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Salary Cap with New Implications

DHHS Salary Cap. Salary Cap with New Implications. James Trotter, Nancy Duncan & Amber Roberts, Sponsored Projects Administration. Course Overview. Salary Cap Overview. Institutional Base Salary. Cost Sharing/Labor Distributions . PART 1. PART 2. Case Studies. More Case Studies.

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Salary Cap with New Implications

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  1. DHHS Salary Cap Salary Cap with New Implications James Trotter, Nancy Duncan & Amber Roberts, Sponsored Projects Administration

  2. Course Overview • Salary Cap Overview • Institutional Base Salary • Cost Sharing/Labor Distributions • PART 1 • PART 2 • Case Studies • More Case Studies • Effort Statements & Salary Cap • Salary Cap and Carry Forward Calculation Tool Short Break Research Administration Training & Education

  3. salary cap overview Research Administration Training & Education

  4. DHHS SALARY CAP Overview • HISTORY • Since 1990 Congress has legislatively mandated a provision that limits the direct salary than an individual may receive under an NIH/AHRQ/SAMHSA grant/contract. • Applied to only NIH/AHRQ/SAMHSA • Salary Limitation was Executive Level I of the Federal Executive Pay Scale ($199,700) Research Administration Training & Education

  5. DHHS SALARY CAP Overview • New Implications • Effective 12/23/2011 the Consolidated Appropriations Act of 2012 was signed into law. • Reduced amount of allowable Direct Salary to Executive Level II of the Federal Executive Pay Scale ($179,700) • Expanded to include ALL DHHS AWARDS • Effective on Federal FY 2012 awards with issue dates on/after 12/23/11. • http://grants.nih.gov/grants/guide/notice-files/NOT-OD-12-035.html • http://grants.nih.gov/grants/policy/fy2012_salary_cap_faqs.htm Research Administration Training & Education

  6. DHHS SALARY CAP Overview BACKGROUND • The salary cap is updated annually • http://grants.nih.gov/grants/policy/salcap_summary.htm • Dec 23, 2011-Sep 30, 2012 $ 179,700 • Oct 1, 2011-Dec 22, 2011 $ 199,700 • 2011 - $ 199,700 • 2010 - $ 199,700 • 2009 - $ 196,700 • 2008 - $ 191,300 Research Administration Training & Education

  7. DHHS SALARY CAP Overview • New Implications Research Administration Training & Education

  8. DHHS SALARY CAP Overview • New Implications Research Administration Training & Education

  9. DHHS SALARY CAP Overview • New Implications Research Administration Training & Education

  10. DHHS SALARY CAP Overview BACKGROUND • Other NIH award resources available! • NIH has query available on RePORT (Research Portfolio Online Reporting Tools) that shows awards made in FY 2012 with issue dates prior to 12/23/2011. • http://report.nih.gov/index.aspx • Also OHSU awards are posted on SPA’s website • http://www.ohsu.edu/xd/research/administration/sponsored-projects-administration/ Research Administration Training & Education

  11. Decision tree Overview DHHS AWARD NO Salary Cap Does Not Apply YES Award Issue Date Before 12/23/2011 Award Issue Date After 12/22/2011 Use $199,700 Use $179,700 Research Administration Training & Education

  12. DHHS SALARY CAP Overview BUDGET IMPLICATIONS • Competitive Awards issued on or after 12/23/11 may be reduced if: • Principal Investigator/Staff over salary cap were included • Grant requires a categorical/detailed budget (NIH modular budgets should not be affected) • Reduction is for current and all future years • Competitive Awards, with categorical/detailed budgets issued before 12/23/11 will not be reduced for FY 2012. However, reductions will occur in all future years. Research Administration Training & Education

  13. DHHS SALARY CAP Overview BUDGET IMPLICATIONS • Non-Competing Awards will not be reduced. • If savings are generated it is allowable to re-budget those funds • Administrative Supplements • Supplements issued on/after 12/23 would be subject to Executive Level II regardless of the level the parent grant is subject to • Budgets cannot be submitted to pending grant applications to reflect the lower salary cap and subsequent rebudgeting of ‘freed-up’ funds. Research Administration Training & Education

  14. DHHS SALARY CAP Overview BUDGET IMPLICATIONS FY2012 Non-Competing Awards Research Administration Training & Education

  15. DHHS SALARY CAP Overview BUDGET IMPLICATIONS FY2012 Competing Awards Research Administration Training & Education

  16. DHHS SALARY CAP Overview BUDGET IMPLICATIONS • Funds carried forward from previous years remain at the salary limitation levels in effect at the time those awards were issued. • As a result, companion accounts will be set up in OGA for the 2011 carry forward dollars for awards with staff affected by the salary cap • Example >>> GCDRC0119BCF • Companion accounts can only be utilized for staff salary/OPE to whom salary cap applies • Dept supplies budget to load into OGA to assigned Sponsored Projects Analyst at the time of receipt of FSR concurrence memo Research Administration Training & Education

