Furloughing of employees paid by non-state dollars
The University of Wisconsin System Administration provided the following three answers in response to questions regarding furloughing of employees in positions funded with non-state dollars. The same answers, however, also apply to employees in other state agencies in similar circumstances.
1. Will federal agencies object to the furloughs of employees whose positions are funded with non-state money, e.g., federal dollars, grants, or gifts?
We are unsure if all federal agencies will have a consistent response to mandated furloughs. Funding agencies and donors expect institutions to have policies in place regarding the payment of salary and wages for employees which are consistently applied regardless of the source of funds and that reflect no more than the percentage of time actually devoted to the project. Since the State of Wisconsin has the legal authority to impose furloughs on employees, funding agencies and donors would not have a basis to object to such a policy as long as the policy does not violate the terms and conditions of the grant/contract/gift and all funds remain available for applicable grant/contract/gift activities.
2. Will the State take the grant/contract/gift money that is saved through furloughs?
No, the State is not asking for these funds nor could the University legally give that money to the State if they asked.
3. What will happen to that money? Will the University be required to return it to the funding agencies or donors?
Not likely. Most funding agencies and donors provide the University the flexibility to adjust budgets to use the money saved from furloughs in other ways, e.g., additional student support, supplies, or even to extend the period of the grant. In those situations where the University does not have that flexibility, the University will need to request permission from the funding agency or donor.
Read full OSER (Office of State Employment Relations) document: Questions & Answers Regarding State Employee Hours of Work Reductions (Furloughs) for 2009-2011 Biennium 
.