Guidance on Direct Charging of Administrative and Clerical Salaries

Page Updated: February 15, 2021

Key Notes

Salaries of administrative and clerical staff should normally be treated as F&A costs, but may be appropriate as direct costs if certain conditions are met. This document is intended to serve as a guide for the UW-Madison campus regarding direct charging of administrative and clerical salaries. Approval for these costs resides with the funding agency. Federal agency representatives have been clear that approval for these costs will not be automatic. Budget justifications or prior approval requests should be articulated carefully and thoughtfully. PIs and departments are strongly encouraged to include these costs in the budget at the time of proposal. In some cases, including NIH, an agency may waive the requirement to obtain prior approval to re-budget for such costs. If agency approval has been waived, then the Dean's or Director's office must make a determination as to the need for direct charging of the salaries.

Background

The Federal government's view on administrative and clerical salaries has not changed. In both OMB Circular A-21 and in the Uniform Guidance (2 CFR 200 et al.), the Office of Management and Budget states that administrative and clerical salaries should normally be treated as F&A costs.

In OMB Circular A-21, OMB made an exception for inclusion of administrative and clerical salaries as a direct cost in a "major project", defined as "a project that requires an extensive amount of administrative or clerical support, which is significantly greater than the routine level of such services provided by academic departments." Although the concept of major project does not appear in the Uniform Guidance, UW-Madison is using major project examples from A-21 to help illustrate situations where direct charging administrative and clerical salaries may be appropriate.

In the Uniform Guidance, OMB has clarified the process of obtaining approval for administrative and clerical costs. This guidance document is intended to assist researchers in providing budget justifications and requests for agency prior approval that will be successful.

Effective Date

Effective immediately, proposals for awards with an expected start date of 12/26/14 or later may include costs for administrative and clerical salaries in accordance with the Uniform Guidance, as outlined below. New awards (as well as incrementally funded awards with a new funding increment, depending on agency guidelines) beginning on or after 12/26/14 also may proceed in accordance with this guidance.

Federal Guidance

Administrative and clerical salaries are addressed in the Uniform Guidance, 2 CFR §200.413 Direct costs:

(c) The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met:

(1) Administrative or clerical services are integral to a project or activity;

(2) Individuals involved can be specifically identified with the project or activity;

(3) Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and

(4) The costs are not also recovered as indirect costs. (See FAQ #8)

In order to be able to direct charge administrative and clerical salaries, Federal agencies require that all four conditions listed above must be met. The PI is responsible for providing justification that these salaries should be direct charged. The word "integral" is generally interpreted as activities that are necessary or fundamental to the project. In order to justify that the individual can be "specifically identified with the project or activity," the individual must spend a minimum of 20% of their time or roughly eight hours per week on the project.

Non-Federal Sponsors

The guidance for non-Federal sponsors is similar, but it may be more flexible. It is important to be familiar with the program guidelines, as well as terms and conditions. Sponsor terms and conditions may restrict the direct charging of administrative and clerical salaries. All other sponsor required stipulations apply (e.g., rebudgeting, prior approval, etc.). If there are questions, please contact your dean's or director's office for advice.

Awards

If the proposal is accepted, and the Federal agency issues the award without explicitly deleting the administrative cost, no other action by the PI is necessary. UW-Madison will consider the administrative cost to be allowable in that circumstance.

An FAQ document is available to address Proposals and Post-Award questions related to this guidance.