NIH Salary Cap FAQs

Frequently asked questions about the NIH Salary Cap

What is the NIH Salary Cap?
Who is requiring it?
How long has it been around?
How is the salary cap issued in FY 2012 different from the other years?
How often does it change?
How does one determine which rate applies to which NIH grant?
How should the salary cap be addressed in NIH grant applications?
What are Caltech's obligations with regard to the salary cap?
What tools are available to help?
What is the process to establish salary cap PTAs?
Who sets up the accounts?
Who adjusts them annually?

 

What is the NIH Salary Cap?

The NIH salary cap is a limitation placed on the salary rate that can be charged to an NIH grant-primarily for PIs, but applies to all salaries charged directly to NIH grants.

The cap is not on the number of dollars that can be charged to an NIH grant. Rather, the cap is on the monthly pay rate that can be charged to an NIH grant.

For example, the current NIH salary cap is $199,700 (a maximum of $16,642/mo). If a PI's annual salary is $250,000 ($20,833/mo on a 12 month basis) and she commits 10% effort to an NIH grant, Caltech will pay the PI as follows:

90% effort-General Budget charges $18,750
NIH 10% effort @cap $ 1,664 (10% of $16,642/mo)
CIT Salary Cap cost share $ 419
Total monthly $20,833

Annually, this creates a gap of $5,028 [deficit is based on 10% of salary] that has to come from another fund source, not federal.

Who is requiring it?

The NIH salary cap is written into the NIH Appropriations Act approved by Congress each year. This is a matter of law, not policy. It is not something that the NIH has imposed on the research community. It has been imposed by Congress.

How long has it been around?

The NIH Salary Cap was first introduced in FY 1990 and has remained in effect ever since.

How is the salary cap issued in FY 2012 different from the other years?

In previous years, the NIH salary cap remained constant at Federal Executive Level I pay scale. In FY 2012, the actual Executive level changed with an effective date of 12/23/2011, when the Appropriation was signed into law. Therefore, in FY2012, for awards issued on/before December 22, 2011 (competing and non-competing), the effective salary limitation remains at Executive Level 1, $199,700. For awards issued on or after 12/23/2011, date the Consolidated Appropriations Action, 2012 (Public Law 112-74) was signed into law, NIH salary cap will be at Executive Level II ($179,700).

How often does it change?

The Federal Executive Pay scale changes January 1st, each calendar year. The rates are set by Congress as part of the annual federal budget appropriations process.

How does one determine which rate applies to which NIH grant?

The rates are based on calendar years and are applied as part of the payroll process. That is, for salaries charged to NIH grants in CY 2009, the cap is $196,700. For salaries paid for work performed after January 1, 2010, the cap is adjusted to $199,700.

The "current cap" applies to all NIH grants regardless of when they begin or end.

How should the salary cap be addressed in NIH grant applications?

NIH competing grant applications (new and renewal) are typically submitted six to nine months before the start date. The salary cap rates are generally not set until some time around January 1 each year. Generally, when the proposal is being prepared, it is not possible to know what the salary cap amount will be at the time an award is made.

Therefore, the NIH instructions for calculating grant budgets are to use the PI's actual salary, adjusted for anticipated increases in rank and cost of living increases. When the grant is awarded, the NIH will adjust the approved budget to reflect the salary cap in effect when the grant begins.

This means that the total amount of the grant funds awarded may be reduced accordingly. However, whether NIH adjusts the budget or not, the salary cap applies.

What are Caltech's obligations with regard to the salary cap?

As the grantee, Caltech is responsible to have in place mechanisms to assure that the NIH salary cap is being implemented in accordance with the NIH requirements. The burden is on the institution, not on the individual PI, to make sure that we are doing this correctly.

What tools are available to help?

 

A standardized process for establishing salary cap PTAs has been established by Project Accounting with significant input from the Divisions. For Caltech PIs whose salaries are over the cap, salary cap companion accounts are set up with the same funding source award number as the main award. An on-line "NIH salary cap calculator" assists grant managers with the calculation for distributing salaries between NIH award and salary cap companion award. The URL for the Salary Cap Calculator is:
http://www.imss.caltech.edu/cms.php?op=wiki&wiki_op=view&id=604

What is the process to establish salary cap PTAs?


The set up process for Salary Cap PTA's is very similar to the process used when setting up a new PTA for a new award. Researchers charging salaries to NIH or NIH sub-award are subject to the NIH Salary Cap. When the Institutional Base Salary (IBS) of a researcher is higher than the NIH cap, a Project will be established for the particular researcher. These projects typically start with the PI's initials and follow with "SALCAP" (Ex: HLL.SALCAP). The GM will submit a request to Office of Sponsored Research to link a salary cap Award to the salary cap Project for the NIH or NIH sub-award. Please see an example below in regards to the naming convention of the PTAs.

Main PTA: HLL.DOTE-1-NIH.086354
Sal Cap PTA: HLL.SALCAP-1-NIHSAL.086354

Main PTA: HLL.ROBINS-1-USC.R0112345
Sal Cap PTA: HLL.SALCAP-1-USCSAL.R0112345

Who sets up the accounts?

The Grant Manager enters the request in Oracle and provides Office of Sponsored Research with a non-sponsored PTA that will be funding the salary cap account. OSR activates the salary cap PTA under the same Funding Source Award (or Grant) number as the NIH PTA.

Who adjusts them annually?

The salary should be scheduled in Oracle Labor Distribution system on the two PTAs, main and salary cap, in accordance with the NIH salary cap in effect for that time period. Project Accounting will review the awards annually to ensure that the researcher's salary has been distributed correctly and is in compliance with the appropriate salary cap. If there is an issue the Grant Manager will be notified.