These procedures are issued in accordance with Policy 303, Program Income.
Sponsors provide funding to cover the costs of conducting research, training, and public-service activities. Program income may be generated as a result of these activities and in some cases must be reported to the sponsor. Uniform Guidance and applicable federal agency regulations document the identification, recording, reporting, and monitoring requirements for income that is generated during the project period. To be consistent in its accounting practices, the University extends these requirements for managing program income to non-federal sponsors.
Purpose of Policy and Procedures
Research Policy 303, Program Income, and these procedures are issued to comply with sponsor policies on program income and to ensure that such income is managed in an appropriate and consistent manner.
Definition of Program Income
Program Income, per Uniform Guidance 200.80 , is "gross income earned by the non-Federal entity that is directly generated by a supported activity or earned as a result of the Federal award during the period of performance" and includes, but is not limited to:
- proceeds from the sale of software, CDs, tapes, or publications produced under the award
- income from fees for services performed, such as laboratory tests or analyses
- registration fees from conferences or symposia
- payments received from external users of property or equipment acquired with sponsored project funds to the extent payments exceed total usage costs
- proceeds from the sale of supplies or equipment purchased or fabricated under an award, and
- income resulting from license fees and royalties on patents and copyrights that is handled by the Office of Technology Transfer. (Note: Unless otherwise required by an award, program income resulting from license fees and royalties on patents and copyrights is not subject to these procedures.)
Except as otherwise provided in the awarding agency regulations or the terms and conditions of the award, program income does not include:
- rebates, credits, discounts, etc., or interest earned on any of them
- interest earned on advances of federal funds.
Recording and Reporting Program Income
Program income will be deposited into a specific fund and account code established by Research and Cost Accounting (RCA), as described below.
The program income fund will be established as a subfund of the primary sponsored project fund. F&A will be charged to expenses in the program income subfund at the same rate as the main sponsored project fund.
Use of program income is limited to costs allowable on the main project. Therefore, expenses unallowable on the main project fund are also unallowable on the program income subfund.
Unless otherwise provided in the award documents, program income revenue is used before sponsor funds.
RCA is responsible for reporting program income activity to the sponsor.
As with all records related to sponsored projects, records on program income activity must be retained according to sponsor requirements.
- For federal awards, Uniform Guidance 200.333 requires that records be kept for at least three (3) years from the date of submission of the final expenditure report.
- Some sponsors/awards may have a longer retention period.
How Program Income Can Be Used
Program Income earned during a project period will generally be treated using one of three methods, depending on sponsor policy, award type, and terms and conditions of the award.
- Additive: Program income funds are added to the funds committed by the awarding agency, thus increasing the amount available to accomplish program objectives. Example: A project has (1) $320,000 available ($300,000 award plus program income of $20,000) and (2) total expenditures of $315,000. Program income of $20,000 will be reported to the sponsor and considered fully spent; the sponsor will pay the balance of $295,000, leaving $5,000 of sponsor funds unused.
- Deductive: Funds generated through program income are deducted from the financial obligation of the sponsor. Thus, total funding available for the project is unchanged. Example: A project has (1) $300,000 available (program income of $20,000 plus original award of $300,000, reduced to $280,000 due to the program income) and (2) total expenditures of $290,000. Program income of $20,000 will be reported to the sponsor and be considered fully spent; the sponsor will pay the balance of $270,000, leaving $10,000 of sponsor funds unused.
- Matching: Program income is used to finance the University's share of the project costs. Example: A project has (1) $360,000 available (original award of $300,000 plus $60,000 of required cost sharing partially funded by program income of $20,000) and (2) total expenditures of $360,000. Program income of $20,000 will be reported to the sponsor and be considered fully spent; cost sharing from other sources will be reported at $40,000; the sponsor will pay the balance of $300,000, leaving no unspent balance in sponsor funding.
