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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 NIH
Example (FY):PI Salary: $250,000 NIH Cap (2011): $199,700100%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 Limitations
Grants, 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 limitationsInstitutional Salary is the individual’s annual compensation that the organization pays for their appointmentSalary cap, as listed by NIH, is noted as FY Salary, not AY
NOT – OD – 11 – 073 Cont’d
FY 2011 Salary CapFiscal Year Employee: $199,700Academic Year Employee: $149,775Or $16,642 monthly salary
2012 Salary Limitations
Grants, 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 AwardSponsor Accounts and Salary Cap Cost Share Accounts will be established and utilize “FY12” within their title to indicate the appropriate level to be usedIncreases (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- ContinuedUnobligated balances from previous years’ awards will remain in their original accountsSalary charged to these funds will use the salary cap level in effect at the time the award was issuedExecutive Level II (FY12) limitations will not be effective until the FY12 funds are usedEX: PI’s salary is $200,000Level used when tracking Salary Cap on “old” funds would be $199,700Level 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 sharedAn increase or decrease in PI salary will affect the amount that will be cost shared or if Salary Cap is applicableChanges 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 Cap
Fiscal Year Employee and Academic Year Employee
Salary Cap Cheat Sheet
*Effective with awards issued for FY12 on or after December 23, 2011
Formulas for Calculating Salary Cap
Academic Year (monthly)(Institutional Salary* 1/9) *EffortFiscal Year (monthly)(Institutional Salary * 1/12) *EffortSalary 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%)=$16,642Cost Share= $5,580($200,000*1/9) *Effort(10%)=$2,222($149,775*1/9) *Effort(10%)=$1,664Cost Share= $558
Calculation & Distribution Examples
FY Employee ExampleAY Employee ExampleFY12 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 AccountAccurately charge salaries to sponsor accounts and related cost sharing accounts based on PI’s effort certificationIf effort changes at any point, the distribution should change to ensure proper allocation to the salarycapand sponsor accounts
Business Office Roles
Update your Salary Cap spreadsheet on a monthly basis to track and ensure compliance with the sponsor regulationsThis is the ideal time to verify salary levels for the PI and make appropriate adjustmentsCorrect any non-compliance issues upon identification
Post Award Roles
Distribute Agency guidelines to University Departments via Business @ PurdueReview Salary Cap at PAR timeContact business office personnel in the event of non-complianceMeet with business offices upon request to discuss account specifics and/or overall management of salary cap faculty members
Resources
Megan Sweet (Sr. AccountMgr)765-494-6367Natasha Lavrenz (AccountMgr)765-494-1066Please use generic e-mail (spsdhhs@purdue.edu)NIHhttp://grants.nih.gov/grants/policy/salcap_summary.htmhttp://grants.nih.gov/grants/guide/notice-files/NOT-OD-11-073.htmlhttp://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-002.htmlSponsored Programshttp://www.purdue.edu/business/sps/postaward/sponsors/dhhs/index.htmlInformation housed under “Announcements”

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National Institutes of Health - Purdue University