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NIH Salary Cap Full Description

last updated 01/21/14

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FY2014 Salary Limits:

Based on Notice Number NOT-OD-14-043, the Department of Health and Human Services (HHS), including NIH, operates under the Continuing Appropriations Act, 2014 (signed by President Obama on January 15, 2014. It is anticipated that non-competing research grant awards will be issued at a level lower (generally up to 90%) than what was issued in the most recent notice of award. In addition, in accordance with Executive Order 13655, the pay scale for Executive Level II was increased by 1 percent from $179,700 to $181,500 effective January 12, 2014.


We are currently awaiting the official announcement from NIH regarding the Salary Limitation on Grants, Cooperative Agreements, and Contracts. In the interim, all new and competing DHHS proposals should reflect the new cap of $181,500. We will share further details with the research community when announced. Please contact your Grants Officer if you have any questions.

* Please note the 2014 Pay Tables for Executive and Senior Level Employees posted by the U.S. Office of Personnel Management at: http://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2014/executive-senior-level/

This OSR News Announcement was originally issued to provide detailed guidance to the campus on the January 2000 change in the NIH Salary Cap and has since been updated to reflect the January 2014 change in the NIH Salary Cap. Information is included about the regulatory requirements for the change, NIH's funding strategy and implementation instructions, and guidance on calculating salaries under the NIH salary cap and preparing future proposal budgets to be consistent with existing NIH salary requirements.

Questions about the change should be addressed to the Grant Officer serving your department.

SUMMARY OF REGULATORY CHANGE

Every year since 1990 Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant. For FY 2011, the Department of Defense and Full-year Continuing Appropriations Act of 2011 (Public Law 112-10) continued implementation of Public Law 111-117: Consolidated Appropriations Act, 2010 which restricted the amount of direct salary to Executive Level I of the Federal Executive Pay scale; this information was published May 4, 2011 in the NIH Guide for Grants and Contracts (NOT-OD-11-073). No increase had been provided for Federal salaries.

For FY 2012 the Consolodated Appropriations Act, 2012 (Public Law 112-74) signed into law on December 23, 2011, restricts the amount of direct salary to Executive Level II of the Federal Executive Pay scale. The Executive Level II salary is $181,500.

The salary cap applies to grant, contract, and cooperative awards that Northwestern receives directly from NIH, and to those NIH awards received via a subcontract from another entity. The limitations also apply to Northwestern's subcontractors under NIH awards.

HOW TO DETERMINE APPLICABLE NIH SALARY

To determine the applicable NIH salary cap amount, use the following steps:

1) DETERMINE WHAT FEDERAL FISCAL YEAR IS FUNDING THE GRANT BUDGET PERIOD

NGA budget period beginning:  
  10/1/00 or later
10/1/99 or later
10/1/98 - 9/30/99
Earlier than 10/1/98
Use FY 2001 Rules
Use FY 2000 Rules
Use FY 1999 Rules
Use FY 1998 Rules

2) DETERMINE APPLICABLE SALARY CAP BASED ON THE FISCAL YEAR RULES AND TIME PERIODS SHOWN BELOW

Federal FY Salary Cap
(annual rate)
Salary Cap
(monthly rate)
Use for Salaries Earned During
the Budget Period:
  FY2014 181,500 $15,125 01/01/14 - 12/31/14
  FY2013 179,700 $14,975 01/01/13 - 12/31/13
  FY2012 179,700 $14,975 01/01/12 - 12/31/12
  FY2011 $199,700 $16,642 01/01/11 - 12/31/11
  FY2010 $199,700 $16,642 01/01/10 - 12/31/10
  FY 2009 $196,700 $16,392 01/01/09 - 12/31/09
  FY 2008 $191,300 $15,942 01/01/08 - 12/31/08
  FY 2007 $186,600 $15,550 01/01/07 - 12/31/07
  FY 2006 $183,500 $15,292 01/01/06 - 12/31/06
  FY 2005 $180,100 $15,008 01/01/05 - 12/31/05
  FY 2005 $175,700 $14,641 10/01/04 - 12/31/04
  FY 2004 $175,700 $14,641 01/01/04 - 12/31/04
  FY 2004 $171,900 $14,325 10/01/03 - 12/31/03
FY 2003 $171,900 $14,325 01/01/03 - 9/30/03
FY 2003 $166,700 $13,891 10/01/02- 12/31/02
FY 2002 $166,700 $13,891 01/01/02 - 9/30/02
FY 2002 $161,200 $13,433 10/01/01 - 12/31/01
FY 2001 $161,200 $13,433 01/01/01 - 9/30//01
FY 2001 $157,000 $13,083 10/1/00 - 12/31/00
FY 2000 $141,300 $11,775 01/01/00 - 9/30/00
FY 2000 $136,700 $11,392 10/1/99 - 12/31/99

