Managing Salary Costs
The largest category of direct project expense at MIT is salary and benefits. The principal investigator (PI) is responsible for reviewing salaries charged to projects, and for validating and certifying percentages of salary charged to a project.
Salary Distribution and Certification
When a principal investigator manages a laboratory with multiple ongoing projects, the distribution of salaries of the PI, research assistants, researchers, and other staff to the various projects must be carefully considered. MIT’s process for salary distribution and certification verifies that direct labor charges to federally sponsored agreements are reasonable, and reflect actual work performed. This is commonly referred to as salary certification or effort reporting. This process shows the distribution of the effort of individuals among the various activities in which they work, as a percentage of total salary (not as a specified number of hours) devoted to benefit the project, either as a direct charge or committed cost sharing.
Charges for work performed on sponsored agreements during the academic year will be based on the individual’s regular compensation for the continuous period that constitutes the basis of his or her salary. Charges for work per formed on sponsored projects during all or any portion of such period are allowable at the base salary rate. In no event should charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. See the definition of Institutional Base Salary (IBS) for more information. Some sponsors may choose to cap the salary or salary rate at a maximum level. In these cases, any salary over that cap is an unallowable expense on that project.
Further, charges for work performed by faculty members on sponsored agreements during the summer months will be determined for each faculty member at a rate not in excess of the base salary divided by the period to which the base salary relates. The base salary period used in computing charges for work performed during the summer months will be the number of months covered by the faculty member’s official academic year appointment. For example, if a PI works on a sponsored project for one month during the summer, the maximum amount of salary chargeable to the project is one-ninth of the academic year salary, assuming the academic year appointment is nine months.
If a principal investigator spends less effort on the project than proposed, the PI and the responsible department should:
- Determine if the sponsor should be notified
- Review and adjust salary charges
- Review any cost-sharing commitments based on salary
In addition, for federal awards, the PI must notify the sponsor in writing if he or she plans to reduce effort by (25%) or more from the awarded level. For example, if the award included one month of salary and the PI expects to spend only half a month on the project, the PI will need to request permission prior to reducing effort, explaining why the reduction is appropriate and how the project will remain on schedule with effort reduced. This notification must be routed through RAS before submission to the grant officer.