15.5 Salary Cap Administration

Presents procedures for implementation of agency regulations that set a maximum salary level for project participants (salary cap).


Questions about this policy can be answered by:

Jahnke, Pam

Research Administration & Compliance Specialist

Vice Provost and Dean of Research

(650) 724-0195

1. Introduction

Stanford will comply with all requirements of the agencies making awards to the University in support of research or other activities. Where an agency specifies a maximum rate at which an individual may be paid from that agency's funds, Stanford will ensure that any salary above that rate will not be charged to the agency.


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2. Applicability

Currently, the only agencies that establish salary caps are the Department of Health and Human Services (DHHS), which includes the National Institutes of Health (NIH), and the Department of Defense (DoD). The NIH salary cap is indexed to a specified Executive Pay Level and changes periodically. See Funding Limitations below.

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4. Definitions

A. Salary Cap

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. NIH salary caps are indexed to a specific Government Executive Pay Level, e. g. Executive Level 2. The salary for the Executive Pay Level may vary for each Government Fiscal Year in which the funds are awarded (usually on January 1).

B. Funding Limitation

A Funding Limitation is defined as the limitation on the annual rate of Stanford salary for full-time effort that the agency provides in a given award. This limit is usually established at the time of a competitive award based on the salary cap in effect at that time. However, if, after a competitive award is made, the NIH announces an increased Salary Cap, the agency will allow PIs to rebudget awarded funds, in that or future years, to charge the higher salary level. NIH has not historically provided additional funds for this purpose (see NIH Salary Cap summary and rebudgeting examples.) 

C. Stanford salary

Stanford salary is defined as the pay that an individual receives from Stanford University upon which benefits are calculated. In the School of Medicine, for example, this includes base pay and clinical components, if any.

Annual rate is the amount of pay an individual would receive from Stanford for a 12-month period.


5. Procedure — National Institutes of Health

Stanford's practices in submitting proposals recognize and respect the policies, guidelines, and practices of the involved agency.

A. Submitting Proposals

NIH application instructions for competing proposals ask that Stanford calculate requested salary amounts by multiplying the full Stanford salary of the individuals proposed to work on the project by the appropriate percentage of effort to be expended on the project. NIH will adjust these amounts to reflect a Salary Cap, if any. 

When submitting Modular Grants or other grants that limit total direct costs, or when submitting non-competing continuation proposals, whenever a proposed individuals rate of pay exceeds the allowable (capped) rate, Stanford will incorporate the applicable salary cap into the proposed salary budget.

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6. Procedure — Department of Defense

Annual federal appropriations bills limit the amount of individual employee compensation that can be charged to government contracts. The provisions were originally included as Section 8117 of the Government Fiscal Year 1995 Defense Appropriations Act. The amount, applicability, and scope of the limitations change frequently. The Cost and Management Analysis (CMA) office manages University compliance with these compensation limitations. Please contact CMA for more information regarding the specifics of the limitations.

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