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NIH Salary Cap

(Last updated by NIH 1/20/12)

Every year since 1990 Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant. For FY 2011, the Department of Defense and Full-year Continuing Appropriations Act of 2011 (Public Law 112-10) continued implementation of  Public Law 111-117: Consolidated Appropriations Act, 2010  which restricted the amount of direct salary to Executive Level I of the Federal Executive Pay scale; this information was published May 4, 2011 in the NIH Guide for Grants and Contracts (NOT-OD-11-073). No increase had been provided for Federal salaries. 

For FY 2012 the Consolidated Appropriations Act, 2012 (Public Law 112-74) signed into law on December 23, 2011, restricts the amount of direct salary to Executive Level II of the Federal Executive Pay scale.  The Executive Level II salary is $179,700.

For the purposes of the salary limitation, the terms "direct salary," "salary," and "institutional base salary" have the same meaning and are exclusive of fringe benefits and facilities and administrative (F&A) expenses, also referred to as indirect costs. An individual's institutional base salary is the annual compensation that the applicant organization pays for an individual's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. Base salary excludes any income that an individual may be permitted to earn outside of the duties to the applicant organization.

NIH grant/contract awards for applications/proposals that request direct salaries of individuals in excess of the applicable RATE per year will be adjusted in accordance with the legislative salary limitation and will include a notification such as the following:   None of the funds in this award shall be used to pay the salary of an individual at a rate in excess of the applicable salary cap. 

This is the first year that the salary limitation has been reduced; it is now restricted to Executive Level II of the Federal Pay Scale.  Since this reduction was included in the law signed December 23, 2011, implementation of the lower level is effective with FY2012 awards where the initial Issue Date of the award is on/after 12/23/2011.  For FY2012 awards issued on/before December 22, 2011 (competing and non-competing), the effective salary limitation remains at Executive Level 1, $199,700.  Please see the salary cap summary and the time frames associated with salary caps at http://grants.nih.gov/grants/policy/salcap_summary.htm.

Implementation of salary limitation for NIH grant and cooperative agreement awards and extramural research and development contract awards:
For awards (competing and non-competing) with an initial Issue Date on/before December 22, 2011, the salary limitation is Executive Level I of the Federal Pay Scale, $199,700. OER has posted a list on RePORT titled "FY2012 Grants Subject to Executive Level I Salary Cap" for all grants issued on/before December 22, 2011 where Executive Level I would be the appropriate level when a salary limitation is applicable.

Effective with grant awards with an initial Issue Date on/after December 23, 2011, the salary limitation is limited to Executive Level II of the Federal Pay Scale, $179,700.
NIH competing grant awards with categorical budgets reflecting salary levels at or above the new limit that have an initial Issue Date on/after December 23, 2011 will reflect adjustments to the current and all future years so that no funds are awarded or committed for salaries over the limitation.

NIH competing grant awards with an initial Issue Date on/before December 22, 2011 with categorical budgets reflecting salary levels at or above the new limit may continue to apply the Executive Level I salary levels for the FY2012 award period.  No adjustments are required.  However, future years for these awards will be adjusted to reflect Executive Level II.
NIH non-competing awards will not be recalculated to adjust for this decrease in the salary limitation.  However, grantee institutions are reminded that the level to charge on non-competing grants is dependent upon the Issue Date of the initial FY2012 award.  For non-competing grants with initial Issue Dates on/before 12/22/2011, the applicable salary limitation is Executive Level I; for non-competing grants with an initial Issue Date on/after 12/23/2011, the applicable salary limitation is Executive Level II.  For grants now limited to Executive Level II, unless otherwise restricted grantees may rebudget any funds freed as a result of the lower cap.   

Any grants awarded in previous fiscal years (e.g., FY 2011, FY 2010, etc.) are not impacted by the FY 2012 salary limitation.  Carrying over previous years' funds to support salaries will remain at the salary limitation levels in effect at the time those awards were issued.

If the President signs a Continuing Resolution for any part of Fiscal Year 2013, unless legislative language provides otherwise, the salary limitation provided in the Consolidated Appropriations Act, 2012 (Executive Level II) will apply regardless of what level applied in FY2012.

An individual's base salary, per se, is NOT constrained by the legislative provision for a limitation of salary. The rate limitation simply limits the amount that may be awarded and charged to NIH grants and contracts. An institution may pay an individual's salary amount in excess of the salary cap with non-federal funds.

The salary limitation does NOT apply to payments made to consultants under an NIH grant or contract although, as with all costs, those payments must meet the test of reasonableness and be consistent with institutional policy.

The salary limitation provision DOES apply to subawards/subcontracts for substantive work under an NIH grant or contract.

 

Last Updated: 11/6/12