain costing categories (subaccounts)
• Allowable, but Limited to a percentage within particular costing categories

Check the CA3 screen in *Define where transfer restrictions are usually documented.
Review the award's executed agreement, accessed via RMS or UT-RMS.
Contact your SPAA Analyst in OSP (your accountant).
CoLA's Research Support Office may also have copies of award documents.

If you're in a hurry, to SUMMARIZE: Confirm allowability of transfers by checking the NSF-maintained matrix that covers many of the fed agencies we do business with - it's informed by § 200.308 in the online Code of Federal Regulations (eCFR), and NSF also published the RTC Overlay, a document that pulls all relevant rules into one place to ensure compliance.

The Rest of the Story

Many federal sponsors do allow what we refer to as transfers between subaccounts (aka rebudgeting costing categories): As long as the transfer doesn't represent a change to the Statement of Work (SOW) of the project, and you're not trying to transfer funds in the typically non-transferrable categories (subawards, participant support, more on this below).

The eCFR) which contains the set of regulations that govern federal funds at universities, has a section devoted to what is and isn't allowable, § 200.308. One important detail when taking in the eCFR details is to keep straight that they group sponsored awards 2 ways: Construction-related projects (infrastructure related, buildings, capital expenditures)  and non-construction Projects. 

• The Principal Investigator determines whether or not the requested budget transfer represents a change to the SOW and the SPAA Analyst (Accountant) has final approval on that determination.
   
  • The subaccounts that aren't available for transfers are the ones that are for subawards (the 60 series of subs) - there's a contract behind those amounts, so to change them, a modification to the contact is needed. Also, funds categorized for participant support costs, typically in the 37 sub (and sometimes in the 70 series of subs) are unable to be transferred.
    
    Here's how the Code of Federal Regulations defines participant support costs:
    'Direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences, or training projects.'
    
    You can find it within a list of CFR definitions here (a helpful list to get to know).

The National Science Foundation (NSF), a federal agency that funds many projects in CoLA, maintains a published matrix of actions that require pre-approval, including transfers. The matrix is in play with many of the main federal agencies that sponsor reseach at UT as outlined on the document. Though the layout is a little tough on the eyes, it's super useful. This document takes away the guesswork on how to handle transfers among fed agencies.

• NOTE: The Reference column indicates the applicable Code of Federal Regulations (eCFR)
• The RTC Overlay column references this document, which is designed to consolidate applicable rules
• Don't let the eCFR and seemingly cyclical nature of these docs discourage you (or cross your eyes)
  Feel free to reach out for clarification or help with parsing the details. (we get it - it's a beastie)

Although the university has not yet set boundaries regarding late transfers of salary and associated fringe, these types of transfers need to be handled with the same approach toward other types of transfers - with a clear understanding that these kinds of late transfers are 'red meat' to auditors --graphic, yes, but also true.

Sponsor audits have become a frequently occuring thing in the world of sponsored research. It's no longer a question of if we get audited, but when we get audited (again!) Disallowance of late transferred charges is something that is occuring with frequency. 

While it's easy to blame the PI for late transfers, and sometimes, that is certainly the case, it usually traces back to lack of oversight --lack of proactive, clear, accountable planning for PI research teams and their active awards. Your failure to properly manage the research accounts in your purview now has very real consequences and a dollar amount assigned to them. 

Even the best admins out there can have some of their transactions disallowed in an audit. But once the investigation is concluded, and more is known about the circumstances, is it going to come down to a questionable choice a PI made of their own volition, or will it become clear that administrative mismanagement was at the heart of the choas and corrections that threw the award into the view of the auditors in the first place?

Now is the time to place emphasis on award projections and project & team budgets
It's not complicated, but it does require due diligence.
Stay on the right side of an audit and help your PIs to do so as well.

If you're in a hurry, to SUMMARIZE: There is no percentage or dollar amount threshold for NSF transfers between subaccounts (that allow transfers in the first place) - honest, promise, pinky swear, it's true!
BUT there is a percentage threshold concerning PI level of effort on the project. PI level of effort can't be reduced (based on what's on the Current and Pending form) by 25% or more without written sponsor approval to do so. 

Common Misconceptions Clarified

There are some misconceptions out there about what is and isn't allowed with NSF transfers. As administrative personnel, we do not limit a Principal Investigator's federal, agency, and university-allowable rights to move funds around within their awards.

Two of the most common misunderstandings revolve around a 25% rule and a $25,000 rule.

1. The '$25,000' threshold rule so frequently misapplied traces back to 2 federal regs: here and  here.

NSF policy makes clear that the rearrangement/reconversion costs they are referring to are specific to physical facilities and construction related costs. They address that threshold because NSF isn't typically in the business of building research labs, buildings and other infrastructure-related costs for the university. 