  17. Institutional base salary Research Administration Training & Education

  18. DHHS SALARY CAP Institutional base salary Institutional Base Salary • Institutional Base Salary (IBS) is the annual compensation an institution pays on an employee’s appointment, whether that individual’s time is spent on research, teaching, patient care, or other activities. • Excludes any income earned outside of the institution • Cannot be increased as a result of replacing institutional salary support with grant funding • Base Salary is NOT limited by the Federal salary cap • legislation • An institution can pay an individual’s salary amount in excess of the salary cap with Non-Federal Funds (COST SHARING) Research Administration Training & Education

  19. DHHS SALARY CAP Institutional base salary Institutional Base Salary- What to put on application • On detailed budget pages, list salary cap as the IBS • Add asterisk notation stating IBS exceeds the cap • Indicate in budget narrative that IBS is greater than salary cap • For specific questions contact your Grants and Contracts Administrator (GCA) Research Administration Training & Education

  20. Case STUDIES Research Administration Training & Education

  21. DHHS SALARY CAP Case Studies Case Study 1 • Dr. LaFleur • Joint Appointment OHSU & VA • VA Salary is $105,000 • OHSU Salary is $97,500 • OHSU Appointment is 1.0 FTE • Assume appropriate salary cap is $199,700 • Would her salary be limited on a her OHSU awarded DHHS grant? Research Administration Training & Education

  22. DHHS SALARY CAP Case Studies Case Study 2 Dr. Ramirez • 0.5 FTE • Institutional Base Salary @ 0.5 FTE = $ 100,000 • HRSA Grant- Award Issue Date in January 1, 2012 Would he need to be concerned about the salary cap? Research Administration Training & Education

  23. DHHS SALARY CAP Case Studies SALARY CAP-HOW MUCH? • The salary cap is based on an annualized rate for full time appointment • Annualized salary cap of $179,700 by FTE: • 1.0 FTE = $179,700 ($179,700 X 1.0 FTE) • 0.75 FTE = $134,775 ($179,700 X 0.75 FTE) • 0.5 FTE = $89,850 ($179,700 X 0.50 FTE) Research Administration Training & Education

  24. DHHS SALARY CAP Case Studies SALARY CAP-HOW MUCH? • The salary cap is not a set dollar limitation • For 1.0 FTE, annualized salary cap of $199,700 by % effort: • 100%= $199,700 ($199,700 X 100%) • 75%= $149,775 ($199,700 X 75%) • 50%= $99,850 ($199,700 X 50%) • 25%= $49,925 ($199,700 X 25%) • 10%= $19,970 ($199,700 X 10%) Research Administration Training & Education

  25. DHHS SALARY CAP Case Studies SALARY CAP-HOW MUCH? • The salary cap is calculated on a per grant basis, not aggregate basis • Every payment each pay period should meet the salary cap requirement (averaging is not appropriate) Research Administration Training & Education

  26. DHHS SALARY CAP Case Studies Case Study 3 Dr. Jones • Institutional Base Salary = $230,000 • 10 % Effort NIH Grant • 20 % Effort NSF Grant • Both grants – Award Issue Date Jan 1, 2012 What is the maximum amount of salary allowable for each grant based on his effort? Research Administration Training & Education

  27. DHHS SALARY CAP Case Studies Case Study 3 Dr. Jones NIH Grant 10% x Salary Cap ($179,700) = $17,970 NSF Grant 20% x IBS ($230,000)= $46,000 Research Administration Training & Education

  28. DHHS SALARY CAP Case Studies Case Study 4 Dr. Smith • 0.5 FTE Appointment • $250,000 per year • 10% Effort NIH Grant (Award Issue Date- 6/1/11) • 10% Effort HRSA Grant (Award Issue Date- 1/1/12) What is the maximum allowable salary on her two awards? Research Administration Training & Education

  29. DHHS SALARY CAP Case Studies Case Study 4 Dr. Smith NIH Grant 0.5 FTE x 10% x Salary Cap ($199,700) = $9,985 HRSA Grant 0.5 FTE x 10% x Salary Cap ($179,700)= $8,985 Research Administration Training & Education

  30. DHHS SALARY CAP Case Studies Case Study 5 Dr. Jay • IBS of $225,000 • % Labor Distribution = % Effort • He is only charging $168,750 (75% of his IBS) to his grants Is this appropriate because in total he is charging less Than the cap of $179,700? Research Administration Training & Education

  31. DHHS SALARY CAP Case Studies Case Study 5 Dr. Jay • 75% x $179,700 = $134,775 Remember: % Effort x Salary Cap= Allowable Salary Research Administration Training & Education

  32. Break Research Administration Training & Education

  33. Cost sharing/labor distributions Research Administration Training & Education

  34. DHHS SALARY CAP Cost Sharing/Labor Distributions COST SHARING/LABOR DISTRIBUTION • When a department agrees to pay personnel over the salary cap they are agreeing to Mandatory, Committed Cost Sharing • For Cost Sharing related to Salary Cap, Labor Distribution schedules in Oracle should be set up with the cost sharing mission code (24) Research Administration Training & Education