GUIDELINES FOR PREPARING FUTURE PROPOSAL BUDGETS


NON MODULAR

Because of the likelihood that this cap will increase annually, it is important that new and renewal non-modular proposals adhere precisely to NIH instructions for listing salaries in proposals. These instructions are as follows:

1. "Institutional Base Salary" field on Form 4 (Detailed Budget for Initial Budget Period) of the 398 kit, list either:

If using an asterisk, provide an explanation in the budget justification that the researcher has elected not to include actual salary information and a statement that the institutional base salary exceeds the salary cap (if applicable). If this option is selected, PIs must still submit one copy of the application to NIH that does include the institutional base salary. This copy will be used by the NIH Grants Office to make appropriate salary calculations at the time of award. If this option is elected, copies of both versions must be provided to OSR for review. Examples of both options are shown below.

2. "Salary Requested" column of Form 4 (Detailed Budget for Initial Budget Period), list:

a). For researchers with salaries at or below the NIH salary cap.
Formula: Institutional base salary multiplied by the researcher's percentage effort on the project
Examples:

1). PI with 12 month appointment and an institutional base salary of $100,000, devoting 25% effort:

$100,000 x 25% effort = $25,000

2). PI with 9 month appointment and an institutional base salary of $100,000, devoting 25% effort during the academic year and 100% effort for two months during the summer:

$100,000 x 25% effort = $25,000 academic year salary
$100,000/9 months(*) x 2 months x 100% effort = $22,222 summer salary

(*) When a PI with less than a 12 month academic appointment requests salary outside of that appointment period (i.e., summer salary for a 9 month faculty member), academic year salary must be converted to a monthly amount.

b). For researchers whose salaries are above the NIH salary cap:
Formula: NIH Salary cap multiplied by the researcher's percentage effort on the project.
Examples:

1). PI with 12 month appointment and an institutional base salary of $200,000, devoting 25% effort:
$191,300* x 25% effort = $47,825(Use $191,300 in the calculation rather than $200,000

2). PI with 9 month appointment and an institutional base salary of $200,000, devoting 25% effort during the academic year and 100% effort for two months during the summer:
$15,942 x 9 months** x 25% effort = $35,870
$15,942 x 2 months x 100% effort = $35,870

(*) Use of the $191,300 salary cap assumes a FY 2008 start date of 01/01/08 or later.

(**) NIH Salary cap of $191,300 is based on a 12 month appointment. If the actual appointment is for less than 12 months, the equivalent pro-rata salary cap must be used. Regardless of the appointment period, the monthly salary cap rate is $16,642. Also clearly note in the budget justification that the amounts calculated are based on the NIH salary cap. Use of the capped salary in the calculations rather than the actual salary allows for a budget that is more realistic and comparable to others undergoing the peer review process.


SAMPLE BUDGETS AND BUDGET JUSTIFICATIONS


OPTION 1 = PI elects not to indicate actual institutional base salary in proposal budget OPTION 2 = PI elects to indicate actual institutional base salary in proposal budget

[PI HOLDS 12 MONTH APPOINTMENT]

 
4

Principal Investigator/Program Director (Last, first, middle):

_______________________________________

DETAILED BUDGET FOR INITIAL BUDGET PERIOD DIRECT COSTS ONLY FROM

09/01/2007

THROUGH

8/31/2008

PERSONNEL (Applicant organization only)     %   DOLLAR AMOUNT REQUESTED (omit cents)
NAME ROLE ON
PROJECT
TYPE APPT. (months) EFFORT ON  PROJ. INST BASE SALARY SALARY REQUESTED FRINGE BENEFITS TOTALS
OPTION 1: Pat Wildcat Principal Investigator 12 25% * $ 47825 $10,735 $ 56,610
               
OPTION 2: Pat Wildcat Principal Investigator 12 25% $200,000 $ 47,825 $10,735 $ 56,610
BUDGET JUSTIFICATION [OPTION 1]: Dr. Pat Wildcat, the Principal Investigator, has elected not to include actual institutional base salary figures in the review copies of this proposal. Dr. Wildcat's institutional base salary exceeds the current NIH salary cap, and the amounts requested for salary and fringe benefits in this budget have been calculated to reflect the FY 2008 cap. The actual institutional base salary has been submitted to PHS on the original copy of the proposal as required under NIH guidelines.

BUDGET JUSTIFICATION [OPTION 2]: Dr. Pat Wildcat's institutional base salary exceeds the current NIH salary cap. The amounts requested for salary and fringe benefits have been calculated to reflect the FY 2008 cap.



