Purdue University College of Liberal Arts

CLA Business Office

Salary Savings Return Policy

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Background of Policy

Certain external granting agencies make available to faculty funds that can be used to support a faculty member's academic/fiscal year salary.  When these funds are awarded as part of the grant funding and the faculty member charges his/her salary to the award account, salary savings is generated.  If salary savings is sufficient, a teaching release is sometimes granted.  The actual salary savings money has historically been used by the College to support replacement instruction, mandatory salary supplements for university fellowships & PRF research assistantships and other college-wide instruction and research needs.  Until July 2000, no financial incentives existed within the College of Liberal Arts to encourage faculty researchers to request funds to support their AY and/or FY salaries. At that time a “Research Incentive Program” was introduced that allowed faculty and departments to share in the distribution of the salary savings generated when their salaries were charged to externally sponsored research accounts. As of July 1, 2003, we are further improving these research incentives.

Program Goals/Objectives

The goal of this program is to encourage and support research and scholarship in the College of Liberal Arts.  In addition, this program is designed to:

  1. Be consistent and equally applicable across all Liberal Arts Departments.

  2. Provide sufficient resources for the College to cover the cost of replacement instruction.

  3. Provide a source of financial support for the PI and/or department to assist with infrastructure costs associated with departmental research programs or general S&E and travel expenses.

  4. Be easy to calculate.

Charging AY Salary to External Research Grants may Affect PIs Teaching Responsibilities 

  1. When 25% or more of a PI’s AY salary is paid from an external grant, the PI’s teaching responsibilities may be reduced by one course per year (i.e., the PI is allowed to buy out of a course).  PIs may, if their department’s head approves, have additional course buy-outs if grant funds pay for some multiple of 25% of their salary.  For example, they could buy out of two courses for 50% of AY salary.  (Note that faculty members need not reach the 25% figure in a single year.  For example, faculty who budget 12.5% AY salary in Year 1 of a grant and 12.5% AY salary in Year 2 of the grant would be entitled to a course buy-out in Year 2.)

Department heads are expected to use a portion of the salary savings transferred to their departments to provide replacement instruction, that is, to pay instructors to teach courses that compensate for course buy-outs.  For example, a head may appoint a Graduate Instructor to teach a course that would have been taught by a PI who has a course buy-out.  Alternatively, a head may appoint a Graduate Instructor to teach another course that enrolls at least as many students as the course bought out.  In addition, heads may also consider other options to ensure that course buy-outs do not have a negative effect on their department’s course offerings.  The dean will regularly review how heads adjust course offerings to compensate for course buy-outs.

  1. When less than 25% of a PI’s AY salary is paid from an external grant, the PI would generally have their normal teaching responsibilities (i.e., no course buy-out).  When special circumstances warrant it, however, department heads may request that the dean authorize a course release in these cases. 

Determining Salary Savings

Salary savings are generated when a faculty member charges a portion of his/her budgeted academic year or fiscal year salary to funds they have received from an external sponsor.

Return of Salary Savings 

Most generally, one third (1/3) of the salary savings from external research grants is retained by the college and two thirds (2/3) is transferred to the department.  The department head is expected to allocate a portion of the salary savings to PIs, to give PIs an incentive to budget grant funds for AY salaries.  The fraction returned to the PI may vary by department. That is, department heads may in consultation with their faculty establish a policy for salary savings return that fits the needs of the department.  For example, if the department’s policy were to divide the savings between the department and the PI as a 50/50 split, the return would be as follows:

33.35% - Individual faculty member charging a portion of their AY/FY effort

33.35% - Department

33.3% - College

The program is reviewed and may be revised every two years.  Based on a review in the summer and fall of 2007, the program was revised with revisions taking effect at the start of the spring semester of 2008.

The portions of salary savings allocated to departments, and then by department heads to PIs, will be distributed annually, after faculty have certified their effort on their Personnel Activity Reports for the fall and spring semesters.  Funds will be allocated to special departmental general fund accounts (21010000 4017XXXYYY, where XXX = deptartment number and YYY designates PI).

Use of Returned Funds

Use of distributed salary savings will be in accordance with the same spending guidelines that apply to the University general fund.  Some examples of allowable expenditures include:

  • Summer salary (requires prior approval -- see Business Manager for assistance)
  • Student support
  • Travel (including international meetings)
  • Honoraria
  • Equipment
  • Supplies
  • Phone and data network lines
  • All equipment and supplies purchased will be university property.

Additional Information

Specific questions about the program can be directed via e-mail to Mohan Dutta, Associate Dean, College of Liberal Arts or Paula Swank, Director of Financial Affairs, College of Liberal Arts.  Other questions can be directed to your Business Manager.  Whether other external awards (such as fellowships) qualify for this program will be considered on a case-by-case basis.  Please contact Mona Holdcraft if you have these types of awards.

Example 

Professor Jones has an annual salary of $60,000.  She receives a $300,000 award from NIH.  Included in the budget are funds to support 40% of her academic year salary.  The project period is July 1, 2008 through June 30, 2009. 

Professor Jones contacts the department head and they agree that Professor Jones will devote 40% effort to this project for the year. 

At the end of the Fall and Spring Semesters Professor Jones completes her PARs and certifies the salary distribution at 40% organized research on the grant and 60% under instruction or departmental research on general funds. 

Salary savings for the academic year is calculated - $60,000*.40 =  $24,000

Annual Distribution  (if the department policy is 50/50 split between department and PI)

PI 33.35% $  8,004
Department 33.35% $  8,004
College  33.30% $  7,992
Total

100.0%

 $24,000

The funds for the PI and Department will be made available for expenditure in the special accounts.



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