  35. DHHS SALARY CAP Cost Sharing/Labor Distributions COST SHARING/LABOR DISTRIBUTION • The difference between the allowable direct charged salary and the institutional base salary must be cost shared from non-federal funds. Salary Cap x % Effort = % Labor Distribution IBS % Effort - % Labor Distribution = % Cost Sharing Research Administration Training & Education

  36. DHHS SALARY CAP Cost Sharing/Labor Distributions Calculating The Salary Cap Dollar Method 2012 Salary Cap $179,700 % Effort x 25% Allowable Salary Support $ 44,925 IBS $ 250,000 % Labor Distribution 17.97% % Cost Sharing (%Effort-%Labor Distribution) 7.03% Research Administration Training & Education

  37. DHHS SALARY CAP Cost Sharing/Labor Distributions COST SHARING/LABOR DISTRIBUTION • Another Way to Do the Math ! Salary Cap x % Effort = % Labor Distribution IBS % Effort - % Labor Distribution = % Cost Sharing Research Administration Training & Education

  38. DHHS SALARY CAP Cost sharing/labor distributions Calculating The Salary Cap Percentage Method 2012 Salary Cap $179,700 IBS $ 250,000 % of IBS 71.88% % Effort x 25% % Labor Distribution 17.97% % Cost Sharing (%Effort-%Labor Distribution) 7.03% Research Administration Training & Education

  39. More Case Studies Research Administration Training & Education

  40. DHHS SALARY CAP More Case Studies Case Study 6 Dr. Uberstern • 1.0 FTE • IBS of $300,000 • 100% of Effort on DHHS grants- award issue date 1/1/2012 What is the maximum percentage of his IBS that can be supported by his grants? What percentage of his IBS must be cost shared by department? Research Administration Training & Education

  41. DHHS SALARY CAP More Case Studies Case Study 6 Dr. Uberstern Salary Cap $ 179,700 % Effort x 100% Allowable Salary Support $179,700 IBS $ 300,000 % IBS that can be grant supported 59.90 % % Department Cost Share (100%-59.90%) 40.10% Research Administration Training & Education

  42. DHHS SALARY CAP More Case Studies Case Study 7 Dr. Zhang • NIH GRANT0001A 20 % Effort (9/30/11 award issue date) • HRSA GRANT0002A 10% Effort (1/01/12 award issue date) • NSF GRANT0003A 30% Effort (12/23/11 award issue date) • Department Chair 20% Effort • Teaching 20% Effort • IBS is $250,000 What’s the total % of Labor Distribution that can be charged to her grants and non-sponsored accounts? How would her Effort Statement be completed? Research Administration Training & Education

  43. DHHS SALARY CAP More Case Studies Case Study 7 Dollar Method NIH GRANT0001A (9/30/11 start date) Salary Cap Exec Level I $ 199,700 % Effort x 20% Allowable Salary Support $ 39,940 IBS $ 250,000 % Labor Distribution on GRANT0001A 15.98% % Cost Sharing (% Effort- % Labor Distribution) 4.02% Research Administration Training & Education

  44. DHHS SALARY CAP More Case Studies Case Study 7 Dollar Method HRSA GRANT0002A (01/01/2012 start date) Salary Cap Exec Level II $ 179,700 % Effort x 10% Allowable Salary Support $ 17,970 IBS $ 250,000 % Labor Distribution on GRANT0002A 7.19% % Cost Sharing (% Effort- % Labor Distribution) 2.81% Research Administration Training & Education

  45. DHHS SALARY CAP More Case Studies Case Study 7 NSF GRANT0003A (12/01/2011 start date) • Not a DHHS Award • Salary Cap Does NOT apply • Effort = Labor Distribution • 10% Labor Distribution on GRANT0003A Research Administration Training & Education

  46. DHHS SALARY CAP More Case Studies Case Study 7 Percentage Method NIH GRANT0001A (9/30/11 start date) Salary Cap Exec Level I $ 199,700 IBS $ 250,000 % of Allowable IBS 79.88% % Effort x 20.00 % % Labor Distribution on GRANT0001A 15.98% % Cost Sharing (% Effort- % Labor Distribution) 4.02% Research Administration Training & Education

  47. DHHS SALARY CAP More Case Studies Case Study 7 Percentage Method HRSA GRANT0002A (01/01/2012 start date) Salary Cap Exec Level II $ 179,700 IBS $ 250,000 % Allowable IBS 71.88% % Effort x 10.00% % Labor Distribution on GRANT0002A 7.19% % Cost Sharing (% Effort- % Labor Distribution) 2.81% Research Administration Training & Education

  48. DHHS SALARY CAP More Case Studies Case Study 7 Dr. Zhang What’s the total % of Labor Distribution that can be charged to her grants? GRANT0001A 15.98% GRANT0002A 7.19% GRANT0003A30.00% 53.17% = Total LD on Grants Dept Chair 20.00% Teaching 20.00% Cost Sharing 6.83% 46.83% = Total LD on Non-Sponsored Accounts Research Administration Training & Education

  49. Effort Statement and Salary Cap Research Administration Training & Education

  50. DHHS SALARY CAP Effort Statement and Salary Cap Case Study 7 How do we reflect cost sharing related to the salary cap for Dr. Zhang on her effort statement? Research Administration Training & Education

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