Grant & Contract Deficit Procedures

Definition & Video

Deficit: The amount by which expenditures exceed a grant or contract award, a budget allocation, or revenue available in a specified fiscal period (grant period, biennium, or fiscal year, depending on the type of budget). Deficits do not include negative budget balances resulting from unliquidated encumbrances.

Applies to: Grants & Contracts, budget type 05

Deficits & Surpluses videoWatch the Video! Click on the video for a brief presentation on Deficits & Surpluses. Keep in mind that this same video will be used as part of the requirements to complete CORE’s Certificate in Research Administration. You may be required to watch the video again in order to obtain the necessary CORE credit.

Deficit Processes

The following operating procedures for grant and contract budgets are intended to complement and supplement APS 37.1 "Monitoring, Mitigating, and Resolving Fiscal Deficits" and Procedures for Monitoring, Mitigating and/or Resolving Projected or Incurred Fiscal Deficits as published on the Office of Planning & Budgeting web page.

GCA has developed an online deficit report of all grant and contract budgets (budget type 05) that are in deficit. University personnel with access to the Enterprise Data Warehouse may access the Grant and Contract Deficit Report at any time (link opens in new tab). You may also access this report via MyFinancial.desktop through "Decision Support" under the “More Systems” button.

Budgets with a deficit greater than the total future anticipated funding for multi-year awards are to be cleared within 30 days of the budget going into deficit.

Deficits that cannot be cleared within 30 days will require a written deficit resolution plan for clearing the deficit within 90 days of the end date of the budget. The plan is to be sent for review and approval to

To facilitate the timely closing of a grant or contract budget, deficits need to be moved to non-grant and contract budgets in a timely manner. Therefore, deficit resolution plans need to provide for clearing of the deficit within 90 days of the budget end date.

The plan should include:

  • An explanation of why the deficit cannot be cleared within 30 days.
  • The source of funds that will be used to clear the deficit.
  • The timeline for clearing the deficit.
  • Signature and/or email approval of the deficit resolution plan from a Dean, Vice President, Vice Provost, or Chancellor.

At Budget Expiration

If future award funding is to be used to clear the deficit, the department is to provide GCA with a written plan for project expenditures and/or additional funding that will result in the deficit being cleared within the total award period. Send the plan to Deficits which cannot be cleared by anticipated future funding require a deficit or cost transfer to a non-grant and contract budget to clear the deficit on the grant/contract budget.

At the Start of a New Competing Renewal Segment

GCA cannot process a lump sum deficit transfer to a renewal budget when that budget is the first year of a new competing segment. However, the department can transfer individual expenditures that fall within the renewal budget's pre-award spending period if pre-award expenditures are authorized.

Departmental Monitoring

  • Departments are to access the online deficit report (link opens in new tab) at least quarterly to obtain a list of all grant and contract budgets that are in deficit, and promptly clear any deficits.
  • If deficits have not been resolved, or an approved deficit resolution plan is not in place when GCA begins closing the budget, GCA will contact the department for a budget to transfer the deficit to.
  • If the deficit is not cleared within 90 days of the budget end date or GCA has not received an approved deficit resolution plan, GCA will contact the Dean’s Office for assistance in clearing the deficit. The PI, chair, department administrator, and the Office of Planning & Budgeting will be copied.

Transferring/Clearing Deficits

Deficits may be cleared or transferred off grant and contract budgets in a number of ways:

  • Transferring deficits in Grant Tracker: Budgets that are in deficit will have a transfer deficit link in Grant Tracker. Click on the link and enter the non-grant and contract budget number to which the deficit is to be transferred. Using this process, deficits may only be transferred to one budget.
  • Transferring deficits to more than one budget: Send a request to and include the non-grant and contract budget numbers to which the deficit is to be transferred, with the corresponding amounts.
  • Deficits may be cleared by processing expense cost transfers, including salary transfers. These transfers require identifying specific transactions to be transferred and may be transferred to other grant and contract budgets with proper justification. See GIM 15 – Transfer of Expenditures Between Budgets.

Cash Deficits

Cash deficits are deficits resulting from non-payment by the sponsor. On occasion, sponsors do not pay the full amount of an award. This may occur for a variety of reasons:

  • Non-performance by the PI
  • Changing financial position of the sponsor (e.g., bankruptcy)
  • Disputes over the results of the project

Most often, GCA is not aware of these situations until well after the end of a budget period, making it difficult to administer under the standard deficit process.

When GCA has exhausted all attempts to collect payment and becomes aware that payment of the full award/expenditure amount will not be made by the sponsor, GCA will do the following:

  • Notify the department that the sponsor refuses to pay and provide the resulting budget balance.
  • Enter a negative budget allocation to balance the budget with the amount of cash the sponsor has paid. This will result in putting the budget in deficit.
  • The budget will then appear on the automated budget deficit report.

Departmental action:

  • Clear the deficit within 30 days of notification of non-payment.
  • If the deficit cannot be cleared within 30 days, provide GCA with a deficit resolution plan as described above.
  • If the deficit is not cleared or an approved deficit resolution plan is not in place, GCA will contact the Dean’s Office for assistance in clearing the deficit.

Disallowed Costs

  • From time to time, costs charged to sponsored projects are determined to be unallowable upon review by internal or external examiners. Should this occur during the budget period, upon notification departments are to promptly transfer the costs to a non-grant and contract budget.
  • When disallowed costs are determined after the end of the budget period and it is not possible to extend the budget period, departments are to promptly upon notification transfer the costs to a non-grant and contract budget. It is not appropriate to use a deficit transfer in this situation.
  • The specific disallowed costs must be transferred using the MyFD cost transfer process.
  • GCA will notify the department of disallowed costs upon final determination and request that the costs be transferred to a non-grant and contract budget as soon as possible. If the budget is closed, GCA will enter a negative budget allocation to bring the total budget allocation in balance with allowable costs. Any resulting positive cash balance will be refunded to the sponsor.
  • In all cases if the disallowed cost is not transferred off the sponsored budget within 30 days of GCA's notice of unallowable costs, GCA will contact the Dean's Office for assistance in removing the unallowable costs.

Helpful Hints

  • Monitor SNAP budgets carefully.
  • Change budget status early to avoid unwanted expenditures that can create a deficit.
  • Recognize that deficits cannot be transferred between federal projects.
  • If unable to get requisitions approved due to a deficit, and a deficit transfer is in process, note this when submitting requisitions.

Deficit Resources