1315 PR.03 Salaries Above a Sponsor Imposed Rate Cap and Other Program Salary Limitations

Revision Date: 
June 26, 2017

Contents

1.      Purpose

2.      Salary Rate Cap

3.      Accounting for Salary Above a Rate Cap

4.      Program Limitation (NIH Career Development Award) Example

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.

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:

  • 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:
    • 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 that 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.

  • 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.

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.

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:

  • 20% effort on NIH Award #1 x $179,700/$251,800 = 14% chargeable to NIH Award #1.
  • The remaining 6% (20% - 14%) of Dr. Smith’s salary representing his effort for this award must be charged to a cost sharing account containing the same Project number as the NIH award number.
  • Repeat the process above for NIH award #2.

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.

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.

  • 20% effort on NIH Award #1 x $14,975/$20,983 = 14% chargeable to NIH Award #1.
  • The remaining 6% (20% - 14 %) of Dr. Smith’s effort for this award must be charged to a cost sharing  grant line.
  • Repeat the process above for NIH Award #2.

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.

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.

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.

  • 15% (the remaining percentage 60% - 45% = 15%) must be charged to a non-sponsored account and not the University of Chicago subaward (see Note below).
  • 40% effort on the University of Chicago subaward x $14.975 (monthly NIH rate cap) ÷ $20,000 (total monthly compensation) = 30% charged to the University of Chicago subaward. The remaining percentage (40% - 30% = 10%) must be charged to a non-sponsored account.

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.

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.01Memorandum 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.

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.

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.

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.

  • 100% (represents the 80% in the MOU) effort on an NIH award x $14,975 / $20,000 = 75% chargeable to NIH research.
  • The remaining 25% of Dr. Bass’ effort for this award must be charged to a non-sponsored source of funds.

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%

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.