The University of Memphis
Faculty Incentive Compensation
Incentive Compensation is a form of non-guaranteed supplemental compensation for faculty members based upon research and scholarly productivity. In no case will Incentive Compensation be charged to a sponsored project.
To reward faculty for sustained research productivity and scholarly activities.
Individuals eligible for Incentive Compensation hold faculty rank and are paid from EDUGEN positions using Banner E-class FA or F9. For purposes of this policy, positions funded by centers and chairs of excellence are considered EDUGEN positions.
A form of non-guaranteed supplemental compensation based in part on a negotiated percentage of Salary Recovery.
The unobligated amount of university salary budget attributable to externally funded effort.
|Facilities and Administration Cost (F&A) Rate||
A composite rate applied to sponsored agreements as a percentage of the sponsored agreement’s direct costs. The federally negotiated indirect cost rates for instruction, organized research, and other sponsored activities are developed by the University in accordance with the Office of Management and Budget and the Federal Acquisition Regulation, and negotiated with the Department of Health and Human Services, Division of Cost Allocation, the University’s federal cognizant audit agency.
|Incentive Compensation Agreement||
The purpose of the Incentive Compensation Agreement is to create an understanding between faculty and chairs regarding a faculty member’s involvement on sponsored programs, including the disposition of salary recovery from sponsors. The incentive compensation can be negotiated at any time; however, routine negotiation should occur during the faculty annual performance review.
Historically, many departments have depended on salary recovery to operate departments. With the advent of incentive compensation, departments face a loss of operating budget. Therefore, chairs are not required to pay the maximum incentive compensation allowed by this policy. Rather, chairs are expected to negotiate an Incentive Compensation Agreement that balances the needs of the department with the need to reward faculty for sustained research productivity. Chairs may retain all of the salary recovery. The Incentive Compensation Agreement shall be reviewed and approved by the deans. Considerations:
Incentive compensation encourages faculty to request sponsor funding for the total cost of the project rather than volunteering to cost share effort. To be eligible for incentive pay, the external sponsor must provide funding for faculty base salary and benefits, plus the maximum F&A rate allowed by the sponsor’s formal policy.
Faculty must complete an effort certification to document work on the sponsored project. Failure to complete a timely effort certification and comply with UM 1676 Certification of Effort nullifies the incentive compensation agreement.
The completed Incentive Compensation Agreement & Payment Request form should be submitted to the payroll office with a copy of the certified effort report for that period.
If any of the following conditions occur, the incentive compensation agreement becomes null and void. If incentive compensation has already been paid when the nullifying condition occurs, faculty may return the excess payments through payroll deduction.
Incentive Compensation may not exceed 50% of the Salary Recovery allocable to the period covered by the effort certification.
The University of Memphis must control the reporting of supplemental compensation earnings to retirement systems. For retirement reporting purposes, TCA § 8-34-101(14)(D) limits credit for supplemental compensation to no more than 25% of base pay. Faculty and staff may earn more than 25% in any reporting period, but the payroll system will report no more than 25% to the Tennessee Consolidated Retirement System (TCRS) or Optional Retirement Plan (ORP), as applicable.
|Roles and Responsibilities||
Principal Investigator/Program Director
|Incentive Compensation Agreement & Payment Request|
|May Faculty receive both incentive compensation and extra compensation?||
Yes, but not for the same work.
|UofM Effort Certification Policy|
|Faculty Incentive Pay Plan|
| ||UM1725 -- revised February 14, 2017
UM1725 -- issued February 29, 2012
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