Dealing with Salary Limitations

salary cap is a maximum rate of UM salary for full-time effort that can be charged to a sponsored award.

The salary cap is not on the number of dollars that can be charged to a sponsored project. Rather, the cap is on the rate of pay that can be charged to a sponsored project. For example, the 2018 PHS salary cap for 12-months was $189,600. For personnel whose annualized salary is greater than $189,600 we can charge the grant for their (level of effort) x (the salary cap). NOTE: If current funding was awarded prior to the effective date of a salary cap, the unit must use the rate in effect on the issue date of the current funds. When the next year of funding comes in the new cap can be applied at that time if there are funds available in the budget to do so.

The balance of funds not covered by the sponsored project [(level of effort) x (actual annualized salary)] - [(level of effort) x (the salary cap)] is the responsibility of the department. The department should work with their Sponsored Projects Accounting and Compliance (SPAC) accountant to have a cap account created and linked to the sponsored account.

Below are some sample calculations based on the PHS rate to show how this could affect a department.

12-month faculty

  Actuals Monthly Amount 100% effort 50% effort 10% effort
Capped Salary 189,600 15,800 189,600 94,800 18,960
Faculty Salary 225,000 18,750 225,000 112,500 22,500
Difference (paid by dept) -35,400 -2,950 -35,400 -17,700 -3,540

9-month faculty

  Actuals Monthly Amount 100% effort 50% effort 10% effort
Capped Salary 142,200 15,800 142,200 71,100 14,220
Faculty Salary 168,750 18,750 168,750 84,375 16,875
Difference (paid by dept) -26,550 -2,950 -26,550 -13,275 -2,655

Summer Salary

  Actuals Monthly Amount 100% effort 50% effort 10% effort
Capped Salary 47,400 15,800 47,400 23,700 4,740
Faculty Salary 56,250 18,750 56,250 28,125 5,625
Difference (paid by dept) -8,850 -2,950 -8,850 -4,425 -885

Note that in all these scenarios, where the faculty member's base annualized salary exceeds the cap, there is an amount over the cap regardless of level of effort. A department cannot lower an individual's level of effort to get under a certain dollar threshold as it is the rate of pay, not the amount, which is governed by salary limitations.

Federal Agencies with Salary Caps:

  • Federal Trade Commission
  • Public Health Service (which includes CDC, HRSA, NIH, SAMHSA, and others)
  • National Institute of Justice
  • United States Agency for International Development (USAID)
  • National Park Service

Salary caps are not limited to federal sponsors, either. Below are some non-federal agencies with salary limitations:

  • American Institute for Cancer Research
  • Michael J. Fox Foundation
  • Patient-Centered Outcomes Research Institute (PCORI)
  • Susan G. Komen Foundation

Current NIH Salary Cap information can be found here.