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Emory University

Working with the PHS Salary Cap

Josh Rosenberg, Director of Cost

Studies August 2012

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High Level Summary

Effective Dec. 23, 2011, the salary cap for individuals funded via Department of Health and Human Services (DHHS) grants and other extramural funding mechanisms has been reduced from Executive Level I of the Federal Executive Pay Scale to Executive Level II.

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Salary Cap Change

Old Salary Cap • Executive Level I: $199,700

New Salary Cap • Executive Level II: $179,700

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History of the Cap (Agencies)

Prior to Dec. 23, 2011, the salary cap only impacted the following HHS agencies: • National Institutes of Health (NIH)

• Agency for Healthcare and Research Quality (AHRQ)

• Substance Abuse and Mental Health Services Administration (SAMHSA)

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Dec. 23, 2011 going forward: Agencies Impacted

National Institutes of Health (NIH)

Agency for Healthcare and Research Quality (AHRQ)

Centers for Disease Control and Prevention (CDC)

Health Resources and Services Administration (HRSA)

Substance Abuse and Mental Health Services Administration (SAMHSA)

Administration for Children and Families (ACF)

Administration on Children, Youth, and Families (ACYF)

Administration on Aging (AoA)

Agency for Toxic Substances and Disease Registry (ATSDR)

Centers for Medicare and Medicaid Services

Food and Drug Administration (FDA)

Indian Health Service (IHS)

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Application (Prime Awards)

Award Issue Date on or before Dec. 22, 2011 (New, Competing, Non-competing) • NIH, AHRQ, SAMHSA: Executive Level I

• Other HHS Agencies: No cap applicable

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Application (Prime Awards)

Award Issue Date on or after Dec. 23, 2011 (New, Competing, Non-competing) • ALL PHS Agencies: Executive Level II (applicable

per the project/budget start date)

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Application (Sub Awards)

Same rules that apply to prime awards.

Award Issue Date dictates

In the absence of this, • Effective Date (if provided in the contract)

• Budget Start Date (if either award issue date or effective date is unavailable)

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Detailed Application

Competing (on or before Dec. 22, 2011) • FY12 Award: Exec. Level I ($199,700)

• Future Years: Exec. Level II ($179,700)

• Detailed Budgets: Awards will be revised to adjust future year commitments only

• Modular Budgets: Awards will not be adjusted by NIH for the salary cap

Grantees apply EL I for FY12

Grantees apply EL II for FY13; re-budgeting of excess in FY13 will be allowed.

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Detailed Application

Non-Competing (on or before Dec. 22, 2011) • FY12 Award: Exec. Level I ($199,700)

• Future Years: Exec. Level II ($179,700)

• NIH will not adjust future year commitments for non-competing within this issue date range

• For FY13 and beyond, grantees will need to charge using EL II. Re-budgeting of excess is allowed.

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Detailed Application

Competing (on or after Dec. 23, 2011) • FY12 Award: Exec. Level II

• Future Years: Exec. Level II

• Detailed Budgets: Awards will be issued using EL II for FY12 and all future years.

• Modular Budgets: Awards will not be adjusted by NIH for the salary cap

Grantees apply EL II

Re-budgeting of excess is allowed

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Detailed Application

Non-Competing (on or after Dec. 23, 2011) • FY12 Award: Exec. Level II

• Future Years: Exec. Level II

• NIH will not adjust FY12 award or future year commitments for non-competing in this category.

• Grantees must charge at EL II; re-budgeting of excess is allowed.

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Application

No-Cost Extension • For awards issued prior to Dec. 23, 2011, if a no

cost extension is issued after Dec. 23, the old cap will still apply on the theory that no new funds are being awarded.

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Application

Carryover • Assuming the carry over is used for salaries, EL I

would be appropriate to charge for the carryover amount only.

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Application (ERS, Effort)

ERS has a CAP flag applied to any smartkey where faculty may have salaries over the cap and are paid from a DHHS project.

There is no way to differentiate cap levels (where old and new may apply to same smartkey), so CAP means PI MAY be subject to the cap.

