Successful Navigation of NIH Salary and Graduate Student compensation caps

1. Successful Navigation of NIH Salary and Graduate Student compensation caps Kamala Upadhyaya, Donald Hammer and Elizabeth Richardson 02.18.2010

2. NIH Salary Cap • Every year since 1990 Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant and cooperative agreement awards and extramural research and development contract awards.

3. NIH Salary Cap • For FY 2010, Public Law 111-117: Consolidated Appropriations Act, 2010 restricts the amount of direct salary to Executive Level I of the Federal Executive Pay scale. Effective January 1, 2010, the Executive Level I salary level increased to $199,700.  • The language used in the Act is, “None of the funds appropriated in this Act ___shall be used to pay the salary of an individual at a rate in excess of the Executive Level I”

4. NIH Salary Cap • It is the rate of pay that is important. The bi-weekly rate of pay for salary cap of $199,700 is $7,680.77. It is calculated by dividing NIH salary cap of $199,700 by 26 bi-weekly pay periods. So the actual charge on NIH project is the percentage of effort multiplied by the bi-weekly salary cap rate of pay of $7,680.77 and not the faculty’s total bi-weekly pay from all appointments.

5. NIH Salary Cap For Example if the PI makes $250,000 of salary and puts 25% effort on the project, his bi-weekly charge on NIH project is 25% X $7,680.77 = $1,920.19 And NOT 25% X $9,615.38 (arrived at by dividing $250,000 by 26) = $2,403.85 • The difference of $483.66 must be charged to a non-sponsored program and reported as cost share on the effort statement.

6. NIH Salary Cap • On ongoing funded projects the Principal Investigator can rebudget/charge up to the salary caps, based on the fiscal year of the award and the time the salary expense is incurred, provided funds are available and the increase is warranted.

7. Graduate Student compensation cap • In December, 2001 NIH established a new policy related to the level of compensation for graduate students supported by funds from National Institutes of Health (NIH) research grants and cooperative agreements.

8. Graduate Student compensation cap • Under this new policy, the maximum amount awarded by the NIH for the support of a graduate student on a research grant or a cooperative agreement is tied to the zero level National Research Service Award (NRSA) stipend in effect at the time the grant award is issued. • The amount provided for compensation includes salary or wages, fringe benefits, and tuition remission.

9. Graduate Student compensation cap • Effective October 1, 2009 the NRSA stipend amount for postdoctoral trainees with zero years of experience is $37,740 • However, Institutions may rebudget funds to charge more than the awarded amount provided that OMB cost principles requiring reasonable compensation are observed

10. Graduate Student compensation cap • In general, graduate student compensation will not be considered reasonable if it is in excess of the amount paid to a first-year postdoctoral scientist at the same institution performing comparable work.

11. References • “NIH Salary Cap Payroll and Cost Sharing Calculations” job aid is available at Training services web site under SPA Course Materials • “Payroll and cost share calculation worksheet” and “Salary cap summary” is available at Sponsored Financial reporting web site • NRSA Stipend notices are posted at NIH guide website each January