Description

The National Institutes of Health (NIHⁱ), the Substance Abuse and Mental Health Services Administration (SAMHSA), and the Agency for Healthcare Research and Quality (AHRQ) restrict the amount of direct salary an individual can earn from a NIH, SAMHSA, or AHRQ grant or contract. These "salary caps" have in the past been  linked to Executive Level I salaries of the federal executive pay scale and adjusted whenever federal salaries are increased. This usually happens on January 1 of each year, however, effective December 24, 2012, this was changed (reduced) to Executive Level II.

The restriction on salary limits the amount that can be awarded and charged to NIH, SAMHSA and AHRQ grants and contracts. It is important to note that, while faculty member's institutional base salary may exceed the cap, the cap serves as the base for determining the amount of salary he/she may be paid from an NIH, AHRQ or SAMHSA award. That is, the amount of the faculty member's salary requested to be awarded (and ultimately charged) is based on the percentage of effort to be devoted to the grant applied to the salary cap. 

Individuals with salaries over the cap must provide cost sharing from non-federal funds for that portion of their salary that exceeds the salary cap.

It is important to note that, while the faculty member's institutional base salary may exceed the cap, the cap serves as the salary base for determining what he/she may be paid on the NIH, AHRQ or SAMHSA award. That is, the amount of the faculty member's salary requested to be awarded (and ultimately charged) is based on the percentage of effort to be devoted to the grant times the salary cap.

The full uncapped institutional base salary (IBS) should be included in the "Institutional Base Salary" section of proposals. The sponsor will adjust the awarded amount to the cap in effect at the time of the award. The IBS includes the following components:

• regular salary (REG)
• summer salary (SUM)
• paid professional leave (PLP)
• salary for retired faculty (TFA)
• administrative supplements (ADS)
• endowed supplements (ENS)
• clinical salary (CUMGⁱ and UWPⁱ)

Example of Methodology for Proposing Salary on an NIH Proposalⁱ When Salary Exceeds the NIH Salary Cap

Dr. Einstein has a 100% appointment and is committing 10% effort on this project.

• Dr. Einstein's institutional base salary is $200,000 and the current cap is $179,700
• Salary proposed from NIH grant is $17,970 (10% * $179,700)
• Salary cost shared is $2,030 (10% * ($200,000 - $179,00))
  • Effort required will be 10% with an institutional base salary of $200,000
  • Salary will be funded up to the cap: 10% of $179,700 = $17,970
  • This creates a required salary cap cost sharing of $2,030 annually or 10% of the difference between the salary cap and the institutional base salary
  • Paid salary plus cost shared salary equals 10% of the IBS: ($17,970 + $2,030 = $20,000 or 10% of the faculty member's IBS)

Departments should ensure that adequate non-sponsored funding is available to cover any cost sharing when a faculty's institutional base salary is over the salary cap.

Tracking Salary Cap Cost Sharing

GC-1

Salary cap cost sharing should not be placed on the GC1 Addendumⁱ. Variations in salary and annual changes in the cap affect the amount of cost sharing required. As a result, "after the fact" calculations are required to determine the correct cost share percentage. These calculations are done automatically by eFECS and displayed on the FEC in the column "Salary Cap."

Details on the calculation can be viewed by opening the "Salary Cap Detail: How salary cap amount and % effort are derived" at the bottom of the online FEC. The department should confirm that there are no changes to the salary (e.g. salary transfers) or need to retain a prior cap due to sponsor or budget restrictions.

Expense Transferⁱ of Salary

Departments should carefully review budgets subject to the salary cap listed on the FEC to ensure no retroactive salary transfers need to be processed. Any salary transfers processed before the FEC is certified by the faculty member will appear in eFECS the day after the transfer is posted.

Determining the Correct Salary Cap

Recent notices from NIH have clarified how the salary cap should be determined and applied when a faculty member's salary exceeds the cap. The appropriate cap is the one in effect during the time the salary is incurred. This means that the salary cap in effect at the time of expenditure may be different than the salary cap in effect when the grant was first proposed or awarded. As a result, it is important to monitor changes in the salary cap levels.

For departments reporting on an academic cycle, the cap will be prorated during the autumn/winter cycle. For example: If the cap changes on January 1 from $190,000 to $195,000,the cap will be prorated to $192,500. The cap for the spring/summer cycle will be the full $195,000.

For faculty reporting on a calendar cycle, the cap should be the same during the entire reporting period. When exceptions occur, guidance will be provided regarding the calculation for effort reporting purposes.

A summary of prior caps and links to the current cap can be found at:
http://grants.nih.gov/grants/policy/salcap_summary.htm