Many federal awards and some private sponsors require individuals charging effort (salary) on sponsored projects to follow a salary cap. Therefore, when departments are budgeting and posting the salary for individuals with a salary over the cap, they need to properly calculate the allowable amount and move the amount over the cap to a non-sponsored project.
As with all expenses posted to sponsored projects, department administrators should regularly review sponsor terms and conditions, including salary cap, to ensure compliance.
Although we are considering an auto adjustment to effort reporting percentages to properly reflect effort based upon sponsor salary caps, at this time those individuals with a salary over the cap will need to increase the effort percentage on their ePER to reflect their actual effort percentage rather than the percentage of payroll posted to those projects.
The salary cap amounts provided by the sponsor are usually shown as an annual amount, however, the cap is based upon a percentage of monthly effort by those individuals.
Example Salary Cap Calculation Based on DHHS Salary Cap
During calendar year 2022 (Jan.-Dec. 2022) the DHHS Salary Cap was $203,700 which equates to a monthly allowable amount of $16,975. Let’s say that a principal investigator (PI) has an annual salary of $250,000, which is $20,833.33 per month. The table represents these figures.
In July 2022, the PI spent 20% of their effort on an award with the DHHS salary cap.
- 20% of $16,975.00 =
- 20% of $20,833.33 =
- Calculate the difference between $3,395.00 and $4,166.66. This $771.66 is that amount over the salary cap.
- Therefore, $3,395.00 can be charged to the DHHS project and $771.66 must be charged to a non-sponsored project.
| Jan.-Dec. 2022 | Annual | Monthly |
|---|---|---|
| DHHS Salary Cap | $203,700 | $16,975.00 |
| PI's Annual Salary | $250,000 | $20,833.33 |
Additional Examples Provided by NIH
Please reach out with any questions or if you would like to review this over a short virtual meeting. Thank you!