National Institutes of Health

1. Salary Cap National Institutes of Health

2. 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): $199,700 100% Effort Monthly Sal: $20,833 Monthly Cap: $16,642 **Difference: $4,191 (Amt to be Cost Shared) 10% Effort Monthly Sal: $2,083 Monthly Cap: $1,664 **Difference: $419 (Amt to be Cost Shared)

3. 2011 Salary Limitations Grants, Cooperative Agreements, and Contracts

4. NOT – OD – 11 – 073 • Things to remember: • Direct Salary, Salary, and Institutional Base Salary hold the same meeting in relation to the NIH salary limitations • Institutional Salary is the individual’s annual compensation that the organization pays for their appointment • Salary cap, as listed by NIH, is noted as FY Salary, not AY

5. NOT – OD – 11 – 073 Cont’d • FY 2011 Salary Cap • Fiscal Year Employee: $199,700 • Academic Year Employee: $149,775 • Or $16,642 monthly salary

6. 2012 Salary Limitations Grants, Cooperative Agreements, and Contracts

7. 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.

8. How Purdue Manages FY12 Salary Cap • New Award • Sponsor Accounts and Salary Cap Cost Share Accounts will be established and utilize “FY12” within their title to indicate the appropriate level to be used • Increases (Non-Competing) • New Sponsor Accounts and New Salary Cap Cost Share Accounts will be established and named “FY12”

9. How Purdue Manages FY12 Salary Cap • Increases- Continued • Unobligated balances from previous years’ awards will remain in their original accounts • Salary charged to these funds will use the salary cap level in effect at the time the award was issued • Executive Level II (FY12) limitations will not be effective until the FY12 funds are used • EX: PI’s salary is $200,000 • Level used when tracking Salary Cap on “old” funds would be $199,700 • Level used when tracking Salary Cap on “new” funds would be $179,700

10. 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”

11. Things to Pay Attention to….

12. Changes • An increase in the Salary Cap limitation will affect the amount that will need to be cost shared • An increase or decrease in PI salary will affect the amount that will be cost shared or if Salary Cap is applicable • Changes 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

13. Examples of Calculating Salary Cap Fiscal Year Employee and Academic Year Employee

14. Salary Cap Cheat Sheet *Effective with awards issued for FY12 on or after December 23, 2011

15. Formulas for Calculating Salary Cap • Academic Year (monthly) • (Institutional Salary* 1/9) * Effort • Fiscal Year (monthly) • (Institutional Salary * 1/12) * Effort • Salary 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.

16. Academic Year Calculation • Institutional Salary: $200,000 • ($200,000*1/9) * Effort (100%) • =$22,222 • ($149,775*1/9) * Effort (100%) • =$16,642 • Cost Share= $5,580 • ($200,000*1/9) * Effort (10%) • =$2,222 • ($149,775*1/9) * Effort(10%) • =$1,664 • Cost Share= $558

17. Calculation & Distribution Examples • FY Employee Example • AY Employee Example • FY12 Example

18. 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 Account • Accurately charge salaries to sponsor accounts and related cost sharing accounts based on PI’s effort certification • If effort changes at any point, the distribution should change to ensure proper allocation to the salary cap and sponsor accounts

19. Business Office Roles • Update your Salary Cap spreadsheet on a monthly basis to track and ensure compliance with the sponsor regulations • This is the ideal time to verify salary levels for the PI and make appropriate adjustments • Correct any non-compliance issues upon identification

20. Post Award Roles • Distribute Agency guidelines to University Departments via Business @ Purdue • Review Salary Cap at PAR time • Contact business office personnel in the event of non-compliance • Meet with business offices upon request to discuss account specifics and/or overall management of salary cap faculty members

21. Resources • Megan Sweet (Sr. Account Mgr) • 765-494-6367 • Natasha Lavrenz (Account Mgr) • 765-494-1066 • Please use generic e-mail (spsdhhs@purdue.edu) • NIH • http://grants.nih.gov/grants/policy/salcap_summary.htm • http://grants.nih.gov/grants/guide/notice-files/NOT-OD-11-073.html • http://grants.nih.gov/grants/guide/notice-files/NOT-OD-13-002.html • Sponsored Programs • http://www.purdue.edu/business/sps/postaward/sponsors/dhhs/index.html • Information housed under “Announcements”