GAB Decision 268
March 31, 1982 Foundation of California State University, Sacramento;
Docket No. 81-192 Ford, Cecilia; Settle, Norval Teitz, Alexander
Foundation of California State University, Sacramento (Appellant)
appealed a disallowance by the Alcohol, Drug Abuse, and Mental Health
Administration (Respondent, ADAMHA) of $5,859 in salary costs (including
related fringe benefits and indirect costs) charged to a mental health
training grant. The salary costs represented payments made to two
California State University faculty members for work performed during
certain "academic holidays" and during the break between the fall
and
spring semesters of the 1974-75 school year. The question presented is
whether these periods constituted part of the academic year for purposes
of determining the faculty members' base salaries. No further payments
were allowable for periods constituting part of the academic year
because the faculty members had already received the maximum
compensation permitted for the academic year under University policy:
the base year salary plus 20 percent. For the reasons discussed below,
we conclude that the periods in question were part of the academic year,
and sustain the disallowance in an adjusted amount. /1/
The disallowance, which was initially taken by ADAMHA's Executive
Officer and later sustained by the ADAMHA Grant Appeals Committee, was
based on an audit by the Health and Human Services Audit Agency. The
audit report found that "(academic) holidays and the break between the
Fall and Spring semesters are included in the base salary period and are
a consideration in setting the base salary amount." (Audit (2) Control
No. 13300-09, Exhibit A, p. 2) Based on this finding, which was not
explained further, the report concluded that Section J.7.i. of Federal
Management Circular 73-8, /2/ captioned "Salary rates for academic
year," was applicable, and that, under that provision, only the
proportionate share of the base year salary could be charged for the
periods worked. Section J.7.i. provides, in pertinent part, that --
Charges for work performed . . . by faculty members during the
academic year will be based on the individual faculty member's regular
compensation for the continuous period which, under the practice of the
institution concerned, constitutes the basis of his salary. Charges for
work performed . . . during all or any portion of such period would be
allowable at the base salary rate.
The audit report recommended that the payments for the academic
holidays and the semester break be disallowed since the faculty members
had already received not only the full amount of their base year
salaries but also an additional 20 percent of their base year salaries
for outside employment during the academic year, as permitted by
University policy. /3/
Appellant argued, however, that the periods in question were not part
of the academic year and that the applicable provisions was thus Section
(3) J.7.j. of Federal Management Circular 73-8. /4/ Section J. 7.j.,
captioned "Salary rates for periods outside the academic year," provides
that --
Charges for work performed by faculty members . . . during the summer
months or other periods not included in the base salary period will be
determined for each faculty member at a monthly rate not in excess of
that which would be applicable under his base salary . . . .
In support of its appeal, Appellant submitted documentation intended
to show that the University did not in fact treat the academic holidays
and semester break as part of the academic year. /5/ The treatment
accorded by the University is crucial since the applicable regulation
specifically looks to "the continuous period which, under the practice
of the institution concerned, constitutes the basis of . . . (a faculty
member's) salary." (Emphasis added.) 45 CFR Part 74, Appendix D, Part I,
Section J.7.j. We find that this documentation fails to show that the
University's practice was to exclude these periods from the academic
year.
One document furnished by Appellant is described by Appellant as "the
official 1974-75 academic year calendar" for California State
University, Sacramento. This calendar designates the beginning and
ending dates of nine "academic pay periods," beginning August 30,
1974
and ending May 29, 1975, and shows the number of "academic work days"
and "academic holidays" included in each pay period. It also gives
the
dates of all academic holidays. Not all of the days for which payments
were disallowed are shown on the calendar as academic holidays, however.
(ADAMHA Grant Appeals Committee record, pp. 51-53) Furthermore, the
calendar shows the fall semester ending January 14, 1975 and the spring
semester beginning January 15, 1975, with no semester break, whereas
some of the payments disallowed were for a period identified as a break
between the fall and spring semesters. In view of these discrepancies,
the calendar does not support the argument that the periods worked were
outside the academic year.
Appellant also submitted several draft statements of the University
policy on additional employment during the academic year and other (4)
periods which were circulated to the presidents of the various campuses
of California State University for comment. The record does not
indicate whether any of the draft statements were implemented pending
issuance of the final policy in 1979. Even assuming that the draft
statements were reflective of University practice, however, we find no
affirmative indication, except possibly in two statements issued after
the academic year in question here, that the University treated the
academic holidays or semester break as outside the academic year.
