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<TITLE>NOT-OD-03-034: SALARY LIMITATION ON GRANTS, COOPERATIVE AGREEMENTS, AND CONTRACTS</TITLE>
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<META NAME="description" CONTENT="NIH Funding Opportunities and Notices in the NIH Guide for Grants and Contracts: SALARY LIMITATION ON GRANTS, COOPERATIVE AGREEMENTS, AND CONTRACTS NOT-OD-03-034. NIH">
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SALARY LIMITATION ON GRANTS, COOPERATIVE AGREEMENTS, AND CONTRACTS
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RELEASE DATE: March 18, 2003
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NOTICE: NOT-OD-03-034
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National Institutes of Health (NIH)
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This notice provides updated information regarding the salary
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limitation for NIH grant and cooperative agreement awards and
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extramural research and development contract awards. On January 25,
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2002, <a href="/grants/guide/notice-files/NOT-OD-02-030.html">the Fiscal Year (FY) 2002 information on the salary limitation</a>
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was published in the NIH Guide for Grants and Contracts.
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<a href="/grants/guide/notice-files/NOT-OD-03-027.html">A notice on the continuing resolutions for FY 2003 regarding the
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salary limitation</a> was published February 10, 2003.
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For fourteen consecutive years, Congress has legislatively mandated a
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provision for the limitation of salary. For FY 2003,the Consolidated
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Appropriations Resolution 2003, Public Law 108-7, which includes
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appropriations for the Department of Health and Human Services,
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restricts the amount of direct salary of an individual under an NIH
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grant or cooperative agreement (referred to here as a grant) or
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applicable contract to Executive Level I of the Federal Executive Pay
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scale. The Executive Level I annual salary rate was $166,700 for the
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period January 1 through December 31, 2002. Effective January 1, 2003,
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the Executive Level I salary level increased to $171,900.
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For the purposes of the salary limitation, the terms "direct salary,"
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"salary," and "institutional base salary" have the same meaning and are
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exclusive of fringe benefits and facilities and administrative (F&A)
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expenses, also referred to as indirect costs. An individual's
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institutional base salary is the annual compensation that the applicant
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organization pays for an individual's appointment, whether that
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individual's time is spent on research, teaching, patient care, or
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other activities. Base salary excludes any income that an individual
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may be permitted to earn outside of the duties to the applicant
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organization.
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NIH grant/contract awards for applications/proposals that request
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direct salaries of individuals in excess of the applicable RATE per
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year will be adjusted in accordance with the legislative salary
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limitation and will include a notification such as the following:
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According to the Consolidated Appropriations Resolution 2003, "None of
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the funds appropriated in this Act for the National Institutes of
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Health, the Agency for Healthcare Research and Quality, and the
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Substance Abuse and Mental Health Services Administration shall be used
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to pay the salary of an individual, through a grant or other extramural
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mechanism, at a rate in excess of Executive Level I" of the Federal
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Executive Pay Scale.