Use salary cap calculators.

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Salary Cap Calculator – High Level

Used to show the impact of the change in the cap and to calculate the amount that must be cost shared.

Can be found on both the Cost Studies website AND on ERS.

Annual Salary 250,000.00$ Appointment (mts) 12.00 Effort 20.00%

Number of Months 3.00 Executive

Level I Executive

Level II Change Impact

$ 199,700.00 $ 179,700.00 MonthlyTotal Monthly Salary 4,166.67$ 4,166.67$ Total Monthly Salary chargeable to Grants 3,328.33$ 2,995.00$ ($333.33)Total Monthly Salary that must be cost shared 838.33$ 1,171.67$ $333.33

Number of MonthsTotal Salary over number of months 12,500.00$ 12,500.00$ Total Salary over number of months chargeable to grants 9,985.00$ 8,985.00$ ($1,000.00)Total Salary over number of months that must be cost shared 2,515.00$ 3,515.00$ $1,000.00

Salary Cap Calculator - Detail

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RED PI: Dr. X Percentages (%)Annual Salary: 229,500.00$ Annual Salary CapDate Range: FY13

Select Cap Type

Cap Amount (if any)

SmartKey(s) subject to Salary Cap % Distribution

Distribution based on committed

effort Monthly Cap Cost ShareAdjusted

Distribution % % Distribution

Distribution based on

committed effort Monthly Cap Cost Share

Adjusted Distribution %

No Cap - 1st Smartkey 5.00% 956.25 956.25 0.00 5.00% 10.00% 1,912.50 1,912.50 0.00 10.00%Old Cap 199,700.00 2nd Smartkey 19.70% 3,767.63 3,278.41 489.22 17.14% 10.00% 1,912.50 1,664.17 248.33 8.70%New Cap 179,700.00 3rd Smartkey 4.69% 896.77 702.18 194.59 3.67% 5.00% 956.25 748.75 207.50 3.92%New Cap 179,700.00 4th Smartkey 1.00% 191.25 149.75 41.50 0.78% 5.00% 956.25 748.75 207.50 3.92%No Cap - 5th Smartkey 1.00% 191.25 191.25 0.00 1.00% 5.00% 956.25 956.25 0.00 5.00%Old Cap 199,700.00 6th Smartkey 1.00% 191.25 166.42 24.83 0.87% 5.00% 956.25 832.08 124.17 4.35%Old Cap 199,700.00 7th Smartkey 1.00% 191.25 166.42 24.83 0.87% 5.00% 956.25 832.08 124.17 4.35%No Cap - 8th Smartkey 1.00% 191.25 191.25 0.00 1.00% 2.00% 382.50 382.50 0.00 2.00%Old Cap 199,700.00 9th Smartkey 1.00% 191.25 166.42 24.83 0.87% 2.00% 382.50 332.83 49.67 1.74%Old Cap 199,700.00 10th Smartkey 1.00% 191.25 166.42 24.83 0.87% 2.00% 382.50 332.83 49.67 1.74%No Cap - 11th Smartkey 5.00% 956.25 956.25 0.00 5.00% 2.00% 382.50 382.50 0.00 2.00%No Cap - 12th Smartkey 1.00% 191.25 191.25 0.00 1.00% 2.00% 382.50 382.50 0.00 2.00%

New Cap 179,700.00 13th Smartkey 4.00% 765.00 599.00 166.00 3.13% 5.00% 956.25 748.75 207.50 3.92%No Cap - 14th Smartkey 1.00% 191.25 191.25 0.00 1.00% 5.00% 956.25 956.25 0.00 5.00%No Cap - 15th Smartkey 1.00% 191.25 191.25 0.00 1.00% 5.00% 956.25 956.25 0.00 5.00%

