Research Administration Guidelines
RAG64 Salary Caps
Policy Steward:Senior Vice President for Research and Corporate Controller>
Policy RA64 provides detail on appropriate management of personnel costs to comply with the Uniform Guidance, specifically Uniform Guidance 2 CFR 200.430 Compensation – personal services. This guideline provides more detail on salary cap documentation requirements.
Certain federal agencies have established reimbursement salary caps. If an individual whose salary exceeds the cap is performing effort on an account subject to a reimbursement salary cap, the amount charged to the account for each month must be calculated to account for the cap. When an effort confirmation for a grant includes an employee who earns at a rate in excess of a reimbursement salary cap, a notation must be listed at the bottom of the effort confirmation. When confirming effort, the following must be noted on the bottom of the effort confirmation statement when the reimbursement salary cap limitation has been applied:
_______(1)_______ spent __(2)__% of his/her time on the grant from the period of ________ through ________ , but is only permitted to charge __(3)__% due to the cap.
(1) Name of the individual earning in excess of the cap,
(2) Actual percent effort,
(3) Percent of salary charged to grant.
Any difference between the actual percent effort and the percent effort charged must be tracked and charged to the same budget function (function code) as the agreement (Instruction, Research, or Outreach). Amounts over the salary caps are NOT allowable costs, and therefore are not permitted as cost sharing.
Please note that if the effort changes by month (e.g. 20% in April and 30% in May), a separate statement is required for each time period.
To illustrate the application of these guidelines, the following example has been prepared:
Assume that Dr. Sal Kapp earns $162,000 per academic year on an academic 36 week appointment. He has committed 25% of his effort to a sponsored project, but the sponsor limits the salary to no more than $191,300 per year. Dr. Kapp's annualized monthly salary is equivalent to $18,000 or $162,000 / 9 months. The imposed salary cap monthly salary is equivalent to $15,941.67 or $191,300 / 12 months. An adjustment will need to be made on the amount being paid on the sponsored project taking into consideration Dr. Kapp's 25% percent effort and the maximum allowable amount. The monthly salary costs for the project effort would be $4,500 or $18,000 * 25%, but the maximum allowable monthly salary cost would be $3,985.42 or $15,941.67 *25%. Therefore, the percent of effort that can be charged to the sponsored project would be 22.14% or $3,985.42 / $4,500 * 25%. The amount of salary not reimbursed by the sponsored project would be $514.58 per month or $4,500 - $3,985.42.
All individuals whose salary is impacted by a salary limitation shall indicate concurrence at the time of award with the following language:
"I understand that the sponsored project titled "insert title" sponsored by "insert sponsor" has imposed a cap on my salary reimbursement. In the event that allowable non-federal funds are unavailable or only partially available to support the portion of my salary above the imposed cap, I understand that my rate of pay will be below my annualized monthly salary. It will be my responsibility to identify the source of allowable non-federal funds, subject to Budget Administrator/Budget Executive approval."
If Dr. Kapp receives his full salary, the $514.58 balance of his monthly salary must be charged to an account with the same function code as the sponsored project. The following statement must be added to the effort confirmation of the project:
"Dr. Kapp spent 25% of his time on the project during the period xx/xx/xxxx through xx/xx/xxxx but is only permitted to charge 22.14% due to the cap."
Please note that the NIH salary cap is updated annually effective January 1st and should be taken into consideration for effort certification notations. Current NIH Rate caps listing. Other agencies may also have salary caps, which could be different than those referenced for NIH, so verify the caps based on agency guidelines and regulations. There is no centralized source summarizing all salary caps in effect.
The amount of salary over the cap must be accounted for within Pay and Effort and should be charged to a general fund account to assure that it is appropriately included in the cost base for F&A purposes. Units should set up a unique cost center to track the amount over a salary cap so these amounts can be easily identified. The excess may also be charged to another source of funding – MGR, gift or endowment – but needs to be clearly traceable to confirm where the costs have been charged.
However, the amounts over the salary cap CANNOT be used as cost sharing. See Cost Sharing FAQ for additional detail.
For questions, additional detail, or to request changes to this policy, please contact the Office of the Senior Vice President for Research or the Office of the Corporate Controller.
Other Policies should also be referenced, especially the following:
RA21-Development of Proposal Budget (Formerly RA03)
RA64 - Personnel Costs
September 18, 2019 - Changed Vice President for Research to Senior Vice President for Research
- February 26, 2016 - This new guideline (incorporating parts of RA08) has been created as part of the policy reorganization brought about by implementation of the Uniform Guidance (2 CFR 200).
Date Approved:February 22, 2016>
Date Published:February 26, 2016>