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In summary, the following reflects the time frames associated with the
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existing salary caps from FY 1999 through FY 2003:
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FY 1999 Awards (Executive Level III)
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o October 1, 1998 through December 31, 1999 $125,900
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o January 1, 2000 through December 31, 2000 $130,200
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FY 2000 Awards (Executive Level II)
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o October 1, 1999 through December 31, 1999 $136,700
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o January 1, 2000 through December 31, 2000 $141,300
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o January 1, 2001 through December 31, 2001 $145,100
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FY 2001 Awards (Executive Level I)
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o October 1, 2000 through December 31, 2000 $157,000
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o January 1, 2001 through December 31, 2001 $161,200
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o January 1, 2002 through December 31, 2002 $166,700
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FY 2002 Awards (Executive Level I)
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o October 1, 2001 through December 31, 2001 $161,200
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o January 1, 2002 through December 31, 2002 $166,700
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FY 2003 Awards (Executive Level I)
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o October 1, 2002 through December 31, 2002 $166,700
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o January 1, 2003 and beyond $171,900
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The following are examples of the adjustments that NIH will make when
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salaries exceed the current salary limitation:
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EXAMPLE 1. INDIVIDUAL WITH FULL-TIME APPOINTMENT (based on grant
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award/contract issued after January 1, 2003 with a $171,900 salary
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limitation)
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Individual's institutional base salary for a FULL-TIME
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twelve month) appointment
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$ 175,000
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Research effort requested in application/proposal - 50%
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Direct Salary requested $ 87,500
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Fringe benefits requested (25% of salary) $ 21,875
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Subtotal $ 109,375
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Applicant organization's F&A (indirect) costs at
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a rate of 45% of subtotal $ 49,219
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Amount requested - salary plus fringe benefits plus
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associated F&A (indirect) costs $ 158,594
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If a grant/contract is to be funded, the amount included for the above
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individual will be calculated as follows:
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Direct salary - restricted to a RATE of $171,900
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Multiplied by effort (50%) to be devoted to project $ 85,950
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Fringe benefits (25% of allowable salary) $ 21,488
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Subtotal $107,438
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Associated F&A (indirect) costs at 45% of subtotal $ 48,347
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Total amount to be awarded due to salary limitation $155,785
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Amount of reduction due to salary limitation
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($158,594 requested minus 155,785 awarded) $ 2,809
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EXAMPLE 2. INDIVIDUAL WITH HALF-TIME APPOINTMENT (based on a grant
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award/contract issued after January 1, 2003 with a $171,900 salary
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limitation)
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Individual's institutional base salary for a
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HALF-TIME appointment (50% of a full-time
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twelve month appointment) $ 87,500
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Research effort requested in application/proposal 30%
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Direct Salary requested $ 26,250
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Fringe benefits requested (25% of salary) $ 6,563
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Subtotal $ 32,813
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Applicant organization's F&A (indirect) costs at a rate
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of 45% of subtotal $ 14,766
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Amount requested - salary plus fringe benefits
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plus associated F&A (indirect) costs $ 47,579
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If a grant/contract is to be funded, the amount included in the award
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for the above individual will be calculated as follows:
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Direct salary - restricted to a RATE of $ 85,950
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Multiplied by 50% appointment by 30% effort $ 25,785
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Fringe benefits (25% of allowable salary) $ 6,446
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Subtotal $ 32,231
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Associated F&A (indirect) cost at 45% of subtotal $ 14,504
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Total amount to be awarded due to salary
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limitation $ 46,735
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Amount of reduction due to salary limitation
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($47,579 requested minus $46,735 awarded) $ 844
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EXAMPLE 3. INDIVIDUAL WITH NINE MONTH APPOINTMENT (based on a
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contract award/grant issued after January 1, 2003 with a $171,900
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salary limitation)
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Individual's institutional base salary WITH NINE MONTH
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appointment $131,250
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Research effort requested in application/proposal 50%
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Direct Salary requested $ 65,625
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Fringe benefits requested (25% of salary) $ 16,406
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Subtotal $ 82,031
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Applicant organization's F&A (indirect) costs at a rate
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of 45% of subtotal $ 36,914
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Amount requested - salary plus fringe benefits
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plus associated F&A (indirect) costs $118,945
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If a contract/grant is to be funded, the amount included in the award
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for the above individual will be calculated as follows:
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Direct salary - restricted to a RATE of $171,900 (annual rate) divided
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by 12 months
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Multiplied by 9 months by 50% effort $ 64,463
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Fringe benefits (25% of allowable salary) $ 16,116
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Subtotal $ 80,579
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Associated F&A (indirect) cost at 45% of subtotal $ 36,260
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Total amount to be awarded due to salary limitation $116,839
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Amount of reduction due to salary limitation
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($118,945 requested minus $116,839 awarded) $ 2106
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NOTE: If a faculty member with a 9 month appointment works during
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his/her off months, the monthly salary rate limitation is $14,325
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($171,900 divided by 12 months) multiplied by the proposed percent of
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effort during those months.
