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 is $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). 

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)

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