Thanks, Jane. You have raised some very good points for me to follow up on
when
I have the conversation with our compensation coordinator in human
resources.
For the sake of clarification, though, the grant operates under the cost
principles for non-profit hospitals, and I am concerned about the questions
 from
the point of view of the hospital, since that is my employer. The academic
department providing the graduate students who work on the project are
willing
to support the assertion that the experience qualifies as a training
experience
for their students, though they are also providing a service (from the
hospital's point of view, they are an important addition to the manpower of
 the
project). I think their experience can fairly be described as about a 50-50
 mix
of training and employment.

____________________Reply Separator____________________
Subject:    Re: wage vs. stipend
Author: xxxxxx@uthscsa.edu (Jane A. Youngers)
Date:       10/13/98 4:02 PM

Molly,
I think you need to look at a number of factors including the purpose of
the
funds you received.  Were they for training?  Is the budget line stipends
or
salaries?  Then you need to decide what the students are doing?  Are they
really working (providing a service) or is the predominant effort training.
Remember that stipend payments are considered for cost purposes as student
aid and student aid is forbidden under the cost principles except for
training purposes.
I don't think the issue is that you are changing methods in midstream;
rather, do the students meet the employment test (for IRS purposes) and the
federal cost principles which you need to salute.
This is a difficult area and one in which many institutions have had
problems.  You might want to think of this as a framework for payment of
all
graduate students on your campus--consistency is the key.  If you are
paying
stipends to other students should you be or are they really employees
(providing a service)?
Just some thoughts from someone who has been down this road more than
once...
Jane

>Hi, all,
>
>I need your (speedy) advice on a post-award question regarding the payment
>of
>graduate students working on a federally funded project currently
underway.
> The
>fiscal agent of the project is a non-profit regional hospital and not part
>of
>the educational institution the grad students are attending. (However, the
>educational institution is a partner in the project, though there is
>currently
>no subgrant of funds to them.)
>
>The graduate students have been employed by the hospital on the project
and
>handled as employees in the payment of their wages (i.e., FICA, Medicare
>and
>taxes are withheld from their paychecks). After one month of this
>arrangement,
>the project coordinator now wants to switch the mode of payment of
graduate
>students to a stipend, paid through the university. (In this case, the
>hospital
>would subgrant the funds to the university, which would then pay students
a
>monthly stipend and not withhold FICA.)
>
>This change seems to me to be a risky move for the hospital, since we have
>already treated the students as employees. The nature of their
>"work/educational
>experience" will remain the same, but their form of pay will be a stipend
>rather
>than wages. I am concerned that hospital risks an unfavorable visit from
>the IRS
>to now switch horses in midstream. The nature of the graduate student
>participation in the project is arguably educational, but I believe that
>since
>the hospital did not initially pay the students with stipends through the
>university that it is too late to switch.
>
>(As you might guess, the reason for this suggested switch is that the
>graduate
>students are comparing their take-home pay with that of their fellow grad
>students at the university. Yes, I realize that the university-paid
>stipends are
>still subject to income and self-employment taxes, but since the
university
>issues 1099's to the students, that issue becomes an individual one.)
>
>-------
>Molly Daniel                           voice: 217-258-2195
>Grants Specialist                      fax:   217-258-2288
>Sarah Bush Lincoln Health Center       email: xxxxxx@sblhs.org
>1000 Health Center Drive               www.sarahbush.org
>P.O. Box 372
>Mattoon, IL  61938-0372
>
Jane A. Youngers
Director
Office of Grants Management
University of Texas Health Science Center at San Antonio
7703 Floyd Curl Drive
San Antonio TX  78284
voice:  210-567-2333
fax: 210-567-2344
email:  xxxxxx@uthscsa.edu