This document, prepared by the Council on Governmental Relations in 2009, provides a detailed analysis of the financial and compliance implications for research institutions considering the implementation of furlough programs during periods of budgetary constraint, such as economic recessions. The analysis addresses how furloughs—defined as mandatory, uncompensated leave—may affect compliance with federal cost principles, particularly OMB Circular A-21, and presents several scenarios illustrating the complexities faced by institutions with employees funded from multiple sources (state, federal, and others). Two primary furlough models are considered: those that apply only to state-funded employees and those that apply to all employees regardless of funding source. The analysis explores the administrative, payroll, effort commitment, and compliance risks associated with each approach, especially for split-funded employees who receive salary from both state and federal sources.
The document emphasizes that, while there is no formal federal policy on institutional furloughs, institutions must ensure that such programs are implemented consistently, equitably, and in accordance with federal cost principles to avoid jeopardizing federal funding or compliance. Key issues addressed include the potential impact on rate of pay, payroll distribution, effort reporting, rebudgeting, treatment of unique employee groups, fringe benefits, cost sharing, and facilities and administrative (F&A) reimbursements. The document underscores the importance of clear institutional policies, documentation, and ongoing monitoring, while noting that legal and compliance risks are minimized if federal costing principles—particularly those around consistent application—are observed. Ultimately, the paper concludes that while some risk is inherent without official federal guidance or approval, institutions can mitigate exposure by adhering to federal standards and maintaining thorough records, though professional legal or compliance advice is recommended before implementation.
