Sponsored Programs Procedure for Budgeting for Reimbursement of Capped Salaries
NIH is prohibited by a provision in the DHHS Appropriations Act from reimbursing as a direct charge to a grant or contract salary payments which exceed the salary for Executive Level II of the Federal Executive Pay Scale. As of March 3 2004, salary reimbursements may not exceed an annual rate of $175,700. The process recommended by NIH for implementation of the salary cap calls for applicants who include categorical budgets to calculate salary requests on actual institutional base salary, even when the institutional base salary exceeds the NIH cap. If applicants include an actual institutional base salary that exceeds the cap, in any resulting award the awarded salary will be reduced to the cap in effect at the time of the award. In actuality, adjustments in awarded salary will be made only when an award is being processed in a year in which the cap is adjusted. Since, in the eleven-year history of the cap, only two adjustments have been made, years in which the adjustments will be made will be rare. Moreover, the adjustment would be quite small ($3,059 in total cost reimbursement for 10% effort). In preparing modular grant applications, an unanticipated effect of submission of actual institutional base salary became apparent. In several cases, inclusion of actual institutional base salary drove the total proposed cost above the limit for submission of modular proposals. Thus, the PI's were faced with the additional burden of developing a detailed budget only to accommodate the actual institutional base salary even though any resulting award would include the capped salary and be at or below the limit for modular awards.
Thus, on balance, considering the rarity of cap adjustments, the size of cap adjustments, and the additional burden on PI's when inclusion of actual institutional base salaries drives the total proposed cost over the modular limit, salaries exceeding the NIH cap will be budgeted at the capped rate and will not be incremented for future years.
- This procedure applies only to NIH proposals.
- Determine which of the proposed personnel have actual institutional salaries which will exceed the NIH cap during the first requested budget period.
- For each such person, use the NIH capped salary rate in effect at the time of submission as the base for calculating salary reimbursement.
- Do not increment the capped salary in years beyond the first budget period.