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Finance & Administration > FAPolicies > Grants and Contracts Accounting > Determining Salary Expenditures in Excess of the NIH Salary Cap  
Determining Salary Expenditures in Excess of the NIH Salary Cap
Section:4- Grants and Contracts Accounting
Policy Procedure:4-3.07
Subject:Determining Salary Expenditures in Excess of the NIH Salary Cap
Established Date:4/8/1999
Responsible Department:Grants and Contracts Accounting

This procedure explains the method for determining the amount of salary expenditures in excess of the National Institutes of Health (NIH) salary cap. NIH will not reimburse grantees for the direct salaries of individuals at a rate in excess of the level specified in its annual appropriations act. The excess salary must not be charged to Sponsored Projects UDAKs and must be accounted for in a separate non-sponsored UDAK.

General Guidelines

The direct salary that may be awarded to the University under a Sponsored Agreement is equal to the employee's estimated percentage effort to be expended multiplied by their "Institutional Base Salary." This base salary is defined as the annual compensation that the institution pays for an employee?s appointment (excluding fringe benefits and facilities and administrative (F&A) costs) whether it is spent on research, teaching, patient care, or other activities.

The Institutional Base Salary for an employee paid by both MUSC and an affiliate such as UMA consists of his/her combined MUSC and Affiliate salary. The Veterans Administration (VA) Hospital is not an affiliate of MUSC and such compensation must not be included. Also, incentive pay must not be included.

NIH salary cap amounts for full-time (100% FTE) employees are updated annually in the NIH Guide. Grants and Contracts Accounting provides a worksheet template and detailed instructions to calculate the salary cap excess. The Affiliate Salary worksheet is to be used to calculate the NIH salary over the cap even if the individual has no affiliate salary.

Questions regarding salary cap calculations should be addressed to the appropriate Grants and Contracts Accounting Team based on departmental assignment (see Distribution of Grants by Administrator) or at 792-2850.


1. When submitting a proposal for an NIH Sponsored Award, the Principal Investigator must list the employee's full Institutional Base Salary on PHS Form 398. The salary must then be limited by the applicable NIH cap in the proposal budget. If the employee works part-time, the employee's FTE percentage must be multiplied by the applicable salary cap to determine the maximum base salary. The calculated capped salary must then be multiplied by the budgeted effort percentage to calculate the budgeted salary amount for the proposal budget.

2. Upon receipt of the NIH Sponsored Award, the Departmental Business Manager must review the awarded budget and determine which employee(s) who will be performing work on the project are currently being paid a combined salary in excess of the current NIH salary cap and use the following procedures.

3. In cases where an employee's combined base salary exceeds the current NIH salary limitation, establish a NIH Salary Cap Excess UDAK in accordance with Procedure 4-1.04: Establishing a UDAK to Capture Salary Expenditures in Excess of the NIH Salary Cap to account for the amount of excess salary that cannot be charged to the sponsor.

4. Complete an Affiliate Salary Worksheet for each of the subject employees using the Affiliate Salary Worksheet Instructions and sample form for each instance when a new or changed salary distribution is necessary, including:

a. New Sponsored Awards

b. Salary distribution (fund) changes

c. Salary changes

d. Effort distribution changes

e. Changes in encumbrance dates

5. Enter the employee's MUSC Base Salary amount, Affiliate Base Salary amount, FTE percentage, UDAK fund sources and awarded/budgeted effort percentages. The completed worksheet will automatically calculate the percentage distribution of the combined base salary to be charged to each of the employee's funding sources. The amount and percentage to be charged to the department's NIH Salary Cap UDAK is automatically calculated at the bottom of the form just above the Total line.

6. Attach the completed worksheet to the salary distribution form and route it to GCA for review and approval. GCA will review the salary distribution and worksheet, approve the distribution or contact the Business Manager if corrections are necessary, and forward the distribution through normal approval channels in Finance and Administration.


Affiliate Salary Worksheet


Page last updated: 03/13/2018

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