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 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 tools are available to help?
What is the process to establish salary cap PTAs?
Who sets up the accounts?
Who adjusts them annually?
What are Caltech's obligations with regard to the salary cap?

 

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 directly charged to NIH grants.

The cap is not imposed on the total number of dollars that can be charged to an NIH grant, but rather, the cap applies to the monthly pay rate that can be charged to an NIH grant.

The URL for the NIH Salary Cap summary, including the most current salary cap amount is: http://grants.nih.gov/grants/policy/salcap_summary.htm

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 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 2014, the cap was $181,500. For salaries paid for work performed after January 1, 2015, the cap adjusted to $183,300.

The "current cap" applies to all NIH grants regardless of the Award start and end date.

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 sometime 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. NIH’s stated preference is for an individual’s full salary rate to be included in the proposal budget, even if that rate is over the cap.  NIH will reduce the award amount to account for any proposed salaries that are over the cap.  However, NIH allows institutions to utilize the capped rate in a budget, for example when the PI is trying to stay within a budget target.  In this case the budget justification must explicitly identify the individuals whose salaries have been included at the capped rate, as well as those individuals’ full salary rates and level of effort (if not already included on the detailed budget).

However, whether NIH adjusts the budget or not, the salary cap applies.    

 What tools are available to help?

 A standardized process for creating salary cap PTAs has been established by Post Award Administration with significant input from the Divisions. For Caltech PIs whose salaries are over the salary 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 the NIH main PTA and salary cap companion PTA. In addition to the calculator, a report is available via Cognos under Campus Reports, “NIH Salary Cap Report.” 

The URL for the Salary Cap Calculator is:
https://business-query.caltech.edu:8181/apex_CNTRL/f?p=100:1:

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 projects, either direct funding or NIH sub-awards are subject to the NIH Salary Cap. When the Institutional Base Salary (IBS) of a researcher is higher than the NIH salary cap, a SALCAP project will be established for the particular researcher. These projects will start with the PI's initials and follow with "SALCAP" (Ex: HLL.SALCAP).  When a new NIH grant or subaward is received the GM will submit a request for a salary cap companion Award to be linked to the researchers salary cap Project. The new salary cap companion PTA should be set up under the same funding source award number as the main PTA. 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 fund the salary cap account. OSR activates the salary cap PTA under the same Funding Source Award (or Grant) number as the main NIH PTA.

Who adjusts them annually?

The salary should be scheduled in Oracle Labor Distribution Module between the two PTAs, main and salary cap, in accordance with the NIH salary cap in effect for that time period.

Grant Managers (GM), utilizing the on-line NIH Salary Cap Calculator tool and NIH Salary Cap report, are responsible for the initial set-up and routine scheduling of salary on the salary cap companion account for those researchers whose salaries are over the salary cap.  Post Award Administration (PAA) is responsible for reviewing the PTA at least semi-annually to ensure the salary has been distributed correctly and is in compliance with the appropriate salary cap.  If an issue arises during PAA’s review the GM will be notified to make the appropriate adjustments.  In order to show timeliness and due diligence in managing the salary cap companion account, all adjustments must be made and the salary trued up within the fiscal year, rather than the calendar year in which the particular salary cap was in effect, or the budget year of the grant..

In 2015, an adjustment threshold of +/- $25.00 was formally established on all correcting entries.  For salary cap purposes this means correcting entries to bring the salary to the NIH salary cap need only be completed if the variance is greater than $25.

Adjustments need to be made within 90 days of notification by PAA.  Reminders will be sent out from the date of distribution as follows: 

After 90 business days - To the Grant Manager and Division AdministratorAfter 120 business days - To the Division Chair
After 135 business days - To the Provost

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 and monitored in accordance with the NIH requirements.