Supplemental Compensation Policies and Procedures

Supplemental Compensation on Sponsored Projects

Generally, supplemental compensation from grants and contracts are not allowed during the academic semesters.  See relevant Federal regulations, guidelines, and University policies listed at the end of this document.

General Rules

Below are some general rules to follow when requesting supplemental compensation from grants and contracts:

Academic appointments:

  1. Supplemental compensation is allowed during summer and winter breaks. 
  2. Total hour limit per academic year, mid-August to mid-August, is 456 except NSF funded awards.
  3. Total hour limit for all NSF sources, including both direct and passthrough NSF awards, is 310. (see bullet point 1.e.ii. below for additional restriction)
  4. Calculation of hourly rate: Academic Annual Salary X 0.000731
  5. Notes: 
    1. The true control of supplemental compensation is 1/3 of one’s academic salary: 456 hours X Academic Annual Salary X 0.000731 = 1/3 of Academic Annual salary. 
    2. The NSF limit is two months of annual salary.  If a faculty member is not requesting pay from NSF sources during semesters, then the supplemental compensation hour limit is 310.  If a portion of regular salary is paid from NSF sources, supplemental compensation needs to be reduced accordingly.  The control is 2/9 of Academic Annual Salary.
    3. The NSF 2-month rule may be exempt if the proposal specifically discloses and justifies the need for more than 2 months of annual pay.  Research faculty members may also justify the need to exceed 2-month limit in proposals. However, NSF does allow rebudgeting, so a project specific budget justification should be included in internal documentation.

 NSF policy states: The PAPPG states, under normal rebudgeting authority, as described in Chapters VII and X, a recipient can internally approve an increase or decrease in person months devoted to the project after an award is made, even if doing so results in salary support for senior personnel exceeding the two-month salary policy. No prior approval from NSF is necessary unless the rebudgeting would cause the objectives or scope of the project to change. NSF prior approval is necessary if the objectives or scope of the project change. 

  1. Fiscal appointments:
    1. Supplemental compensation from grants and contracts is generally NOT allowed.
    2. The NSF 2-month rule applies to fiscal appointees too.  Only 2 months of regular salary can be paid from NSF sources unless specific disclosure and justification are provided in the proposal.
  2. Supplemental compensation during academic semesters may be allowed for either academic or fiscal faculty members only when ALL of the following criteria are met:
    1. The faculty member is NOT a PI, a senior personnel, or a regular employee on the award; and
    2. The award is not administered by the faculty member’s home unit; and
    3. The work on the award is consultation in nature; and
    4. The supplemental compensation is specifically budgeted with disclosure that the payment is beyond the faculty member’s institutional base salary; and
    5. Total hours allowed per year is 176 for fiscal appointments and 456 inclusive of summer and winter supplemental compensation for academic appointments.
    6. Note: Faculty members on sabbatical while continue their work on grants and contracts may receive compensation up to 40% of annual salary if approved by the sponsor.  This needs to be set up as a component of pay.  Supplemental compensation should NOT be used for this purpose. (see bullet point 5.f. below for UA’s Compensation Definitions for Faculty and Appointed Professionals)
  3. Other categories of employees:
    1. Supplemental compensation is generally not allowed if an employee is budgeted on the award.
    2. Supplemental compensation may be allowed when the work is beyond the normal duties assigned and the work will be short term in nature. 
    3. Generally, the work paid by supplemental compensation should be in a different job classification. 
    4. Supplemental compensation should NOT be used as a pay increase for increased workload or expanded responsibilities.
    5. Consult GA Hiring Manual for rates and schedules when supplemental compensation is for Graduate Research Assistants. 
  4. Web links to Federal Regulations and University Policies:
    1. OMB U.G. 2.CFR.200.430 (5) Periods outside the academic year
    2. OMB U.G. 2.CFR.200.430 (h)(8) Salary Rates for Faculty Members 
    3. NSF 2-month Salary Limitation (Senior Project Personnel Salaries & Wages Policy)(i)(a)
    4. NIH Grants Policy Statement, Section and 
    5. NIH Grant Policy Statement 4.2.10 Salary cap/Salary Limitation 
    6. UA Supplemental Compensation Website
    7. University Handbook for Appointed Personnel (UHAP), Section 2.06.07. See Note towards the bottom of this page.  Also see supplemental compensation schedules under for the same note stating exceptions for grants and contracts. )
    1. University Classified Staff HR Policy Manual, Section 316.0
    2. University Staff 8. Additional Compensation:



(h) Institutions of Higher Education (IHEs).

(1) Certain conditions require special consideration and possible limitations in determining allowable personnel compensation costs under Federal awards. Among such conditions are the following:

(i) Allowable activities. Charges to Federal awards may include reasonable amounts for activities contributing and directly related to work under an agreement, such as delivering special lectures about specific aspects of the ongoing activity, writing reports and articles, developing and maintaining protocols (human, animals, etc.), managing substances/chemicals, managing and securing project-specific data, coordinating research subjects, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and conferences.

(ii) Incidental activities. Incidental activities for which supplemental compensation is allowable under written institutional policy (at a rate not to exceed institutional base salary) need not be included in the records described in paragraph (i) of this section to directly charge payments of incidental activities, such activities must either be specifically provided for in the Federal award budget or receive prior written approval by the Federal awarding agency.

(2)Salary basis. Charges for work performed on Federal awards by faculty members during the academic year are allowable at the IBS rate. Except as noted in paragraph (h)(1)(ii) of this section, in no event will charges to Federal awards, irrespective of the basis of computation, exceed the proportionate share of the IBS for that period. This principle applies to all members of faculty at an institution. IBS is defined as the annual compensation paid by an IHE for an individual's appointment, whether that individual's time is spent on research, instruction, administration, or other activities. IBS excludes any income that an individual earns outside of duties performed for the IHE. Unless there is prior approval by the Federal awarding agency, charges of a faculty member's salary to a Federal award must not exceed the proportionate share of the IBS for the period during which the faculty member worked on the award.

(3) Intra-Institution of Higher Education (IHE) consulting. Intra-IHE consulting by faculty should be undertaken as an IHE responsibility requiring no compensation in addition to IBS. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the faculty member is in addition to his or her regular responsibilities, any charges for such work representing additional compensation above IBS are allowable provided that such consulting arrangements are specifically provided for in the Federal award or approved in writing by the Federal awarding agency.

(5)Periods outside the academic year.

(i) Except as specified for teaching activity in paragraph (h)(5)(ii) of this section, charges for work performed by faculty members on Federal awards during periods not included in the base salary period will be at a rate not in excess of the IBS.

(ii) Charges for teaching activities performed by faculty members on Federal awards during periods not included in IBS period will be based on the normal written policy of the IHE governing compensation to faculty members for teaching assignments during such periods.

(6) Part-time faculty. Charges for work performed on Federal awards by faculty members having only part-time appointments will be determined at a rate not in excess of that regularly paid for part-time assignments.

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