At the time of proposal, the proposing Principal Investigator and/or Department is responsible for ensuring compliance with any salary limitations (caps) on sponsored project awards which may be imposed by sponsors.  The most well known of the salary limitations is the NIH Salary Cap. 

The National Institutes of Health (NIH) Salary Cap restricts the amount of salary that can be paid to an individual from an NIH grant.  This is due to the federal Consolidated Appropriations Act which limits the rate at which salaries can be directly charged to sponsored projects funded by certain agencies of the federal Department of Health and Human Services (DHHS).  Since the inception of the cap in 1989, salary limits have been imposed on awards made by the National Institutes of Health (NIH), and the Substance Abuse and Mental Health Services Administration (SAMHSA). Beginning with the FY 2002 Appropriations Act, the cap was applied to the Agency for Healthcare Research and Quality (AHRQ) awards. The capped rate in effect as of January 1, 2008, is $191,300.

Q. What is the basis for the cap?

The cap is tied to levels of the Federal Executive Pay scale specified within the Consolidated Appropriations Act.  Since FY 2001 the cap has been set at the Executive Level I.

Q. How is the salary cap applied?

The cap establishes a maximum annual rate of pay at which an individual can be compensated for full time effort over a twelve-month period.  Salary charges to a contract, cooperative agreement or grant from these agencies cannot be paid at a monthly rate that exceeds 1/12th of the maximum annual rate of pay then in effect. 

The capped rate in effect as of January 1, 2008, is $191,300.  This means that salary paid on or after January 1, 2008, cannot be paid at a monthly rate that exceeds $15,941.67 ($191,300 / 12 = $15,941.67).

Links to the notices providing detailed information about the NIH Salary Cap and a list of rates is available on the NIH Salary Cap Summary page.

The table below shows annual rates, when they are applicable, and how the annual rates convert into monthly maximum rates of pay:

 Q. How is this maximum annual rate of pay applied to fiscal year appointees?  Does this differ from the way it is applied to nine-month faculty?

For fiscal year appointees (those who have calendar year appointments), the maximum monthly rate of pay for full time effort is 1/12th of the maximum annual rate of pay. For example, if the maximum annual rate of pay for full time effort is $191,300, the monthly maximum rate of pay as described above is $15,941.67.

Pay received by academic year appointees reflects the fact that the nine-month salary is paid out in twelve equal portions. Thus, for FY 2008 awards subject to the maximum rate of pay for full time effort of $191,300 pay for work performed during the academic year will reflect a maximum monthly full-time rate of $11,956.25 ($15,941.67 multiplied by 9 and divided by 12).

The table below shows the same calculation for each of the applicable rates:

Q. Are nine-month faculty eligible to receive additional compensation during the summer from a source subject to the cap?

Yes. 

Q. Can "summer ninths" for research be charged to NIH funds?

Yes. 

Q. Can a nine-month appointee receive compensation from a source subject to the salary cap during the academic year and also receive compensation from the same source or another source subject to the cap during the summer?

Yes. 

Q. Should proposals be prepared using the actual or capped rate if an individual’s actual salary exceeds the federal cap?

For traditional grant applications that include a detailed budget in the proposal, the actual institutional base salary should be shown for all individuals for whom funding is requested.  It is also a good idea to provide an explanation indicating that the actual institutional base salary exceeds the current salary cap, and request dollars are calculated based on the cap amount.  This explanation can be placed in the budget justification.

For streamlined applications, including NIH Modular grant proposal submissions and all non-competing (continuation) submissions, the current capped rate of $186,600 should be used for calculating salary for any individual whose University rate of pay exceeds the capped rate. 

Please also be aware at the time of proposal that the amount exceeding the cap will need to be paid from a non-federal source having no restriction that would preclude the payment of costs associated with the NIH-funded project.

Q. How does the salary cap relate to effort?

Ordinarily, the salary chargeable to a sponsored project is the employee's rate of pay multiplied by the employee's level of effort on the project. Salary charges to a contract or grant subject to the cap cannot be paid at a monthly rate that exceeds 1/12th of the maximum capped annual rate of pay in effect, multiplied by the number of months of full-time effort being devoted to the project.

Higher levels of effort mean proportionately more salary can be charged to the grant, cooperative agreement or contract. Under no circumstances, whether or not an employee is working on contracts or grants that are subject to the NIH cap, can the percent of full-time salary charged to the contract or grant exceed the level of full-time effort devoted to the project.

For example, if the University pays Dr. Jones an annual salary of $200,000 for a full-time fiscal year appointment, then her monthly rate of pay for full time effort (1/12th of the annual salary rate) is $16,666.67. Dr. Jones' salary exceeds the capped rate, which in calendar year 2008 is limited to a maximum of $191,300 for full-time effort. This equates to $15,941.67 per month (1/12th of the maximum allowable annual rate of pay for full-time effort under the NIH cap).

If Dr. Jones devoted 1.2 calendar months to a grant from NIH, SAMHSA or AHRQ made with federal FY 2008 monies, she could charge at most $19,130 to the grant.

If Dr. Jones were able to devote 6 calendar months to the project, then a maximum of $95,650.02 could be charged to the grant. 

If Dr. Jones devoted 9 calendar months to the project each month, she could charge at most $143,475.03 to the grant.

Assuming that Dr. Jones has no teaching or other responsibilities and is able to devote full-time effort to the project for a year, a maximum of $191,300 could be charged to the grant.

Below is the link to a Microsoft Excel spreadsheet which calculates an employee's salary percentage and effort percentage:

• NIH Salary Cap Worksheet