COVID-19 Furloughs and Other Cost-Saving Measures

Page Updated: Monday, August 10, 2020 11:02:20 AM CDT

Please click here to read a message from the Vice Chancellor for Research and Graduate Education Steve Ackerman that addresses the importance of campus facing this crisis together.

Section 1: Impact of Furloughs on Sponsored Programs

A1: Yes. The University is applying furloughs broadly across campus, regardless of source of funds. However, there are a few classes of employees, primarily students, who have been exempted from furloughs. Please check the University’s website for complete information about furloughs and their application to various classes of employees. Please see Q2 for additional information related to this question.

A2: The University has implemented a furlough policy based on primary appointment type, so there are distinctions between the treatment of 9-month employees and 12-month employees in regard to sponsored programs. As stated in the UW-Madison Furlough Guidelines, “For employees on 9-month appointments, these furlough days are designed so the dollars they lose in lost wages are about the same amount as those at their income level on 12-month appointments.”

The Guidelines mean that 9-month employees will experience furloughs during the period they work on their primary University contract. In that case, summer salary paid from grants will not be subject to furloughs.

For 12-month employees, their primary University contract period is an annual appointment. Consequently, all salary funded by grants will be subject to furloughs.

For information about specific application of furloughs, please watch the University’s COVID-19 website.

A3: Student hourly employees, graduate assistants, post-degree training appointments, and non-FTE appointments are exempt from a campus-wide, intermittent furlough. Non-FTE appointments include 1) temporary employees, 2) academic staff hourly, and 3) lump sum appointments. Foreign workers on H-1B and E-3 visas may not be furloughed. Please see OHR’s website for further, more detailed information.

A4: Yes, people on IPA’s will be subject to the same requirements as the rest of campus. The University has made a decision that sponsored projects are not exempted from furloughs. Individuals with IPA appointments are University employees who continue in their University appointments even though they are working at other governmental entities. We draw down funds as reimbursement for their University salary and fringes paid by the UW-Madison to IPA recipients. In this case, we will simply draw less for the period of furloughs to reflect the reduced salary paid for the period.

A5: Yes, it is legal for people on grants, even federal grants, to take furloughs. The Uniform Guidance (2 CFR § 200.430) states: “Because practices vary as to the activity constituting a full workload (for IHEs, IBS), records may reflect categories of activities expressed as a percentage distribution of total activities.” Institutions are expected to have organizational policies with regard to the payment of salary and wages for employees and to consistently apply those policies regardless of the source of funds. Payroll and effort records should reflect no more than the percentage of time actually devoted to any grant or contract. See the next section of FAQs for more information about how furloughs will affect effort.

A6: No. The University is not asking for that money nor could the University legally use that money for purposes other than the stated scope of work.

A7: Most funding agencies give the University the flexibility to adjust budgets to use the money saved from furloughs in other ways, e.g. additional student support, supplies, or even to extend the period of the grant. In those limited situations where the University does not have the flexibility, the University will need to request permission from the sponsor.

A8: Sponsored projects require support from a large number of people such as custodial staff, security officials, grants and administration specialists, building managers, data services providers, and many more. The people providing those services ultimately enable the research enterprise to thrive. It’s important that we understand the need for infrastructure to support the work of researchers and to remember that most staff who are part of the infrastructure are paid from a variety of sources outside of grants.

The University sought a consistent approach to paying staff and faculty through this period of furloughs. Inconsistently applied furloughs for individuals paid from different sources would be problematic.

It is also the case that in almost all instances, grant funds not used for salaries are still available to support the work of the research project. The disruptions and unanticipated costs caused by the pandemic have impacted the ability to perform the scope of work required on sponsored projects. While sponsors have indicated they hope to be able to provide additional funding to address these unanticipated costs, there are no guarantees that the funds will materialize. The small amount of salary savings may be useful to complete the project objectives.

Section 2: Impact of Furloughs on Effort

A1: Campus-wide, intermittent furloughs will NOT affect effort reporting since effort reporting is based on 100% of an individual’s compensated activities at the university. These furloughs reduce the actual time an individual works and the pay associated with that work. However, the reduced time still represents 100% of the person’s compensated activities. There will be no effect on the percentage of time and the distribution of effort across different funding sources for either 9-month or 12-month employees.

