NIH Salary Cap and Cost Share FAQs

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					University of Arizona, Sponsored Projects Services


NIH Cap and Cost Share FAQs
    1. What is the NIH salary cap?

        Since 1990, Congress has legislatively mandated a provision limiting the salary that an individual
        may receive under awards funded by the National Institutes of Health (NIH), the Substance
        Abuse and Mental Health Services Administration (SAMHSA) and Agency for Healthcare
        Research and Quality (AHRQ). Other HHS agencies, such as Centers for Disease Control (CDC),
        and the Health Resources and Services Administration (HRSA) sometimes incorporate this limit
        on salary into their awards.

        See a NIH Salary Cap Summary at: http://grants.nih.gov/grants/policy/salcap_summary.htm

    2. How is the NIH salary cap applied and why does it create cost share?

        The cap establishes a maximum annual salary rate at which an individual’s full time effort over a
        twelve-month period can be directly charged to a federal award. The cap is not intended to
        limit the salary level set by the institution. It simply requires the institution to subsidize the pay
        that is over the cap. Therefore, a cost share is created when an individual’s salary is over the
        cap. See examples below:

        Example 1: Fiscal Appointment
        Professor John Doe’s institutional base salary:                                       $ 250,000.00
        NIH Cap 2012:                                                                         $ 179,700.00
        Over the cap amount: ($250,000 - $179,000)                                            $ 70,300.00
        Dr. Doe’s effort on NIH Grant A:                                                              10%
        Amount allowed to be directly charged to NIH Grant A: (10% x $179,700)                $ 17,970.00
        Amount cost shared: (10% x $70,300)                                                   $ 7,030.00

        Example 2: Academic Appointment
        Professor Jane Doe’s institutional base salary:                                       $ 250,000.00
        NIH Cap 2012: ($179,700 X 9/12)                                                       $ 134,775.00
        Over the cap amount: ($250,000 - $134,775)                                            $ 115,225.00
        Dr. Doe’s effort on NIH Grant A:                                                              10%
        Amount allowed to be directly charged to NIH Grant A: (10% x $134,775)                $ 13,477.50
        Amount cost shared: (10% x $155,225)                                                  $ 11,522.50

    3. How to calculate payroll funding distribution percentages for employees whose salary is over
       the cap?

        Continue using the two examples given under question #2:



                                                 Page 1 of 2                                         3/7/2012
University of Arizona, Sponsored Projects Services


        Example 1: Fiscal Appointment
        Professor John Doe’s institutional base salary:                                   $250,000.00
        NIH Cap 2012:                                                                     $179,700.00
        Over the cap amount: ($250,000 - $179,000)                                         $70,300.00
        Dr. Doe’s effort on NIH Grant A:                                                          10%
        Amount allowed to be directly charged to NIH Grant A: (10% x $179,700)             $17,970.00
        Amount cost shared: (10% x $70,300)                                                 $7,030.00
        Funding distribution % on NIH Grant A: ($17,970 / $250,000)                             7.19%
        Funding distribution % on NIH Grant A’s cost share subaccount: ($7,030 /
        $250,000)                                                                               2.81%

        Example 2: Academic Appointment
        Professor Jane Doe’s institutional base salary:                                  $ 250,000.00
        NIH Cap 2012: ($179,700 X 9/12)                                                  $ 134,775.00
        Over the cap amount: ($250,000 - $134,775)                                       $ 115,225.00
        Dr. Doe’s effort on NIH Grant A:                                                          10%
        Amount allowed to be directly charged to NIH Grant A: (10% x $134,775)           $ 13,477.50
        Amount cost shared: (10% x $155,225)                                             $ 11,522.50
        Funding distribution % on NIH Grant A: ($13,478/ $250,000)                              5.39%
        Funding distribution % on NIH Grant A’s cost share subaccount: ($11,523 /
        $250,000)                                                                               4.61%

    4. How to charge cost share when an over-the-cap academic employee charges summer salary to
       NIH awards?

        The summer salary should reflect NIH salary cap level, thereby eliminating the over the cap cost
        share.

        Departments can also use non-sponsored funds to provide additional summer compensation up
        to 1/3rd of the faculty member’s base salary. If non-sponsored funds are used to support the
        NIH work, a cost share subaccount is required to track the cost shared salary amount.

        Example 1: Hours of summer/winter supplemental compensation allowed on NIH grant:
        Professor Jane Doe’s institutional base salary - Academic Appointment:   $250,000.00
        NIH Cap for 12 month appointment:                                        $179,700.00
        NIH Cap for 3 month summer work: ($179,700/12 x 3)                        $44,925.00
        Dr. Doe’s summer work on NIH Grant A:                                       3 months
        UA supp comp hourly rate for academic appointment: ($250,000 x 0.00072)      $180.00
        Hours of supplemental compensation allowed per year: ($44,925 / $180)   249.58 hours

         A lower hourly rate can also be used if the summer/winter supplemental compensation needs
        to be spread over the entire 464 hours: $44,925/464 hours = $ 96.82 per hour.



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