National Institutes of Health Salary Cap

Salary Cap Defined Salary cap is the difference between

what is charged and the cap which is allowed by NIHExample (FY):

PI Salary: $250,000 NIH Cap (2011): $199,700

100% EffortMonthly Sal: $20,833 Monthly Cap: $16,642

**Difference: $4,191 (Amt to be Cost Shared)

10% EffortMonthly Sal: $2,083 Monthly Cap: $1,664

**Difference: $419 (Amt to be Cost Shared)

2011 Salary LimitationsGrants, Cooperative Agreements, and Contracts

NOT – OD – 11 – 073

Things to remember: Direct Salary, Salary, and Institutional

Base Salary hold the same meeting in relation to the NIH salary limitations

Institutional Salary is the individual’s annual compensation that the organization pays for their appointment

Salary cap, as listed by NIH, is noted as FY Salary, not AY

NOT – OD – 11 – 073 Cont’d FY 2011 Salary Cap

Fiscal Year Employee: $199,700 Academic Year Employee: $149,775 Or $16,642 monthly salary

2012 Salary LimitationsGrants, Cooperative Agreements, and Contracts

NOT – OD – 12-035 FY12 Salary Cap – Executive Level II

($179,700 FY; $134,775 AY; Monthly Salary $14,975)

Effective with awards issued on or after December 23, 2011.

FY 12 funds issued prior to this date will be calculated with the old rate of $199,700 (FY).

Carry over funds from previous years will remain at the salary limitation level in effect at the time those awards were issued.

How Purdue Manages FY12 Salary Cap

New Award Sponsor Accounts and Salary Cap Cost

Share Accounts will be established and utilize “FY12” within their title to indicate the appropriate level to be used

Increases (Non-Competing) New Sponsor Accounts and New Salary

Cap Cost Share Accounts will be established and named “FY12”

How Purdue Manages FY12 Salary Cap

Increases- Continued Unobligated balances from previous years’

awards will remain in their original accounts▪ Salary charged to these funds will use the salary

cap level in effect at the time the award was issued Executive Level II (FY12) limitations will not

be effective until the FY12 funds are used▪ EX: PI’s salary is $200,000▪ Level used when tracking Salary Cap on “old” funds would

be $199,700▪ Level used when tracking Salary Cap on “new” funds would

be $179,700

FY 13 Salary Cap Limitation

• NIH is currently working under Continuing Resolution, therefore, all legislative mandates that were in effect in FY 12 remain in effect now.

• This includes the Salary Limitation at Executive Level II ($179,700 FY)

• FY13 funds issued while Continuing Resolution is in effect will be added to existing FY12 accounts within the grant and the SP title will be changed to include “FY13”

Things to Pay Attention to….

Changes An increase in the Salary Cap limitation will affect

the amount that will need to be cost shared An increase or decrease in PI salary will affect the

amount that will be cost shared or if Salary Cap is applicable

Changes in the PI’s effort on the project will change the cost distribution between sponsor dollars and cost share dollars

**Effort only changes the dollar amount of cost share required, not if Salary Cap is applicable

**If Salary Cap is increased, but the PI’s salary stays the same, Salary Cap could cease to apply; if the PI’s salary then falls under the new cap

Examples of Calculating Salary CapFiscal Year Employee and Academic Year Employee

Salary Cap Cheat Sheet

Year Salary Cap FY Salary Cap AY Monthly Cap2008 $191,300 $143,475 $15,9422009 $196,700 $147,525 $16,3922010 $199,700 $149,775 $16,6422011 $199,700 $149,775 $16,642FY12* $179,700 $134,775 $14,975

*Effective with awards issued for FY12 on or after December 23, 2011

Formulas for Calculating Salary Cap Academic Year (monthly)

(Institutional Salary* 1/9) * Effort Fiscal Year (monthly)

(Institutional Salary * 1/12) * Effort Salary Cap: $16,642 * Effort

▪ $16,642 is based off the current NIH Salary Cap of $199,700

$199,700/12=$16,642

**Fringes are budgeted, but the PI’s salary drives the Cap, fringes just follow.

Academic Year Calculation Institutional Salary: $200,000

($200,000*1/9) * Effort (100%) =$22,222

($149,775*1/9) * Effort (100%) =$16,642

▪ Cost Share= $5,580

($200,000*1/9) * Effort (10%) =$2,222

($149,775*1/9) * Effort (10%) =$1,664

▪ Cost Share= $558

Calculation & Distribution Examples FY Employee Example

AY Employee Example

FY12 Example

Business Office Roles Notify SPS personnel when an individual has

exceeded the salary cap limitation and is paid on an NIH funded research project (41020000) This applies to all personnel working on a project.

Provide SPS with budget (salary and fringes) for the Salary Cap Account

Accurately charge salaries to sponsor accounts and related cost sharing accounts based on PI’s effort certification If effort changes at any point, the distribution should

change to ensure proper allocation to the salary cap and sponsor accounts

Business Office Roles

Update your Salary Cap spreadsheet on a monthly basis to track and ensure compliance with the sponsor regulations This is the ideal time to verify salary

levels for the PI and make appropriate adjustments

Correct any non-compliance issues upon identification

Post Award Roles

Distribute Agency guidelines to University Departments via Business @ Purdue

Review Salary Cap at PAR time Contact business office personnel in

the event of non-compliance Meet with business offices upon

request to discuss account specifics and/or overall management of salary cap faculty members

Resources Megan Sweet (Sr. Account Mgr)

765-494-6367 Natasha Lavrenz (Account Mgr)

765-494-1066 Please use generic e-mail (spsdhhs@purdue.edu) NIH

http://grants.nih.gov/grants/policy/salcap_summary.htm http://grants.nih.gov/grants/guide/notice-files/NOT-OD-11-073.html http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-002.html

Sponsored Programs http://www.purdue.edu/business/sps/postaward/sponsors/dhhs/index.html

▪ Information housed under “Announcements”