eFECS Application of New Salary Cap

1. eFECS Application of New Salary Cap MRAM - March 13, 2014 Michael Anthony Management Accounting & Analysis University of Washington

2. eFECS Application of New Salary Cap • Effective January 12, 2014, the Executive Level II NIH salary cap changed to $181,500 annually • Annual increase of $1,800 from the previous cap of $179,700 • Change permits more salary to be charged directly to grants thereby reducing the amount of salary cap cost sharing required University ofWashington Management Accounting & Analysis

3. eFECS Application of New Salary Cap Official notification for change found in NIH Notice of Salary Limitations on Grants, Cooperative Agreements and Contracts Notice Number: Not-OD-14-052. Notice states this applies to “FY 2014 Awards Issued” Further language clarifies ability to “re-budget/charge up to the new salary cap based on the fiscal year of the award and the time the salary expense is incurred providing the budgets have funds available to cover the increased salary charges. University ofWashington Management Accounting & Analysis

4. eFECS Application of New Salary Cap The Notice states that awards issued in years that were restricted to Executive Level II, including competing awards already issued in FY2014, if adequate funds are available and if the salary cap increase is consistent with the institutional base salary, grantees may re-budget to accommodate the current Executive Level II salary level However, no additional funds will be provided to these grant awards and the total estimated cost of the contract will not be modified.” University ofWashington Management Accounting & Analysis

5. eFECS Application of New Salary Cap Maximum impact on a grant is $1,800 per year ($181,500 minus $179,700) which equates to $150 per pay period. Considering this, the change will be made effective in eFECS January 1, 2014 rather than January 12, 2014. The impact by starting January 1, 2014 is slightly less than one pay period. Decision will be left to departments to adjust the salary cap cost sharing on the FEC should they wish to do so given the minimal impact on the majority of grants. University ofWashington Management Accounting & Analysis

6. eFECS Application of New Salary Cap When one factors in the percent effort devoted to most grants by faculty exceeding the salary cap, the impact may be incidental. For example, a faculty member with an IBS at or above the new salary cap providing 10% effort on a grant will impact the salary cap cost sharing and salary charged to the grant by approximately $15 for this 12 day period. University ofWashington Management Accounting & Analysis

7. eFECS Application of New Salary Cap • To assist academic departments in this transition (i.e., 9/16/2013 – 3/15/2014 FEC cycle) eFECS will average the two salary caps in effect during the autumn/winter FEC cycle. • This will eliminate the need for departments to correct the salary cap cost sharing unless • The grant does not cover the full FEC cycle so the salary caps are not equally weighted and/or • Decision is made not to increase the salary charges to the grant. University ofWashington Management Accounting & Analysis

8. eFECS Application of New Salary Cap In those cases adjustments will need to be made to the salary cap cost sharing amounts calculated by eFECS. Detailed guidance for making adjustments to the salary cap cost sharing amounts on the FEC will be provided closer to the time the FEC reports are to be released. University ofWashington Management Accounting & Analysis

9. Example FEC Adjustment When New Salary Cap Not Desired Assumes $200,000 annual salary & 20% grant effort University ofWashington Management Accounting & Analysis

10. Recharge Center Updates Capital lease payments must be charged to reserve budgets, not operating budgets. Rates should include depreciation of these assets not the lease payment. New accrual section on quarterly reports Variance analysis will be required annually MAA will begin sending out reminder emails that recharge rate proposals are due Other emails, e.g., escalation emails, will be forthcoming University ofWashington Management Accounting & Analysis