The draft statement dated March 15, 1972 (identified as FSA 72-18)
states, in pertinent part, that --
In addition to his full-time academic year appointment and the
aforementioned 25% permissible overload, a member of the teaching
faculty may be employed to teach in summer session or a summer quarter .
. . . (FSA 72-18, Attachment, p. 5) /6/
There is no mention of any periods falling outside the academic year
other than the summer session. Moreover a memorandum dated October 11,
1973 (FSA 73-93) clarifying FSA 72-18 specifically states that "(the)
break period between the fall and spring semesters . . . falls within
the academic year . . . ." The next draft statement, dated February 7,
1978 (FSA 78-09), states, in pertinent part, that --
The academic year includes all time from the beginning of the
academic year to the end of the academic year. (FSA 78-09, Attachment,
p. 1)
Under this provision, the periods in question in this case (with the
exception of the days identified in footnote 1) would be part of the
academic year. The final draft statement dated March 16, 1978 (FSA
78-87) states, in pertinent part, that --
"Any salary earned between the close of an employee's academic year
and the beginning of the next or during a break between terms when that
break includes no academic work days, shall not be counted when
calculating the total amount of salary for the academic year. . . .
(FSA 78-87, Attachment, p. 1)
(5) The same statment is repeated in the final policy dated June 14,
1979 (FSA 79-30) (Attachment, p. 2) Under this provision, at most the
semester break would be considered as outside of the academic year. As
indicated above, however, there is no basis for regarding FSA 78-87 or
FSA 79-30 as controlling, since they were issued after the 1974-75
academic year. In addition, as stated above, the academic calendar for
the 1974-75 academic year gives no break between fall and spring
semesters.
Conclusion
We conclude that Appellant has not demonstrated that the academic
holidays and semester break were outside of the academic year under
University practice. Accordingly, we sustain the disallowance of
payments made to faculty members for those periods since full payment
for the academic year of which they were a part had already been made.
The amount of the $5,859 disallowance should be adjusted as indicated in
footnote 1, however. /1/ Respondent acknowledged, however, that two
days (May 30-31) for which payments to one faculty member (E.
Leon) were disallowed were neither academic holidays nor part of the
semester break, but were instead outside the academic year. (Memorandum
dated February 12, 1982, p. 1) Thus, these two days are not considered
as part of the periods in question in this case. Respondent also
concurred with Appellant's assertion that the amount of fringe benefits
applicable to the questioned salaries was improperly determined, and
should have been $147.82 and not $702.00. (Confirmation of Telephone
Conversations, dated March 12, 1982) The disallowance should be reduced
accordingly. /2/ Federal Management Circular 73-8 is a directive to
federal agencies and is thus not binding on Appellant. However,
45 CFR Part 74, Appendix D, Part II, Section I.2. extends to educational
service agreements (such as the training grant involved in this case),
with the exception noted in footnote 3 below, the provisions of Section
J.7.i. of Part I of Appendix D, which is identical to Section J.7.i. of
the Federal Management Circular. /3/ This 20 percent "overload"
is permitted by 45 CFR Part 74, Appendix D, Part II, Section I.2., which
states that " . . . charges may include compensation in excess of the
base salary of a faculty member for the conduct of courses outside the
normal duties of such member provided that . . . salary payments for
such work follow practices consistently applied within the institution .
. . ." This provision modifies Section J.7.i., which states that "
. .
. any extra compensation above the base salary for work on Government
research during such period would be unallowable." /4/ The
corresponding provision in 45 CFR Part 74, Appendix D, Part I -- Section
J.7.j. -- is made applicable to the grant by Appendix D, Part II,
Section I.2. /5/ Since none of this documentation, with the
exception of FSA 79-30 (described below), was submitted by Appellant in
the proceedings before the ADAMHA Grant Appeals Committee, ours is a de
novo review. /6/ Although FSA 72-18 refers to a 25% permissible
overload, Appellant did not dispute the statement in the audit report
(noted on p. 2 of this decision) that the permissible overload for the
1974-75 academic year was 20%.
OCTOBER 22, 1983