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Policy: VIII.C.2

Issued: May 16, 1988

Owner: Owner: Director of Sponsored Programs

Latest Revision: March 21, 2003

This policy has been migrated to the standardized format.

1.0 Purpose

This policy describes the process for handling sponsored program award- projects that have exceeded the total amount budgeted.

2.0 Policy [Top]

       2.1 Overview

Sponsored Program awards and projects are created as a result of an agreement with a funding agency.  The budget is established at a high level according to sponsor requirements.  The Office of Sponsored Programs (OSP) collects payment on actual expenditures, up to the limit of the budget.  Sponsored Program awards and projects are unique, in that the State allows for the charging of expenditures before the collection of cash.  However, the University must use other resources to fund Sponsored Program expenditures until the actual funds are received from the sponsor.  Since overcharges/overruns cannot be billed to the sponsoring agency, deficit accounts place additional constraints on already limited University resources.

OSP is charged with filing financial reports required by the sponsoring agencies.  In general, federal reports are due 90 days after the completion date of the project.  The reports cannot be filed when a deficit exists or the account contains outstanding commitments.  Many sponsoring agencies may delay issuing awards or withhold scheduled payments because of delinquent financial, progress or technical reports.  Additionally, Oracle will not allow an award- project combination that is in deficit to be billed. 

The principal investigator is responsible for ensuring the Sponsored Program project does not exceed the budget. 

2.2    OSP Actions

OSP will facilitate corrective action on deficit projects through distribution of the “sponsored programs budget deficit letter.”   Departments and PIs must have a plan for corrective action, and notify OSP of the plan, within 30 days.  Departments and PIs must implement corrective action within 70 days or OSP will transfer the deficit to the department’s facilities and administration award.

Here are the steps OSP will take to facilitate the management of budget deficits:

1.      OSP will identify sponsored program deficit projects during the first ten days of each month.

2.      OSP will then prepare and distribute the Sponsored Programs Budget Deficit Letter to the appropriate departmental administrator listing the Award No, Project No., Project PI, Amount and any comments (i.e. Need cost transfer, wage payroll request, etc.) under the “First” Notice section of the Letter.

3.      The departmental administrator must respond to OSP within 30 days with a plan for correcting the deficit of any Project listed under the First Notice category.  If there is no response, OSP will transfer the deficit to the department’s F&A award without further notice.

4.      A “Second” Notice Deficit Letter will be sent 30 days later if corrective action is not taken.

5.      If correcting actions have not been submitted for processing, or the deficit has not been cleared within 60 days, OSP will send a memo to the department head with a copy to the department administrator as a final request for corrective action:  copies of correcting transactions must be received by OSP within 10 days of the letter’s date, or the department’s overhead account will be charged the full amount of the deficit without further notice.

6.      If no corrective actions are received after 70 days, OSP will transfer the deficit to the department’s overhead account without further notice.  A copy of the transaction will be provided to the departmental administrator.

The following chart describes the notification process:


Steps taken:


Project is overspent


1st Notice to department administrator


2nd notice to department administrator (30 days overspent)


3rd notice to department administrator and Chair with 10 days notice for correction (60 days overspent with a 10 day notice to correct)


OSP transfers the deficit full amount to the department’s facilities and administration award.

The notification letter :

3.0 Definitions [Top]

For this policy, a deficit project is defined as a project that has exceeded the total amount budgeted including both actual expenditures and outstanding commitments.

4.0 References [Top]

5.0 Approvals and Revisions [Top]

       Previous version in effect from 5/16/88 to 3/8/00 available in policy archive.
       Previous version in effect from 3/8/00 to 3/25/03 available in policy archive.

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