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Revision Date: 07/23/2026
Last Review: 07/23/2026
Responsible Office: Division of Research

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Policy:

Fixed price contracts are agreements in which the sponsor and the University agree, in advance, to the scope of work to be performed at an agreed-upon price. Milestone-based contracts are agreements in which the sponsor agrees to pay fixed amounts when specified milestones are met.  It is expected that in either case, the sponsored project budget will be carefully prepared to closely match the actual expenses. If unanticipated complications arise and the project costs exceed the agreed-upon price, the University will incur a loss. On the contrary, an unexpended balance could result if the University completes the project at a lower cost.

Unexpended Balance:

At the end of a project that results in an unexpended balance, the OSP (Office of Sponsored Projects) will take the following actions

1. Verify that all deliverables of the project have been met
2. Verify that all financial obligations of the project have been met
3. Cover overdrawn balances in other grant accounts of the same PI, if applicable.
4. Recover F&A costs associated with the RF (Residual Funds) balance
5. Recover any F&A waiver that may have been granted during the performance period of the project.

Residual Funds:

The funds remaining after these steps are completed shall be termed Residual Funds (RF).

Disposition of Residual Funds

Disposition of RF is initiated by a Residual Funds Transfer Memo from the PI. Once the Residual Funds Transfer Memo is approved, the OSP will transfer the RF to designated accounts (typically one with a PRG prefix in Workday), as described below.

Residual Funds ≤ $10,000:

The OSP will transfer the funds to a Program (PRG) account designated by the PI, or one created for this purpose.

It is expected that the RF will be used to enhance the research capabilities and competitiveness of the research group that generated the funds, in consultation with the project senior project personnel.

Residual Funds > $10,000:

The RF shall be distributed as follows:

1. $1 - $10,000: Returned to the PI, as described above.
2. $10,001-$50,000: The RF will be transferred to a Program (PRG) account designated by the Dean of the College of the PI or the appropriate division head.
3. The RF remaining after completion of steps a) and b) will be transferred to a Program (PRG) account designated by the Vice President for Research (VP/R) that preserves any restrictions stipulated by the award contract.

Use of Funds:

Expenditure of funds from the Dean’s and VP/R’s accounts shall be guided by the University’s vested interest in maintaining and enhancing its research infrastructure, both physical and human. The following examples of residual funds expenses—consistent with the University’s vested interest—are not meant to be exhaustive.

1. Repair, upgrade, or purchase of research equipment; acquisition of software, materials, or supplies to pursue related or new research directions.
2. Expenses associated with the commercialization of intellectual property.
3. Article processing charges for open access publications of research papers.
4. Travel expenses for researchers to attend professional conferences.
5. Support for students.
6. Salary and fringe benefits for research support staff.

Definitions:

Fixed-Price Contract: A contract that provides for a price which is normally not subject to any adjustment unless certain provisions are included in the agreement. Accountability is based primarily on performance and results as outlined in Uniform Guidance 200.1 and 200.201 – Fixed amount awards.

Milestone-based Contracts: Agreements in which the sponsor agrees to pay fixed amounts when specified milestones are met. 

Overdrawn Balance: The amount of expenditures in excess of the total authorized budget that causes the project to be in an overdrawn position.

Residual funds (RF): Funds remaining after the steps outlined in the Policy have been applied to Unexpended Balances.

Residual Funds Transfer Memo: Template for requesting the transfer of RF.

Senior project personnel: The principal investigator and co-principal investigators involved in the project.

Unexpended Balance: Balance remaining in a fixed-price or milestone-based grant account after all deliverables have been met and accepted by the sponsor; all award costs have been recorded in the accounting system; all appropriate adjustments have been made; and all payments from the sponsoring agency have been received.

Procedures:

The Residual Funds Transfer Memo should be completed for requesting the transfer of residual funds. A template for the memo is provided at the link above.

The Residual Funds Transfer Memo should include the following information:

1. Certification by the PI that:
   • All the work on the project has been completed.
   • No outstanding items remain open or are in question with the sponsor.
   • All required reports have been submitted and accepted by the sponsor.
   • All costs for the project have been applied to the grant account.

2. If the residual balance is greater than 15% of the awarded amount, an explanation for the balance.

In cases where the RF exceeds $10,000, the research team may send requests to access the RF to the dean or VP/R, consistent with the University’s vested interests mentioned above.