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Implementation of new salary limitation:
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o No adjustments will be made to modular grant applications/awards or
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to previously established commitment levels for non-competing grant
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wards issued with FY 2003 funds.
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o NIH competing grant awards with categorical budgets reflecting salary
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levels at or above the new cap(s)issued in FY 2003 will reflect
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adjustments to the current and all future years so that no funds are
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awarded or committed for salaries over the limitation.
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o For awards issued with FY 2002 funds, if adequate funds are available
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in active FY 2002 awards, and if the salary cap increase is consistent
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with the institutional base salary, grantees may rebudget to
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accommodate these salary levels and contractors may bill at the higher
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level. However, no additional funds will be provided to the FY 2002
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grant award and the total estimated cost of the contract will not be
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modified.
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o An individual's base salary, per se, is NOT constrained by the
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legislative provision for a limitation of salary. The rate limitation
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simply limits the amount that may be awarded and charged to NIH grants
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and contracts. An institution may supplement an individual's salary
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with non-federal funds.
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o The salary limitation does NOT apply to payments made to consultants
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under an NIH grant or contract although, as with all costs, those
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payments must meet the test of reasonableness and be consistent with
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institutional policy.
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o The salary limitation provision DOES apply to subawards/subcontracts
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for substantive work under an NIH grant or contract.
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o COMPETING grant applications and contract proposals that include a
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categorical breakdown in the budget figures/business proposal should
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continue to reflect the actual institutional base salary of all
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individuals for whom reimbursement is requested. In lieu of actual
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base salary, however, applicants/offerors may elect to provide an
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explanation indicating that actual institutional base salary exceeds
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the current salary limitation. When this information is provided, NIH
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staff will make necessary adjustments to requested salaries prior to
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award.
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Questions & Answers
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1. Can I rebudget grant funds or bill contracts issued with FY 2003
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funds to allow for the increase? Yes, provided funds are available and
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the increase is warranted. Prorated figures should be used for the
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applicable months, i.e., the $171,900 level is effective beginning
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January 1, 2003.
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2. If a grant award (competing or non-competing) has already been
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issued in FY 2003, will an adjustment be made? No adjustments will be
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made. However, rebudgeting is allowable.
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3. If an application/proposal fails to provide needed salary
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information, will an adjustment be made based on the new rates? No
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adjustment will be made if an application fails to provide adequate
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information regarding the individual's salary level.
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4. Does the NIH appropriation language link the salary cap to a Federal
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Executive Level or to a dollar level? The link is to the Federal
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Executive Level pay scale (i.e., Executive Level III for FY 1999 and
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Executive Level II for FY 2000 and Executive Level I for 2001, 2002,
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and 2003). As the cap is linked to Federal Executive Levels, can
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grantees/contractors with ongoing awards rebudget/bill up to the
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various salary caps, based on the fiscal year of the award and the time
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of the salary expense? Yes, salary may be charged in accordance with
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the prevailing FY cap(s), as long as the levels are consistent with the
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individual's institutional base pay.
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5. Will grantees be permitted to submit revised budgets reflecting
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higher base salaries? Not as a general rule. NIH policy states that
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grantees should always reflect actual base salaries in the requested
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budgets or provide an explanation indicating that actual institutional
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base salary exceeds the current salary limitation. As a general rule,
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NIH will use the information available in the existing application and
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make adjustments for salary cap based on information available at the
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time of award.
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INQUIRIES
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Questions concerning this notice or other policies relating to grants
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or contracts should be directed to the grants management or contracts
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management office in the appropriate NIH Institute or Center.
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</pre>
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<P><HR><P>
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<A HREF="/grants/guide/WeeklyIndex.cfm?WeekEnding=03-21-03">Weekly TOC for this Announcement</A><br>
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<A HREF="/grants/guide/index.html">NIH Funding Opportunities and Notices</A>
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