Revision Date: June 26, 2017
Contents
3. Accounting for Salary Above a Rate Cap
4. Program Limitation (NIH Career Development Award) Example
1. Purpose
To describe the proper calculation and scheduling of an employee’s salary in Workday Payroll Costing when charging a sponsored award with a sponsor-imposed salary rate cap or program limitation.
2. Salary Rate Cap
A salary rate cap imposed by a sponsor may be due to one of the following situations:
- As part of the Consolidated Appropriations Action, 2012 (Public Law 112-74) the Department of Health and Human Services (DHHS) agencies with the exception of the FDA (funded under the USDA appropriations bill) and the Indian Health Service (funded under the Department of Interior appropriations bill) are required to:
- Impose a salary rate cap applicable to grants, cooperative agreements and contracts (with the exception of those that are clearly defined to be exempt from the cap).
- Effective December 23, 2011, set the salary rate cap at the Executive Level II of the Federal Pay schedule.
- Sponsors (federal and non-federal) other than the sponsors identified above may have a salary reimbursement limitation as a matter of policy; and
- Sponsors (federal or non-federal, including subawards or pass-through awards made to Yale) may have a salary rate cap that may be program specific limiting the recovery of salary.
It is important to note that the sponsor’s funding announcement as well as the terms and conditions of an award must be carefully read in order to determine if a salary limitation exists.
In the situations described above:
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The employee’s institutional base salary (IBS) is not affected. However, the monthly rate of pay for a faculty member with an academic appointment may be impacted if paid during the summer.
Note: IBS excludes bonuses, honoraria, and incidental compensation.
- The University will pay an employee’s IBS portion in excess of a salary rate cap with non-sponsored project funds.
- The amount of salary that can be charged to the award is calculated as follows:
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Salary rate cap x % of effort [rather than, institutional base salary (IBS) x % of effort].
Note: Depending on the type of appointment, in any given month, no more than 1/12 of the salary rate cap amount may be charged to the award. (Examples of how to calculate and account for salary over the cap are provided below.)
Also, salary rate caps due to budget appropriations for current and previous years are located in the Controller’s Office Factsheet. For FAQs and calculations specific to the NIH consult:http://www.grants.nih.gov/grants/policy/salcap_summary.htm.
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- Salary in excess of a sponsor-imposed rate cap is considered by the Federal government and University to be an unallowable expense.
- Federal regulations do not permit the use of salary over a sponsor-imposed salary cap to meet any cost sharing requirements of the sponsor. At the time of award, a linkage account must be created by the Office of Sponsored Projects (OSP). Refer to Cost Sharing Procedure 1306 PR.01 in order to capture those dollars in excess of the salary cap.
- VA salary for faculty with a Yale/VA joint appointment and conducting research under a Yale award under a Memorandum of Understanding (MOU) is not included as part of the total compensation when calculating IBS and the applicability of the salary rate cap. Only the portion of salary paid by Yale is considered IBS when determining the salary rate cap requirements.
- Carefully read the terms and conditions of the award and the sponsor’s funding opportunity announcement.
- Consult with the appropriate business support center or OSP for assistance.
3. Accounting for Salary Above a Rate Cap
The examples below are intended to assist in accounting for salaries over a sponsor-imposed salary rate cap. (The examples below use the old Executive Level II rate cap). Consult the Controller’s Office Factsheet for the current NIH salary cap.
To properly account for the effort of individuals with an IBS exceeding a sponsor-imposed salary rate cap, it is necessary to account for the salary over the rate cap using a Yale Designated or Gift.
For additional information regarding the setup of linkage accounts, review Cost Sharing Procedure 1306 PR.01.
A. 12-Month Appointment Examples
For an employee whose salary exceeds the sponsor-imposed cap, review the following example for assistance:
1. Determine the employee’s percentage of effort for each activity.
| Example: Dr. Smith has a 12-month appointment. In addition to teaching and performing other University activities, he works on two NIH awards as follows: | |
| Activity | Committed Effort Percentages |
| NIH Award #1 | 20% |
| NIH Award #2 | 30% |
| University Activities | 50% |
2. Calculate the percentage of the employee’s salary that can be charged to each NIH award.
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Example: Dr. Smith’s institutional base salary for 12 months is $251,800, which exceeds the NIH rate cap of $179,700. Although Dr. Smith spends 20% of his time on NIH Award #1, the percent charged to the NIH award is calculated against the NIH rate cap of $179,700 rather than his IBS of $251,800:
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| Activity | Committed Effort % | % Salary to NIH Award | $ Salary to NIH Award | % Salary to Non-Sponsored account | $ Salary to Non-Sponsored account | |
| NIH Award #1 | 20% | 14% | $35,940 | 6% | $14,420 | |
| NIH Award #2 | 30% | 21% | $53,910 | 9% | $21,630 | |
| University Activities | 50% | 0 | 0 | 0 | $125,900 | |
| Total Sponsored Salary | $89,850 | Total Non-Sponsored Salary | $161,950 | |||
| Total Salary | $251,800 | |||||
Same example as above but calculated on the monthly rate of pay rather than the institutional base salary.
