UCLA-Related Questions and Answers on HHS Salary Cap


HHS Salary Cap Questions and Answers

(Last updated June 2012)

Q: What is the HHS salary cap?
A: The FY 2012 Federal Consolidated Appropriations Act limits the rate at which salaries can be directly charged to contracts, grants and cooperative agreements funded by the U.S. Department of Health and Human Services (DHHS).

Q: What is the basis for the cap?
A: The salary cap is tied to levels of the Federal Executive Pay scale specified within the Consolidated Appropriations Act. Since FY 2001, the cap has been set at the Executive Level I. Effective December 23, 2011 the salary cap decreased to Executive Level II or $179,700.

Q: How is the salary cap applied?
A: The cap establishes a maximum annual rate of pay at which an individual’s full time effort over a twelve-month period can be charged for a federal contract, grant or cooperative agreement. It is not intended to limit the actual salary paid by the institution. An institution may pay an individual in excess of the salary cap.

The table below shows the current rate and rates in effect since January 2006, when they are applicable, and how the annual rates convert into monthly maximum rates of pay for twelve month appointees.

Salary charged to a contract, grant, or cooperative agreement from HHS cannot be paid at a monthly rate that exceeds 1/12th of the maximum annual rate of pay then in effect.*

Annual Rate
Applicable Dates**
Monthly Rate = Annual/12
$183,500
Jan 1, 2006 - Dec 31, 2006
(FY 2006 and FY 2007 awards)
$15,291.67
$186,600
Jan. 1, 2007 – Dec 31, 2007
(FY 2007 and FY 2008 awards)
$15,550.00
$191,300
January 1, 2008 and Dec 31, 2008
(FY 2008 and FY 2009 awards)
$15,941.67
$196,700
January 1, 2009 and Dec 31, 2009
(FY 2009 and FY 2010 awards)
$16,391.67
$199,700
January 1, 2010 and after
(FY 2010 awards)
$16,641.67
$179,700
December 23, 2011 and after
$14,975.00


*For more information about applicable dates, see page 4 of the presentation at: www.research.ucla.edu/ora/training/documents/Feb-12/OCGA.full.pdf and NIH Salary Cap FAQs at: grants.nih.gov/grants/policy/fy2012_salary_cap_faqs.htm.
** For a complete history of the NIH capped rates see: http://grants.nih.gov/grants/policy/salcap_summary.htm

Q: How is this maximum annual rate of pay applied to nine-month faculty?
A: Those who are appointed on an academic year basis may only be paid at a maximum rate of $134,775 for full time effort over that nine-month period. For academic year appointees (those who have nine-month appointments), the nine-month salary is paid out in twelve equal portions. Thus, under Executive Level II, nine-month appointees can be paid at a maximum monthly full-time rate of $11,231.25 ($14,975.00 multiplied by 9 and divided by 12). The table below shows the same calculation for the current rate and rates in effect since January 2006.

Annual Rate
Monthly Rate = Annual/12
Pay Out Rate = (Monthly x 9)/12
$183,500
$15,291.67
$11,468.75
$186,600
$15,550.00
$11,662.50
$191,300
$15,941.67
$11,956.25
$196,700
$16,391.67
$12,293.75
$199,700
$16,641.67
$12,481.25
$179,700
$14,975.00
$11,231.25

Q: Should proposal budgets reflect the rates at which those subject to the salary cap will be paid?
A: For traditionally formatted competitive applications, actual salaries should be used in calculating salaries and preparing budgets, and should be shown on the budget form.

For streamlined applications, including NIH Modular grant proposal submissions and all non-competing (continuation) submissions, the full-time rate of $199,700 should be used for calculating salary for any individual whose salary for full time effort over a twelve-month period exceeds the capped rate.

Q: Are nine-month faculty eligible to receive additional compensation during the summer from a source subject to the cap?
A: Yes.

Q: Can "summer ninths" for research be charged to HHS funds?
A: Yes.

Q: Can a nine-month appointee receive compensation from a source subject to the salary cap during the academic year and also receive compensation from the same source or another source subject to the cap during the summer?
A: Yes.

Q: Can salaries subject to the HHS cap be supplemented?
A: Yes. Actual salary paid to an individual by UCLA is not constrained by the salary cap. Only the salary charged to sources that are subject to the cap are affected. Federal regulations permit institutions to supplement salary paid under awards that are subject to the salary cap using non-federal funds. However, University of California policy prohibits use of State general funds (19900) for salary supplementation.

Q: Does the salary cap apply to all components of salary for 11-month faculty who are members of Health Science Compensation Plans?
A: For members of the Health Science Compensation Plans, the "institutional base salary" is equivalent to the total negotiated (or guaranteed) salary. That guaranteed or negotiated salary consists of "X" and "Y" components. It does not include bonus or "Z" payments.

Q: How does the salary cap relate to effort?
A: Ordinarily, the salary chargeable to a sponsored project is the employee's rate of pay multiplied by the employee's level of effort on the project. However, salary charged to an award subject to the salary cap cannot be paid at a rate that exceeds the capped annual rate of pay in effect, multiplied by the level of effort being devoted to the project.

Higher levels of effort mean proportionately more salary can be charged to the grant, cooperative agreement or contract. Under no circumstances, whether or not an employee is working on an award that is subject to the HHS cap, can the percent of full-time salary charged to a contract, grant or cooperative agreement exceed the level of effort devoted to the project.


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