[PI HOLDS 9 MONTH APPOINTMENT]

 
4

Principal Investigator/Program Director (Last, first, middle):

_______________________________________

DETAILED BUDGET FOR INITIAL BUDGET PERIOD DIRECT COSTS ONLY FROM

09/01/2007

THROUGH

08/31/2008

PERSONNEL (Applicant organization only)     %   DOLLAR AMOUNT REQUESTED (omit cents)
NAME ROLE ON PROJECT TYPE APPT. (months) EFFORT ON  PROJ. INST BASE SALARY SALARY REQUESTED FRINGE BENEFITS TOTALS
OPTION 1: PatWildcat Principal Investigator 9 25% * $34,407 $ 8,051 $ 42,458
    2 100% * $30,584 $ 7,157 $ 37,741
             
OPTION 2: Pat Wildcat Principal Investigator 9 25% $200,000 34,407 $ 8,051 $ 42,458
  2 100% $33,333 $30,584 $ 7,157 $ 37,741
BUDGET JUSTIFICATION [OPTION 1]: Dr. Pat Wildcat, the Principal Investigator, has elected not to include actual institutional base salary figures in the review copies of this proposal. Dr. Wildcat's institutional base salary exceeds the current NIH salary cap, and the amounts requested for salary and fringe benefits in this budget have been calculated to reflect the FY 2010 cap. The actual institutional base salary has been submitted to PHS on the original copy of the proposal as required under NIH guidelines.

BUDGET JUSTIFICATION [OPTION 2]: Dr. Pat Wildcat's institutional base salary exceeds the current NIH salary cap. The amounts requested for salary and fringe benefits have been calculated to reflect the FY 2010 cap.



MODULAR

When determining the number of modules to request, if a salary exceeds the cap, the cap amount should be used as the basis for estimating salary and fringe benefits. If a salary is below the cap, the actual salary should be used.

FUNDING OF ADDITIONAL COSTS DUE TO SALARY CAP INCREASE

Regardless of available funding, PIs are expected to continue to provide the level of effort on their projects committed at the time of their award. Reduction in an individual key personnel's level of effort of more than 25% continues to require NIH prior approval.

NIH has announced that it will not provide supplemental funding for awards or modular grants issued with FY 2010 funds; however, PIs may redirect existing funds, if available, to pay applicable salaries at the higher rate unless specifically prohibited by the terms of the award.

PIs who have already submitted proposals and expect to receive non-modular new or renewal awards from NIH should review their proposal budgets. NIH will automatically adjust new or renewal awards, including the base year and all out-years IF and only if the original application reflected an actual institutional base salary in excess of the cap. If the amount listed in the "institutional base salary" field of the Form 4 reflects a lower salary than the $199,700 cap and there is no annotation to indicate that the amount shown represented the salary cap and not ACTUAL salary, NIH will assume that this was the actual salary of the PI and will not make any adjustment.

COMPETING grant applications and contract proposals that include a  categorical breakdown in the budget figures/business proposal should  continue to reflect the actual institutional base salary of all  individuals for whom reimbursement is requested. In lieu of actual  base salary, however, applicants/offerors may elect to provide an  explanation indicating that actual institutional base salary exceeds  the current salary limitation. When this information is provided, NIH  staff will make necessary adjustments to requested salaries prior to  award.

The salary limitation does NOT apply to payments made to consultants under an NIH grant or contract although, as with all costs, such payments must meet the test of reasonableness and be consistent with institutional policy.

CHARGING SALARY AND REPORTING EFFORT

Once a NIH award has been made, it is important to remember that the actual salary charges on the award must also conform to the applicable NIH salary cap. When preparing an Appointment/Position Data or a Salary Distribution Adjustment form, the monthly salary amount charged to a NIH award during the academic year and/or summer cannot exceed the NIH monthly cap rate multiplied by the percentage of effort. For example, a PI who has been awarded summer salary and will expend 100% effort for two summer months on that NIH award may not charge the grant more than $16,642 (based on the FY 2008 NIH cap level) in a given summer month, even if the actual monthly pay rate exceeds that amount.

When completing quarterly Personnel and Professional Activity Reports (PARs), it is also important to remember that the reported percentage of effort on a NIH award should equate to the effort committed and actually expended on the project, NOT to the percentage of salary charged. This percentage should include the effort that could not be charged to the award because of the salary cap. For example, a PI with a twelve month appointment and an institutional base salary of $200,000 ($16,667 per month), who committed and expended 25% effort to an NIH project during the first three months of the University academic year, must report 25% effort on the PAR, even though only 22.5% ([$15,942 x 25%]/[$16,667]) of the salary was charged to the grant.

Questions regarding salary charges on NIH (or any other sponsor) awards should be addressed to the designated Account Specialist at Accounting Services for Research and Sponsored Programs (ASRSP) or to Jane Roy-Singh, Associate Director of ASRSP, at j-roy-singh@northwestern.edu. Questions regarding effort reporting should be addressed to Tina Mete at c-mete@northwestern.edu or to Mike Daniels at ASRSP. 


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