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Example: Dr. Smith’s institutional base salary per month is $20,983, which exceeds the NIH rate cap of $14,975. Although Dr. Smith spends 20% of his time on NIH Award #1, the percent charged to the NIH award is calculated against the NIH rate cap of $14,975 rather than his IBS of $20,983.
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| Activity | Committed Effort % | % Salary to NIH Award | $ Salary to NIH Award | % Salary to Non-Sponsored account ) | $ Salary to Non-Sponsored account | |
| NIH Award #1 | 20% | 14% | $2,995 | 6% | $1,202 | |
| NIH Award #2 | 30% | 21% | $4,493 | 9% | $1,802 | |
| University Activities | 50% | 0 | 0 | 0 | $10,492 | |
| Total Sponsored Salary | $7,488 | Total Non-Sponsored Salary | $13,496 | |||
| Total Salary | $20,983 | |||||
3. Identify the source(s) that will be used to fund any remaining percentages of salary. At the proposal stage or once the award is received, identify the appropriate source of funds to support the salary over the sponsor-imposed rate cap.
Example: Sources of salary over the rate cap for Dr. Smith.
| Activity | Non-Sponsored Funding Source | % Salary | $ Salary to Non-Sponsored account |
| NIH Award #1 | Gift for Dr. Smith’s general purposes | 6% | $14,420 |
| NIH Award #2 | GA | 5% | $12,113 |
| General purpose gift for Dr. Smith | 4% | $9,517 |
4. Schedule the employee’s Payroll Costing. Review 3501 PR.01 Payroll Costing or contact ga.ld@yale.edu for assistance.
| Payroll Costing Example: Dr. Smith’s assignment-level labor schedule will be: | ||
| Activity | Funding Source | % |
| NIH Award #1 | NIH Award #1 | 14% |
| Gift | 6% | |
| NIH Award #2 | NIH Award #2 | 21% |
| GA | 5% | |
| Gift | 4% | |
| Other Activity | e.g., clinical account | 50% |
| Total % | 100% | |
B. Summer Salary Example
For an employee who charges summer compensation to one or more projects funded by NIH awards, and whose salary exceeds the imposed cap, review the following example for assistance:
1. Determine the employee’s percentage of effort for each activity.
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Example: Prof. Jones has a 9-month faculty appointment. Her 9-month academic institutional base salary is $180,000 (if annualized her institutional base salary would be $240,000) charged to a General Appropriations account during the academic year. During the summer, Prof. Jones’ monthly rate of pay is $20,000. During the month of July, Prof. Jones will devote effort to the following projects: |
|
| Activity | Effort Percentages |
| NIH Award | 60% |
| University of Chicago Subaward (NIH Prime) | 40% |
2. Calculate the percentage of the employee’s July compensation that can be charged to each award.
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Prof. Jones is paid $20,000/month exceeding the monthly NIH rate cap of $14,975 (annual NIH salary cap of $179,700 divided by 12 months). 60% effort on the NIH award x $14,975 (monthly NIH cap) ÷ by $20,000 (total monthly compensation) = 45% charged to the NIH award.
Note: In general, faculty with a 9-month appointment and receiving summer compensation from a sponsored project are not compensated by Yale for salary over a sponsor-imposed rate cap. However, faculty in the 9 over 9 program can use funds from their personal research account to support the difference. Salary for a 9-month appointment reflects the academic year salary only (even when paid out over 12 months) with no obligation to provide summer salary support. If the Provost’s Office grants an exception to support the salary over a sponsor-imposed rate cap, an appropriate source of funds must be identified when submitting a proposal. |
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| Activity | Committed Effort % | % Salary to NIH Award | $ Salary to NIH Award | % Salary to Non-Sponsored account | $ Salary to Non-Sponsored account | |
| NIH Award | 60% | 45% | $8,985 | 15% | $3,015 | |
| U Chicago Subaward | 40% | 30% | $5,990 | 10% | $2,010 | |
| Total Sponsored Salary | $14,975 | Total Non-Sponsored Salary | $5,025 | |||
| Total Monthly Salary | $20,000 | |||||
3. Identify the source(s) if any that will be used to fund any remaining percentages of salary.
Example: Sources of salary over the NIH rate cap for Prof. Jones.
