Part III - UNM Finance: Practical Applications

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Standard Accounting Resource Manual (SARM)

MSC 0000 00
1 University of New Mexico
Albuquerque, NM 87131

Appendix 5- NIH Salary Cap

Every year since 1990 Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant.  For FY 2023, Public Law 112-74: The Consolidated Appropriations Act, 2023 restricts the amount of direct salary to Executive Level II of the Federal Executive Pay scale.  To review the current salary caps, see the following site:  https://grants.nih.gov/grants/guide/notice-files/NOT-OD-23-056.html

The following are examples of Salary Application Requests, Salary Cap Calculations and Adjustments:

For all examples:

  • the Institutional Full-Time base salary (FTS) is $240,000
  • the requested Fringe Benefits rate is 25% of the direct salary
  • the (F&A) indirect cost rate is 45%
  • the salary cap for grant awards/contracts issued on or after January 1, 2023, is $212,100

Example 1. Individual with Full-Time Appointment

Research effort requested in application/proposal – 12 months (50% effort)

a.

Individual's institutional base salary for a FULL-TIME calendar year appointment

$ 240,000.00

(FTS)

b.

Direct Salary with research effort (50%)

$ 120,000.00

(a x .50)

c.

Fringe Benefits requested at 25% of salary

$ 30,000.00

(b x .25)

d.

SUBTOTAL

$ 150,000.00

(b + c)

e.

Requested F&A (indirect) costs at 45% of subtotal

$ 67,500.00

(d x .45)

f.

Total amount to be requested

$ 217,500.00

(d + e)


The salary cap for the above individual will be calculated as follows:

g.

Salary Cap – FY 2023

$ 212,100.00

 

h.

Salary Cap with research effort (50%)

$ 106,050.00

(g x .50)

i.

Fringe Benefits calculated at 25% of allowable salary

$ 26,512.50

(h x .25)

j.

SUBTOTAL

$ 132,562.50

(h + i)

k.

Associated F&A (indirect) costs at 45% of subtotal

$ 59,653.13

(j x .45)

l.

Total amount to be awarded due to salary limitation

$ 192,215.63

(j + k)


Therefore, the amount of reduction due to federal salary limitation is:

m.

Total adjustment

$ (25,284.37)

(l - f)

For all examples:

  • the Institutional Full-Time base salary (FTS) is $240,000
  • the requested Fringe Benefits rate is 25% of the direct salary
  • the (F&A) indirect cost rate is 45%.
  • the salary cap for grant awards/contracts issued on or after January 1, 2023, is $212,100

Example 2. Individual with Half-Time Appointment

Research effort requested in application/proposal – 6 months (30% effort)

a.

Individual's institutional base salary for a HALF-TIME calendar year appointment

$ 120,000.00

(FTS x (6/12))

b.

Direct Salary with research effort (30%)

$ 36,000.00

(a x .30)

c.

Fringe Benefit Requested at 25% of salary

$ 9,000.00

(b x .25)

d.

SUBTOTAL

$ 45,000.00

(b + c)

e.

Requested F&A (indirect) costs at 45% of subtotal

$ 20,250.00

(d x .45)

f.

Total amount requested

$ 65,250.00

(d + e)


The salary cap for the above individual will be calculated as follows:

g.

Salary Cap – FY 2023

$ 212,100.00

 

h.

Salary Cap – FY 2023 (6-month rate)

$ 106,050.00

(g x (6/12))

i.

Salary Cap with Research effort (30%)

$ 31,815.00

(h x .30)

j.

Fringe Benefits calculated at 25% of allowable salary

$ 7,953.75

(i x .25)

k.

SUBTOTAL

$ 39,768.75

(i + j)

l.

Associated F&A (indirect) costs at 45% of subtotal

$ 17,895.94

(k x .45)

m.

Total amount to be awarded due to salary limitation

$ 57,664.69

(k + l)


Therefore, the amount of reduction due to federal salary limitation is:

n.

Total Adjustment

$ (7,585.31)

(m-f)


For all examples:

  • the Institutional Full-Time base salary (FTS) is $240,000
  • the requested Fringe Benefits rate is 25% of the direct salary
  • the (F&A) indirect cost rate is 45%.
  • the salary cap for grant awards/contracts issued on or after January 1, 2023, is $212,100

Example 3. Individual with a Nine-Month Appointment

Research effort requested in application/proposal – 9 months (30% effort)

a.

Individual's institutional base salary for a nine-month calendar year appointment

$ 180,000.00

(FTS x (9/12))

b.

Direct salary requested

$ 54,000.00

(a x .30)

c.

Fringe Benefit Requested at 25% of salary

$ 13,500.00

(b x .25)

d.

SUBTOTAL

$ 67,500.00

(b + c)

e.

Requested F&A (indirect) costs at 45% of subtotal

$ 30,375.00

(d x .45)

f.

Total amount requested

$ 97,875.00

(d + e)


The salary cap for the above individual will be calculated as follows:

g.

Salary Cap – FY 2023

$ 212,100.00

 

h.

Salary Cap – FY 2023 (9-month rate)

$ 159,075.00

(g x (9/12))

i.

Salary Cap with Research effort (30%)

$ 47,722.50

(h x .30)

j.

Fringe Benefits calculated at 25% of allowable salary

$ 11,930.63

(i x .25)

k.

SUBTOTAL

$ 59,653.13

(i + j)

l.

Associated F&A (indirect) costs at 45% of subtotal

$ 26,843.91

(k x .45)

m.

Total amount to be awarded due to salary limitation

$ 86,497.04

(k + l)


Therefore, the amount of reduction due to federal salary limitation is:

n.

Total Adjustment

$ (11,377.96)

(m-f)