Salary Caps
The PHS (Public Health Service) which includes the NIH (National Institutes of Health) is governed by regulations establishing a maximum salary that may be awarded to a project participant - salary cap. Some non federal agencies also impose salary caps.
Wayne State University will comply with all agency requirements in this regard. Where an agency specifies a maximum rate amount at which an individual may be paid from that agency's funds, Wayne State will ensure that any salary above that rate will not be charged to the agency.
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- Salary Cap Overview
A Salary Cap is defined as a maximum annual rate of Stanford Salary for full-time effort that can be charged to an agency's award.
DHHS (Department of Health and Human Services)
The Department of Health and Human Services (DHHS), which includes the NIH (National Institutes of Health) enforces a salary cap which is indexed to a specified Executive Pay Level and changes periodically.
The DHHS salary cap limits the amount which can be charged to a DHHS project (or related cost sharing account) by limiting the maximum annual salary rate for a 100%, 12-month FTE. The rate is set annually and applies to all awards made that year.
DHHS establishes the funding limitation for salaries at the time that a competitive award is made. However, if subsequent (non-competing) funding is awarded during a year with a higher salary cap, NIH will allow existing funds to be re-budgeted to that level. Typically, no new funds will be awarded for this purpose.
- DHHS salary cap may change annually
- PHS (Public Health Service) funds salary up to the level of the cap in effect on the award date
Many other sponsors have salary caps. Read every solicitation carefully to determine whether a sponsor has a salary cap.
- Salary Cap by Fiscal Year
The dollar amount of the PHS cap is indexed to selected Executive Pay Levels established by the Federal Government and may vary for each Government Fiscal Year in which funds are awarded. The cap amount is the maximum annual rate of salary that the PHS will allow to be paid to an individual from their funds.
- How is the salary cap applied?
The cap establishes a maximum annual rate of pay at which an individual's full time effort over a twelve-month period can be charged for a federal contract, grant, or cooperative agreement. It is not intended to limit the actual salary paid by the institution. An institution may pay an individual in excess of the salary cap.
The cap is not on the amount of dollars that can be charged to an NIH grant but, it is on the monthly pay rate that can be charged to an NIH grant.
- Identify University personnel who will be paid from the sponsored project and confirm the institutional base salary for each.
- Review the funding source regulations and policies to determine wheter the sponsor has set a salary cap.
- Compare the institutional base salary with the salary cap. If the base salary exceeds the salary cap:
- Salary above the cap is considered as mandatory cost sharing and must be tracked by the department and certified on an annual basis
- Calculate the salary that will be charged to the sponsored project by multiplying t he salary cap amount by the percentage ofd effort the person will commit to the project.
- To determine the balance that will not be charged to the project, multiply the institutional base salary by the effort the person will commit to the project, and subtract the amount that is being charged to the project.
- The excess amount above the salary cap can be covered using non-federal or non-sponsored funds.