| Activity | Non-Sponsored Funding Source | % Salary | $ Salary Charged to Non-Sponsored account |
| NIH Award | Endowed Professorship | 15% | $3,015 |
| U Chicago Award | Start-up Funds | 10% | $2,010 |
4. Schedule the employee’s Payroll Costing. Review 3501 PR.01 Payroll Costing or contact ga.ld@yale.edu for assistance.
| Payroll Costing Example: Prof. Jones’ assignment-level labor schedule will be: | ||
| Activity | Funding Source | % |
| NIH Award | NIH Award | 45% |
| Endowed Professorship | 15% | |
| U Chicago Subaward | U Chicago Subaward | 30% |
| Start-up Funds | 10% | |
| Total % | 100% | |
C. Joint Veterans Administration Appointment Example
The VA Connecticut Healthcare System and the University must establish a Memorandum of Understanding (MOU) specifying the investigator’s title, responsibilities (both at Yale and the VA) and the percentage of effort available for research at the University. For detailed information about joint VA and Yale appointments, consult Guide 1411 GD.01 – Memorandum of Understanding Requirements: Faculty with Both a Veterans Administration Medical Center and Yale University Joint Appointment.
For any employee who works on one or more projects funded by NIH awards, has a joint appointment at Yale and the VA, and whose Yale salary exceeds the NIH salary rate cap, the calculation is as follows:
1. Determine the employee’s percentage of effort for each activity.
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Example: According to the MOU between Yale and the VA, Dr. Bass works 20% of his professional effort at the VA and works 80% of his professional effort doing research at Yale. The 80% effort devoted to Yale research is considered 100% of his Yale compensated effort. |
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| Activity | Effort Percentages |
| Clinical work at VA | 20% Not included in salary rate cap calculation |
| NIH Award | 80% = 100% Yale effort |
2. Calculate the percentage of the employee’s salary that can be charged to the NIH Award.
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Dr. Bass is paid $20,000 in monthly salary by Yale and $5,000 in monthly salary by the VA for combined monthly professional compensation of $25,000. However, ONLY the portion paid by Yale can be considered when calculating applicability of a salary rate cap.
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| Activity | Committed Effort % | % Salary to NIH Award | $ Salary to NIH Award | % Salary to Non-sponsored award | $ Salary to Non-sponsored award | |
| NIH Award | 100% | 75% | $14,975 | 25% | $5,025 | |
3. Identify the source or sources that will be used to fund any remaining percentages of salary. At the proposal stage or once the award is received, identify the appropriate source of funds to support the salary over the sponsored imposed cap.
4. Schedule the employee’s Yale Payroll Costing.
| Payroll Costing Example: Dr. Bass’ assignment-level labor schedule will be: | ||
| Activity | Funding Source | % |
| NIH Award | NIH Award | 75% |
| Non-sponsored funds | 25% | |
| Total % of Yale Salary | 100% | |
4. Program Limitation (NIH Career Development Award) Example
Some sponsors may limit the maximum salary that can be charged directly to an award while identifying the minimum required effort. For individuals whose salary associated with the minimum required effort exceeds the maximum salary limit, the salary amount exceeding the maximum salary permitted must be charged to a GA account. For example, NIH Career Development Awards have a maximum salary limit that can be charged to an award with a required percent of effort. The portion of the institutional base salary greater than the maximum allowed by the sponsor is not considered institutional cost sharing and must be charged to a GA account. Refer to University Policy 1316 regarding proposing effort in the form of voluntary cost sharing for programs that have salary limits but do not have minimum effort requirements
In order to confirm that the required effort is met, the salary in excess of the program’s limit and supporting the percent effort, is normally charged to a non-sponsored account. Refer to Procedure 1306 PR.01 – Cost Sharing for assistance.
The table below provides an example of a program limitation for a NIH career development award.
| PI’s IBS | Career Program Salary Limitation | Minimum Effort Required | Payroll % - K Award | Payroll % - Unrestricted (KSL) |
| $130,000 | $90,000 | 75% | 69% | 6% |
| $125,000 | $90,000 | 75% | 72% | 3% |
| $90,000 | $90,000 | 75% | 75% | 0% |
Where the grant cannot be identified in the COA value for salary over the program (e.g., the CMHC staffing contract), a note must be entered in the effort certification statement’s Notes field reflecting the percent effort being supported by unrestricted funds.
Illustrative Notes box language: The PI’s salary representing the 75% effort commitment to the K award exceeds the amount supported by the sponsor. The amount exceeding the sponsor’s limit is funded by the CMHC staffing contract. Therefore, only 69% of the PI’s salary is directly charged to the K award and the remaining 6%, fulfilling the 75% commitment, is funded by XXXXX account.
For NIH Career Development Awards, refer to the FAQs found in Procedure 1315 PR.04 – Effort Reporting.
Reviewed for Workday Purposes on 6/26/2017.