DHHS Salary Cap Treatment
PURPOSE
Since 1990, Congress has legislatively mandated a provision limiting the salary that an individual may receive under some federal awards. Prior to Dec 23, 2011, this 'salary cap' was applicable to NIH/AHRQ/SAMHSA grants & contracts. However, effective Dec 23, 2011, the salary cap provision became applicable to all DHHS agencies. This procedure is provided to clarify how OHSU ensures that individuals are not receiving compensation in excess of the salary cap. Any amount paid in salary above the cap is considered cost sharing and must be charged to the appropriate non-sponsored account.
DEFINITIONS
A. Institutional Base Salary (IBS)
As defined by the National Institutes of Health (NIH), Institutional Base Salary is the annual compensation (excluding fringe benefits) that the applicant organization pays for an individual's appointment, whether that individuals' time is spent on research, teaching, patient care, or other activities.Base salary also excludes any income that an individual may be permitted to earn outside of the duties to the applicant organization.Base salary may not be increased as a result of replacing institutional salary support with grant funds. RESPONSIBILITIES
A. Unit Head (Dean/Director/Department Chair/Division Head)
Ensures that administrators, investigators and employees in their units, as well as themselves, know, understand and abide by sponsor terms and conditions and this procedure, and the consequences for not following them.
Ensures that faculty with IBS over any salary cap have sufficient non-sponsored funding to cover the cost sharing on applicable grants & contracts.
B. Principal Investigator (PI)
Principal Investigators are responsible for understanding and abiding by sponsor terms & conditions and this procedure, and the consequences for not following them.
PI's are responsible for ensuring that changes to grants for salary on an individual grant basis do not exceed the salary cap on applicable grants & contracts. PI's must ensure that any salary over the salary cap is cost shared to a non-sponsored account. PI's are responsible for ensuring that subcontractors on their applicable grants adhere to any salary cap.
C. Department Effort Coordinator
The DEC is responsible for ensuring that the cost sharing associated with the salary cap is appropriately reflected on the Effort Certification Statement, if applicable.
D. Department LD Adjustor
The Department LD Adjustor is responsible for ensuring that a LD Schedule is set up appropriately utilizing unrestricted funds for the portion of salary support not allowed on the grant.
Research grants and Contracts (RGC)
RGC is responsible for ensuring that salary over the cap is appropriately addressed in applicable grant applications.
Sponsored Projects Administration (SPA)
SPA is responsible for providing education and resources regarding the application of the salary cap regulations.
REQUIREMENTS
Any amount above the salary cap is considered cost sharing and should be charged to the appropriate unrestricted account and should be reflected as committed cost sharing on the Effort Certification Statement (ECS). For example, if the salary cap is $179,700, annually ($6,912 bi-weekly) and a PI had an annual salary of $225,000 ($8,654 bi-weekly) and expended 50% effort on a DHHS grant over a two week period, the maximum amount that can be charged to the grantfor that period is $ 3,456 (50% of $6,912) not $4,327 (50% of $8,654). The difference of $ 871 must be charged to a non-sponsored account.
OHSU's Effort Certification Procedure states "OMB Circular A-21 allows institutions to base salary and wage payments on estimated initial labor charges, provided that such charges are promptly adjustedif activity records indicate significant differences". A significant difference is the change in specific project's labor distribution of greater than + 5% over the entire certification period. Due to the specific nature of the salary cap regulations this "+ "5%" rule should not be used for consideration of reflecting cost sharing associated with the cap, (i.e. if the cost sharing is less than 5% on any particular project it still needs to be reflected on the ECS).
The DHHS salary cap limitation also applies to OHSU's subcontractors on applicable grants.
The individual's Labor Schedule in Oracle should be set up to automatically distribute the cost sharing to an unrestricted department account, utilizing the appropriate cost share mission code (e.g. 24 for Cost Sharing on Externally Sponsored Research). Cost sharing associated with the DHHS salary cap is tracked using this mission code for use in the calculation of the negotiated F&A Rates.
It is the responsibility of the PI, department administrator and DEC to ensure that the proper amounts, calculated on an individual grant basis, are cost shared. It is important to note that the DHHS salary limit changes annually. Please refer to the Salary Cap Summary for salary limitations. Departments are responsible for completing the DHHS Salary Cap Cost Share Worksheet, found on the RDA Forms webpage, which assists in calculating the necessary cost share amounts. This completed worksheet must be attached to the individual's effort statement.
Particular care should be taken when the individual's home ore is not the grant owning org.
Related Documents
Effort Certification ~ Policy No. 04-90-010
Institutional Base Salary Procedure
Revision History
Original draft of procedure approved March 200808/30/2010 Language changes and revisions to requirement section. Added requirement for
back up documentation on salary calculations.
2/16/2012 Language changes and revisions. Broadened to include all DHHS awards.
