Salary Cap Limitations for NIH, SAMHSA, AHRQ, CDC and HRSA Awards
The National Institutes of Health (NIHi), the Substance Abuse and Mental Health Services Administration (SAMHSA), and the Agency for Healthcare Research and Quality (AHRQ) have historically restricted 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 the Executive Level I salaries of the federal executive pay scale and adjusted whenever federal salaries were increased. This usually happens on January 1 of each year.
Effective December 23, 2011, the salary cap was changed and linked to the Executive Level II salaries resulting in a reduction of the salary cap. At that time, the Center for Disease Control (CDC) and the Health Resources and Services Administration (HRSA) adopted the salary cap for the first time. The implementation of the new salary cap started with awards having an "issue date" on or after December 23, 2011.
The restriction on salary limits the amount that can be awarded and charged to NIH, SAMHSA, AHRQ, CDC and HRSA grants and contracts. It is important to note that the cap serves as the base for determining the amount of salary the faculty member may be paid from awards issued by these 5 agencies.
- The amount of the faculty member's institutional base salary (IBS) requested to be awarded (and ultimately charged) is determined based on the percentage of effort to be devoted to the grant multiplied by the salary cap (not the IBS).
The full uncapped 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. For the University of Washington, 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)
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.
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. Executive Level II cap is applied.
- 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 Sharingi
Cost Share Addendum
Salary cap cost sharing should not be placed on the Cost Share Addendum. 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.
Departments should carefully review budgets subject to the salary cap listed on the FEC to ensure no retroactive salary expense transfers need to be processed. Any salary expense transfers processed before the FEC is certified by the faculty member will appear in eFECS the day after the transfer is posted.
Recent notices from NIH have clarified how the salary cap should be determined and applied when a individual's salary exceeds the cap.
- Information on how to apply the cap in various situations (e.g. new awards, no cost extensions, carry forward, etc.) can be found in How to Apply NIH Executive Level II Salary Cap
- To assist in determining which cap is applicable, the Grant Control Flag "08" in MyFinancial Desktop, Budgeti Profile, will reflect a value of "1" for budgets subject to Executive Level I and a value of "2" for those budgets subject to Executive Level II.
Note: given the CDC and HRSA did not apply the salary cap prior to the implementation of the Executive Level II cap, the Grant Control Flag 08 funding actions having an issue date prior to December 23, 2011 for the CDC and HRSA will be set at a value of "9" indicating the salary cap is not applicable.
- For agencies other than NIH, SAMHSA, AHRQ, CDC and HRSA, eFECS does not presently calculate the salary cap cost share on the FEC. Instead:
- Use the salary cap calculator for adjusting an FEC to determine the amount of cost share.
- Use the Adjust/View Cost Share feature in eFECS to set up a short term shift cost share to document the salary cap cost share.
- Insert a note into the Additional Comments field indicating this is salary cap cost sharing.
- For other sponsors who may apply the DHHSi cap to specific awards, the Grant Control Flag 08 will be set to a value of "1" or "2" on the grant budget depending on the issue date of the funding action.
- For other sponsors who apply a unique salary cap (other than the DHHS cap) to specific awards, the Grant Control Flag 08 will be set to a value of "7."
Salary Caps in Calendar and Academic Cycles
- Academic Cycle: the mandated cap which normally changes in January, is prorated during the autumn/winter cycle.
- 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.
- Calendar Cycle: the mandated cap should be the same during the entire reporting period.
- Multiple Caps: If a faculty has more than one award subject to the salary cap, it is possible she/he may have multiple caps for that cycle, i.e. Executive Level I for one award and Executive Level II for another award. When exceptions occur, guidance will be provided regarding the calculation for effort reporting purposes.
Using Sub Budgets
eFECS has been modified to accommodate multiple salary cap amounts however it cannot apply multiple salary cap amounts to a single budget within an FEC cycle. In these cases departments may choose (and are encouraged) to use a sub budget to make the distinction in the salary cap limitations, i.e. Exectutive Level I (EL I) and Executive Level II (EL II) salary caps. It will be necessary for departments choosing not to use a sub budget to determine the correct amount of salary cap cost sharing required when this situation occurs using the salary cap calculator.
- Budget originally subject to EL I
- Receive additional funds subject to EL II
- No sub budget set up for ELII component
- FEC covers period of time when there are funds issued prior to December 23, 2011 subject to the EL I salary limit and new funds issued on or after December 23, 2011 subject to the EL II salary limit.
- Original award for April 1, 2011 - March 31, 2012 issued March 2011 (subject to EL I)
- New funds awarded for April 1, 2012 - March 31, 2013 issued March 2012 (subject to EL II)
- No sub budget established
- FEC covers 1/1/2012 - 6/30/2012
- 1-3/31/2012 subject to EL I
- 4/1-6/30/2012 subject to EL II
eFECS will calculate the salary cap cost sharing at the EL II (lower) salary cap limit. The department will need to adjust the salary cap cost sharing (generally downward) using the salary cap calculator.
- Salary Cap Calculator Assists in estimating the amount of source funding needed for salary cap cost sharing by year.
- Salary Cap Summary A summary of prior caps and links to current Notice of Salary Limitation on Grants, Cooperative Agreements and Contracts
- NIH Salary Cap Change Memo An overview of salary cap reduction in FY 2012 NIH and other DHHS budgets
- How Salary Cap is Calculated on FEC A visual view of salary cap calculations as displayed on the FEC