For an individual placed in the Work-Share program, the situation may need to be analyzed more closely. For example, if the individual’s work hours are reduced by a sufficient percentage (typically 25% or more), then sponsor prior approval would need to be obtained. Please consult RSP for further instructions related to effort reporting.

For position-specific furloughs, individuals are placed on a temporary unpaid leave of absence due to a lack of work or if an employee cannot work remotely. These situations will need to be reviewed on a case-by-case basis to assess the impact on the award. Please consult RSP for further instructions related to effort reporting.

A2: The effort reporting principles will not change. The Notice of Grant Award from the sponsor has already established a level of activity or commitment that is still expected. Certifiers should continue to certify the level of work actually performed for each effort period and also confirm that it will meet the required commitment on the grant. Assuming that salaries are still distributed as planned and overall effort is expended in the same proportions as before the furloughs, none of the percentages on the effort statement will change.

Departments and certifiers should review salary and effort distributions even more closely during the furlough period, especially those who have a significant portion of their salary funded from grants. In particular, please consider the following financial accounting factors: how the grant(s) have been charged, any re-budgeting that has occurred, financial status reports, and award closeouts.

A3: Most classes of student employees at the university have been exempted from campus-wide, intermittent furloughs, and there will be no impact on effort reporting for them. In the event that a graduate assistant or student hourly employee is placed on a position-specific furlough, the situation would need to be reviewed to assess the impact on the award.

Please check the University’s website for complete information on students and furloughs.

A4: Let’s take an example of an employee who is required to take a 6-day furlough and who is paid 50% from State funds and 50% from Federal funds. Since the furlough program covers all individuals regardless of funding source, there would be a proportional decrease in compensation to both funding sources. The payroll distribution would be unaffected, and the individual’s full-time appointment and corresponding responsibilities would not be affected. Thus, the percentage of effort certified will not change. Just as before, this employee should certify 50% effort on State funds and 50% effort on Federal funds. Even though the employee is on furlough, the amount of total available effort is still 100%.

A5: A mandatory cost share means the funding agency is requiring a certain level of matching contributions as a condition of eligibility for an award. If you are meeting the commitment through contributions of your time, there is an impact. While your effort reporting level will not change because of the furloughs, your cost sharing DOLLAR commitment will be reduced. If cost sharing is mandatory, you will need to increase your level of effort in order to meet the dollar level of cost sharing promised in the proposal.

A5A: Let’s assume that a PI with a 12-month appointment has pledged $7,000 of his $100,000 salary to help meet a mandatory cost sharing commitment. This translates to a 7% effort commitment or 0.84 calendar months. With a 5-day furlough in place, the PI’s overall annual salary would be reduced by about 1.9% to $98,076. In order to meet the $7,000 salary cost share, the PI would need to increase his level of payroll to 7.14% or 0.86 calendar months and certify effort at 8% (rounded up from 7.14%).

A6: In that case, you must meet the level of effort promised in the proposal, but you are not required to meet the dollar threshold. The commitment was to effort, not dollars.

A7: Yes, most institutions of higher education are facing the same budget issues and many of our peers are using furloughs as one of the mechanisms to address the budget shortfalls. UW-Madison is working with other major research universities to provide a generally consistent approach to furloughs and effort reporting across institutions.

Section 3: Essential vs Non-Essential Purchases on Sponsored Programs

A1: The University has instituted a campus-wide travel ban through June 30th. This affects all funding sources, including sponsored programs. Any employees who want to request an exemption to the travel ban must submit a request using the Essential Travel form to be approved by your Dean or Vice Chancellor. The approved form should be forwarded to Dan Langer in Business Services (dan.langer@wisc.edu) for final campus approval. See Vice Chancellor Ackerman’s message on travel restrictions.

A2: Yes. POs will continue to be issued for subawards as they are critical to the success of many sponsored programs. PI’s should use their best judgement in determining the amount of the subawards and the period of performance as the impact of the pandemic may limit the ability of subrecipients to perform all proposed activities.

A3: Yes. Supplies required to continue research operations are considered essential purchases. In purchasing these items, PI’s should use their best judgment in determining the quantity needed and the frequency of purchasing as the impact of the pandemic may limit the ability to use items as originally proposed.