Federally-sponsored awards: Unless the federal awarding agency specifies in its regulations or the award terms and conditions a different method, Uniform Guidance provides that program income for research projects be treated under the additive method and program income on non-research projects be treated under the deductive method.
Non-federally sponsored awards: Many non-federal sponsors do not have an established program income policy. In the absence of a sponsor policy, the program income is not reportable to the sponsor.
While all program income must be recorded properly in Banner, not all program income must be reported to the sponsor. The terms and conditions of the award determine the appropriate program income treatment and sponsor reporting requirements. For example, unless otherwise provided in the award, program income earned after the end of an award period is not subject to either the program income policy or these procedures. Additionally, as noted above, income resulting from license fees and royalties is subject to the program income policy and procedures only if the terms and conditions of the award require such reporting.
Anticipated Program Income and the Program Income Subfund
Principal Investigators (PIs) are responsible for identifying and documenting program income on projects funded by both federal and non-federal sponsors and notifying either the Office of Sponsored Research (SPARC) or Research and Cost Accounting (RCA), as described below.
If program income is anticipated at the time of proposal submission, the PI notification must be included with the proposal documents sent to SPARC.
- The Review and Approval (R&A) form question on anticipated revenues to be generated is marked "Yes," and the Notification of Anticipated Program Income form will be attached to the R&A and forwarded to SPARC.
- The PI will ensure that potential program income information is appropriately included with the proposal documents sent to the sponsor.
- If the proposal is awarded, SPARC will forward the program income information included in the proposal to RCA with other proposal documents forwarded for new awards.
If program income is not anticipated at the time of proposal and arises out of opportunities that occur during the award, the PI is to notify RCA as soon as he/she becomes aware that program income will be generated for a specific award.
- RCA can be contacted via email to firstname.lastname@example.org.
RCA will establish the program income subfund and notify the PI, the appropriate department administrator, chair, and Dean's Office of the fund number.
RCA will meet with the PI / department administrator to assist with estimating costs and rates and developing a plan for invoicing, payment collection, and deposit activities.
Invoicing, Depositing, Monitoring, and Reporting program Income
The PI and department administrator (DA) are responsible for preparing any needed invoices related to the program income, collecting payments, and making cash deposits to the program income subfund.
Program income should be deposited to account code 57231 (Program Income Non-Taxable) or 57241 (Program Income Subject to Sales Taxes). Note: Questions on amounts subject to Texas sales taxes should be sent via email to email@example.com to the attention of the Disbursements Manager.
In order to establish the budget for the Program Income subfund, the PI and the DA are responsible for forwarding a Rebudgeting Request (with copies of the deposit vouchers, checks, and invoices) to RCA to record the expense budget for the income.
The PI and DA are responsible for monitoring the budget and activity in the program income fund to ensure that all revenue and related expenses are properly reflected in Banner.
RCA will report program income activity to the sponsor as required by sponsor regulations and award terms and conditions.
During and After Project Closeout
During project closeout, RCA will report final program income amounts to the sponsor, as required by award terms and conditions.
RCA will appropriately "zero" the program income fund based on project expenditures confirmed by the PI/DA.
Program income earned after the project period of the primary award should not be deposited to the program income fund.
- Contact Current Funds Accounting if a new non-R fund is needed after the project ends.
Summary of Roles and Responsibilities
Function / Responsibility
|PI / DA||SPARC||RCA|
1. Notification of Anticipated Program Income Form (with estimated amounts, sources, etc.)
a. During proposal
1) Indicate "Yes" on R&A form & attach needed information
2) Ensure information is forwarded to sponsor as needed
3) Ensure information in the proposal is forwarded to RA if proposal is awarded
b. During award, via email to Research and Cost Accounting
2. Establishment of program income subfund
3. Invoicing, collection and deposit of payments to program income subfund
4. Processing needed budget revision forms
5. Reporting program income to the sponsor
6. "Zeroing" program income subfund during closeout of award