OTHER ISSUES
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Program Income

Program income is defined as income generated from a project financed by a contract or grant. Program income can result from revenue obtained from conference fees, sale of materials such as videos, books, proceedings, software, etc., supported by funding received from a sponsored project. Most contract and grant awards have regulations or guidelines related to the treatment of program income. The federal government provides the following guidelines in OMB Circular A-110, Subpart C.24:

(B) Except as provided in paragraph (h) below, program income earned during the project period shall be retained by the recipient and, in accordance with Federal awarding agency regulations or the terms and conditions of the award, shall be used in one or more of the ways listed in the following.

1. Added to funds committed to the project by the Federal awarding agency and recipient and used to further eligible project or program objectives.
2. Used to finance the non-Federal share of the project or program.
3. Deducted from the total project or program allowable cost in determining the net allowable costs on which the Federal share of costs is based. This is the default for non-research projects.

The regulations continue with more specifics. See the full text of OMB Circular A-110 from the OVPRED web site http://research.unm.edu/policiesprocedures.

Be sure to follow the specific program or agency guidelines if there will be any income generated on a project. When preparing a proposal, be sure to include any program income as a separate category or column on the budget page. In the budget explanation list the source(s) of proposed program income and describe how the funds will be spent. If the proposal is funded, Post-Award will account for the program income funds separately from the contract or grant funds.

If program income is generated after an award is received and earned during the award period, the principal investigator should submit budget and expenditure information to Post-Award.

Post-Award will follow the agency’s guidelines for reporting program income.

 

Unrelated Business Income Tax (UBIT)

Per Internal Revenue Service regulations, the University is a tax exempt organization. Program income retains the exempt status provided that the income is substantially related to the regular business of the University. The activities that generate the income must contribute importantly to the accomplishment of the organization’s exempt purposes to be substantially related. Program income not substantially related to the regular business activity will be subject to unrelated business income tax. If the activity involves the sale of tangible goods, it may be subject to New Mexico governmental gross receipts tax. Questions regarding taxability issues should be directed to the UNM Banking and Taxation Department http://www.unm.edu/~taxweb.

 

Foreign Nationals

Foreign nationals who enter the United States may provide a variety of services and the University may agree to reimburse them for their travel expenses and/or pay them for any services rendered, depending upon their visa type. Payments made to foreign nationals must comply with U.S. Citizenship and Immigration Services (USCIS), a part of the Department of Homeland Security and Internal Revenue Service regulations, and must be allowable by applicable contracts or grants and documented with receipts. All J-1 and F-1 visa holders are required to check in with the UNM Office of International Programs and Studies (OIPS) to ensure compliance with federal laws. Advance planning (two months or more in most cases) is critical to ensure that foreign nationals can fulfill the intended purpose of the trip and the University can comply with any agreements made. All foreign nationals, regardless of visa type, must provide requested information and documentation to UNM Banking & Taxation Department before payments can be made to them or to third parties on their behalf. The use of foreign nationals on technical programs may involve licensing under the federal regulations related to export controls and foreign assets Questions related to the Export Administration Regulations (EAR) or the International Traffic in Arms (ITAR) regulations should be discussed with the UNM Industrial Security Department for more information. Questions related to the Department of the Treasury Office of Foreign Asset Controls (OFAC) should be directed to the UNM Banking, Tax and Investments Department. Other questions related to Foreign Nationals should be directed to OIPS. See the UNM Business Policies and Procedures Manual, Policy #2180 – Foreign Nationals.

 

Industrial Security and Export Control

Some proposals contain special security requirements or deal with critical technology requiring protection or export licensing. The UNM Industrial Security Office must be contacted prior to proposal submission if any references are made to “export control,” “ITAR,” “embargo,” “classified information,” “DTIC,” or “security.”

The export or reexport of commodities, software, and technology is regulated by the US Department of Commerce Bureau of Industry and Security (BIS) which is responsible for implementing and enforcing Export Administration Regulations (EAR).

The BIS regulates purely commercial items as well as items that are commercial and might have military or proliferation applications (called "dual-use" items). The term "proliferation applications" refers to the spread of biochemical, nuclear, and other weapons of mass destruction to countries not originally involved in developing them.

Not all exports are covered under the EAR, however. For instance, defense articles and services are regulated by the Department of State under the International Traffic in Arms Regulations (ITAR). Examples of these types of exports include military equipment, military and space electronics, computers designed for military application, cryptographic techniques and encryption software.

Special exports such as endangered species, medical devices, and nuclear materials and equipment are regulated by still other governmental agencies. A list of the various agencies and contact information for each can be found in Supplement No. 3 to Part 730 of the EAR.

The University of New Mexico and its employees are required by law to comply with all laws related to Export Controls. The penalties for violations of these laws and regulations can be quite severe, for the employee personally and the institution as a whole. If you have a project that requires Export Control licenses and/or special security accommodations (such as space, computers, etc.), the costs associated with both the licenses and compliance should be recognized and budgeted as a direct cost in your proposal.  For more information on this topic, please contact your Pre-Award Office or the Industrial Security Office.

A letter from the Vice President for Research and Economic Development discussing the issue of Export Controls in available online http://research.unm.edu/policiesprocedures.

Effort Certifications

The University of New Mexico distributes semi-annual effort certifications to track the effort the faculty and other exempt employees who have been paid from and/or committed to sponsored project effort. Each University department has the primary responsibility to ensure compliance. If effort is not properly certified, salary charges must be removed from the sponsored project.

First, effort reporting is a federal requirement. As a condition to receive federal funding, institutions must maintain an accurate system for reporting the percentage of time (i.e., effort) that faculty and other exempt employees devote to federally sponsored projects (see OMB Circular A-21, Cost Principles for Educational Institutions - Compensation for Personal Services).

In addition, federal and state agencies, private foundations, organizations, and industry provide significant funding to enable the University to conduct research, public service, and training projects. The University effort reporting system provides the principal means for certifying that the salaries and wages charged to sponsored projects are consistent with the effort committed. All faculty and other exempt employees involved in certifying effort must understand that severe penalties and funding disallowances could result from inaccurate, incomplete, or untimely effort reporting.

OMB Circular A-110 requires grantees to obtain the sponsoring agency’s approval in writing if the PI or key personnel specifically named in the Notice of Grant Award (NGA) will :

:: Withdraw from the project entirely;

:: Be absent from the project during any continuous period of 3 months or more; or

:: Reduce time devoted to the project, by 25% or more, from the level approved at the time of award.

This rule applies to all federal grants unless waived in writing by the sponsor. The sponsoring agency must approve any alternative arrangement proposed by the grantee, including any replacement of the PI or key personnel named in the NGA.

The effort commitment approved by the sponsor at the time the award is issued is considered the threshold against which reductions of 25% or more need to be requested and approved by the sponsoring agency. In order to be in compliance, the PI should compare the original commitment in the award document against actual grant effort on the Effort Certification form.

Please refer to the following URL for further guidance: http://research.unm.edu/policiesprocedures/Effort_Reporting_Guidance.pdf