PURPOSE

1. To define the method for documentation and treatment of program income earned in conjunction with a sponsored program.



DEFINITIONS

2. Program income is income earned by the University that is directly generated by a supported activity or earned as a result of an award. Program income includes income from fees for services performed, the use or rental of real or personal property acquired under sponsored programs, the sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights, and interest on loans made with award funds.
3. Program income should be budgeted and described in the grant proposal.



POLICY

4. Use of Funds
   Program income is used in one of three ways described below:

(a) Deduction. Ordinarily program income shall be deducted from total allowable costs to determine the net allowable costs. Program income shall be used for current costs unless the sponsor authorizes otherwise. Program income, which the grantee did not anticipate at the time of the award, shall be used to reduce program costs and grantee contributions rather than to increase the funds committed to the project.
(b) Addition. When authorized, program income may be added to the funds committed to the grant agreement by the sponsor and the grantee. The program income shall be used for the purposes and under the conditions of the grant agreement.
(c) Cost sharing or matching. When authorized, program income may be used to meet the cost sharing or matching requirement of the grant agreement. The amount of the grant award remains the same.


If the grant agreement does not distinguish which of the above methods is used, program income must be accounted for as a deduction. In specifying alternatives, the federal or state agency may distinguish between income earned by the grantee and income earned by subgrantees and between the sources, kinds, or amounts of income.


Grantees are encouraged to earn income to defray program costs. The state requires that interest earned in excess of $250 per year on grants from purely state sources be considered program income. Earnings attributable to federal funds may be used only in accordance with applicable federal law.


5. Expenditures Made from Program Income - Program income is treated the same as "awarded" funds. As such, all of the award's rules and regulations are applied to the program income and it can not be spent on any activities other than the program.
6. Tracking and Documentation - A separate account in the grant range of account numbers will be set-up by the Office of Sponsored Programs in order to accurately track and report program income. The program income account will have the same time period as the grant.
7. Income Earned After the Sponsored Program Has Ended - Income earned after the end of the project no longer has a government obligation on the use of funds.
8. Tuition and Fees for Regularly Offered Courses - Tuition and related fees received by an institution for a regularly offered course taught by an employee performing under a sponsored project is not considered program income.

CERTIFICATION STATEMENT

This PPS has been approved by the reviewer listed below and represents Texas State's Division of Academic Affairs policy and procedure from the date of this document until superseded.

Review Cycle: ______________________ Review Date: ____________
Reviewer: __________________________Date: __________________
Approved: _________________________ Date: __________________

Gene Bourgeois
Provost and Vice President
 for Academic Affairs

Texas State University-San Marcos
Provost and Vice President for Academic Affairs
Last Updated: March 19, 2008
Send comments and questions to: tg12@txstate.edu