Salary Caps

Introduction

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.

Stanford 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, Stanford will ensure that any salary above that rate will not be charged to the agency.

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 (Dep​artment 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
• Use a special expenditure type to capture difference between actual pay & what can be charged to a PHS award

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 fun.

Preparing a Proposal Using the Salary Cap

In preparing an NIH proposal budget, for example, when one of the key personnel to be paid on the project earns an annual salary above the PHS cap, keep the following general principles in mind:

• The salary cap applies to the total institutional salary paid to the individual. If a faculty member earning more than the cap will charge 50% of her salary to a project, the salary charge is 50% of the cap amount - not the full salary.
• An individual's total Stanford salary is defined as the pay which an individual receives upon which benefits are calculated. In the School of Medicine, for example, this includes base pay and clinical components. Sabbatical pay, however, is not included as part of base salary. Pay would also include administrative supplements, which incur benefits.
• Salary dollars above a salary cap level are unallowable costs, but they must be tracked and accounted for as part of Stanford's Organized Research Base. We accomplish this by using a special Expenditure Type 51190, "Regular Benefits Eligible (RBE) Unallowed Salary over a Cap," on the Oracle Labor Distribution Labor Schedule, which allocates salary costs.
• NIH will fund the salary cap at the level in effect at the time of the competitive award. If, during the period of that award, the salary cap is increased, you will normally be able to use rebudgeting authority to pay the salary to the higher level. NIH, however, will not award any additional funds for this purpose. 

A Note about Oracle Labor Distribution:

The Oracle Labor Distribution Labor Schedules require percentages to be entered rather than dollar amounts. Panels require 100% of the Stanford pay to be distributed and the calculations get complicated!

Download the NIH Salary Cap Worksheet located in the Related Items section below.

Use the special "RBE (Regular Benefits Eligible) Unallowed Salary Over Cap" Expenditure Type 51190 to capture the salary percentage over the cap. The use of this Expenditure Type flags the dollars as unallowable. Stanford must include those dollars in its Organized Research or other applicable base.

A Note about Oracle Labor Distribution:

The Oracle Labor Distribution Labor Schedules require percentages to be entered rather than dollar amounts. Templates are available in the Related Items section below to assist you in these calculations, as panels require 100% of the Stanford pay to be distributed and the calculations get complicated!

Use the special "RBE (Regular Benefits Eligible) Unallowed Salary Over Cap" Expenditure Type 51190 to capture the salary percentage over the cap. The use of this Expenditure Type flags the dollars as unallowable. Stanford must include those dollars in its Organized Research or other applicable base.

A Note about Oracle Labor Distribution:

The Oracle Labor Distribution Labor Schedules require percentages to be entered rather than dollar amounts. Templates are available in the Related Items section below to assist you in these calculations, as panels require 100% of the Stanford pay to be distributed and the calculations get complicated!

Use the special "RBE (Regular Benefits Eligible) Unallowed Salary Over Cap" Expenditure Type 51190 to capture the salary percentage over the cap. The use of this Expenditure Type flags the dollars as unallowable. Stanford must include those dollars in its Organized Research or other applicable base.

The NIH Salary Cap worksheets calculates to 3 decimal places, however, Labor Scheduler and Labor Distribution modules only require entry for 2 decimal places.  For awards with salary caps, to avoid overcharging, always round down on the sponsored award to the nearest hundredths and round up on the salary coded to over-the-cap (51190).  Actual pay should be checked regularly to ensure it is being charged as expected.  Variations of $1 or less per pay period that may occur on a sponsored award with a salary cap do not need to be corrected.

Other Sponsors with Salary Caps

Other sponsors may impose a salary cap so it is important to read the solicitation carefully to determine if your sponsor has a salary cap.  The following list contains sponsors who impose salary caps. It is not exhaustive!

• Alex's Lemonade Stand
• American Cancer Society
• Autism Speaks
• California Institute for Regenerative Medicine (CIRM)
• Cystic Fibrosis Foundation  
• Department of Justice
• James S. McDonnell Foundation
• Juvenile Diabetes Research Foundation
• Michael J. Fox Foundation
• National Multiple Sclerosis Society
• Ovarian Cancer Research Fund
• Patient-Centered Outcomes Research Institute (PCORI)
• Rheumatology Research Foundation
• Susan G. Komen
• The Greenwall Foundation
• Thrasher Foundation
• V Foundation