• The confusion occurs when we log into research.gov to submit a request, such as a no-cost extension. From a dropdown list, we select which type of request we are sending in. Within that list is the following type of request with a confusing name:
   
• Rearrangement/Reconversion costs in excess of $25,000.
  Without context from the eCFR § 200.462 rule, this request with unfortunate wording, appears to be all-encompassing and has led to many clarification requests directed at NSF Program Managers, and also many instances of misinformation communicated to PIs by admins regarding what they can and can't do in terms of moving funds around within their NSF awards.
  
  Rebudgets and Transfers between subaccounts (that allow transfers in the first place) DO NOT fall under this threshold. Please do not tell NSF PIs they have a $25,000 threshold for rebudgeting - that is not accurate.
   
  • Here is the exact wording contained in NSF's proposal guide that addresses the unknown or misunderstood policy re construction costs:
    
    'Except under certain programs, NSF does not normally make grants for construction or facility improvements. However, rearrangement and reconversion costs that do not constitute construction (i.e., rearrangement and reconversion costs aggregating $25,000 or less) may be allowable under NSF grants to adapt space or utilities within a completed structure to accomplish the objective of the NSF-supported activity, provided that:'...
    (and it goes from there with specifics that impact this rule)  --That's what all the confusion has been about!

 

When it comes to getting the all-clear on intra-subaccount (rebudget) transfers on NSF awards, not only do we have:

1. A matrix that tells us that it's allowable, we also have...
2. A clarified policy that rules out the misapplied $25,000 threshold.
   But if you prefer things in threes
3. Here's the final greenlight that should really bring things home:
    
   • During a 2022 NSF Financial Management Update Webinar, an attendee asked a question about rebudget thresholds among salary and fringe, and this is the response provided by Beth Strausser, NSF Senior Policy Specialist, Policy Office, Division of Institution and Award Support: 
      
     • 6/08/2022: 2:27 PM:
       'Unless one has been specified in an NSF award notice, in general NSF does not have a percentage threshold for rebudgeting. Under normal rebudgeting authority, a grantee can rebudget within personnel categories after an award is made and no prior approval from NSF is necessary. The caveat is if the change would cause the objectives or scope of the project to change, then the grantee would have to submit an approval request via Research.gov.'
        
   • The question posed was referring to an often-misunderstood 25% threshold (instead of a $25,000 threshold), but the response addresses both misconceptions. And that brings us to the other one...

 

2. The 25% threshold rule.

There is indeed an NSF 25% threshold policy, but it has nothing to do with transfers of funding in our sponsored research awards.

It's about the level of PI effort devoted to a project.
That same NSF prior approval matrix addresses the requirement to seek approval if a PI's level of effort is reduced. Here's the exact wording: 'Disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator' (requires prior approval)

UT has adopted and applied that policy across all sponsored awards. Here's the exact wording:

'As a result of the most recent statewide audit and associated corrective action plan principal investigators are reminded that a withdrawal from a sponsored project, an absence from the university of more than three months, or a 25% (or greater) reduction in time devoted to the project on the part of a principal investigator, project director, or other key personnel requires prior approval from the sponsor.'

To clarify what a 25% or more reduction in time devoted to the project looks like:

This is not about the amount of salary the PI charges to the award. It's about the amount of time they have formally declared they'll spend on the project --located on the Current and Pending Support form they included with their proposal (as required by NSF and most federal sponsors). So we can't measure a reduction in effort by looking at the salary amount a PI charges to their award.

But if a PI, for example, tries to lower that declared amount of time on a Current and Pending Support form they plan to submit with another proposal -that's a problem. --and it has been a problem, which is probably why NSF clarified this policy.

A PI would be the only person who knows how much effort they are devoting to a project. If they inform you that they are going on sabbatical, or extended leave from teaching, or leave without pay, any status change should prompt you, the person in charge of award management, to ask them about their effort on their award(s).

Note: NSF only created this policy for decreases in effort, not increases. If a PI wants to devote more time and associated salary coverage to the project, NSF doesn't require any kind of prior approval. But if a PI does increase their time devoted to the project without the associated salary coverage, that opens up another question: Who is paying for that extra time? It can't be paid by another sponsored award so... is UT paying for that time via their instructional funds? If so, welcome to the world of Cost Share. 

NIH spells out in clear terms what their policy is regarding transfers, corrections, etc.

You can read it in its entirety here.

In Summary

• Transfers must be done within 90 days of when error was discovered
• Requires supporting documentation to explain how error occured

   --and confirmation of correctness of new charges

• Transfers to cover cost overruns are not allowable
• Must have system and process in place to catch errors timely
  Repeated issues with late transfers may indicate improvements needed
• Accounting system needs to be transparent and available to sponsors, auditors, etc.
• The expectation is that though there is flexibility with adjusting the budget to meet project needs, spending timing should be consistent with how the project was outlined
   

--Plain-speak: If an award sits laregly unspent for a while and then experiences a fast and significant amount of charges, whether new/original charges or transfers, the auditors will pick up on that and look to find out more about how the award is being managed.

• If there is a significant difference in the way the award's budget was to be spent and the expenditures that are charged, that too may warrant additional scrutiny from sponsors/auditors. 

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