New Cap 179,700.00 16th Smartkey 1.00% 191.25 149.75 41.50 0.78% 5.00% 956.25 748.75 207.50 3.92%Old Cap - 17th Smartkey 1.00% 191.25 191.25 0.00 1.00% 5.00% 956.25 956.25 0.00 5.00%New Cap 179,700.00 18th Smartkey 2.00% 382.50 299.50 83.00 1.57% 5.00% 956.25 748.75 207.50 3.92%Old Cap 199,700.00 19th Smartkey 1.00% 191.25 166.42 24.83 0.87% 5.00% 956.25 832.08 124.17 4.35%Old Cap 199,700.00 20th Smartkey 1.00% 191.25 166.42 24.83 0.87% 5.00% 956.25 832.08 124.17 4.35%

1,164.81 1,881.83 0.00%

SmartKey not Subject to Cap % Distribution

Distribution based on committed

effortMonthly

DistributionAdjusted

Distribution % % Distribution

Distribution based on

committed effort

Monthly Distribution

Adjusted Distribution %

XXXXX 21.57% 4,125.65 4,125.65 21.57% 1.00% 191.25 191.25 1.00%XXXXX 9.38% 1,793.73 1,793.73 9.38% 0.00% 0.00 0.00 0.00%XXXXX 9.05% 1,730.81 1,730.81 9.05% 1.00% 191.25 191.25 1.00%XXXXX 5.61% 1,072.91 1,072.91 5.61% 1.00% 191.25 191.25 1.00%XXXXX 0.00% 0.00 0.00 0.00% 1.00% 191.25 191.25 1.00%XXXXX 0.00% 0.00 0.00 0.00% 0.00% 0.00 0.00 0.00%XXXXX 0.00% 0.00 0.00 0.00% 1.00% 191.25 191.25 1.00%XXXXX 0.00% 0.00 0.00 0.00% 0.00% 0.00 0.00 0.00%

Cost Share SmartKey 124.50 0.65% 1,504.50 7.87%Cost Share SmartKey 1,040.31 5.44% 377.33 1.97%

100.00% 19,125.00 19,125.00 100.00% 100.00% 19,125.00 19,125.00 100.00%

Cost Share Balance to be Distributed: 0.00 Cost Share Balance to be Distributed: 0.00

LEGENDSALARY DISTRIBUTION WORKSHEET - INCLUDES SALARY CAP CALCULATIONS

September-12 October-12

=required inputshould total 100%- based on issuance and effective dates

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Example # 1

Annual PI salary: 250,000

Monthly PI salary: 20,833

Effort Level: 50%

Award Issue Date: Dec. 1, 2011

NIH award

Cap to use: Executive Level I (199,700)

Monthly maximum salary (per CAP): 16,642

Salary to charge: 8,321 (50% of monthly max)

Monthly cost share due to CAP: 2,096

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Example # 2

Annual PI salary: 300,000

Monthly PI salary: 25,000

Effort Level: 25%

Award Issue Date: Jan. 1, 2012

NSF award

Cap to use: No Cap

Monthly maximum salary (no CAP): 25,000

Salary to charge: 6,250 (25% of monthly max)

Monthly cost share due to CAP: 0

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Example # 3

Annual PI salary: 185,000

Monthly PI salary: 15,417

Effort Level: 5%

Award Issue Date: Dec. 31, 2011

CDC award

Cap to use: Executive Level II (179,700)

Monthly maximum salary (per CAP): 14,975

Salary to charge: 749 (5% of monthly max)

Monthly cost share due to CAP: 22

Example # 4 Salary: 190,000 Award Issue Date Effort Sponsor Applicable Cap

Annual, Ignore CAP

Annual, with CAP

Monthly, with CAP

Award 1 Feb. 1, 2012 15% CDC ELII (179,700) 28,500.00

26,955.00

2,246.25

Award 2 Jan. 1, 2012 10% NIH ELII (179,700) 19,000.00

17,970.00

1,497.50

Award 3 Dec. 1, 2011 35% NIH ELI (199,700) 66,500.00

66,500.00

5,541.67

Award 4 Nov. 1, 2011 10% AHRQ ELI (199,700) 19,000.00

19,000.00

1,583.33

Award 5 Oct. 1, 2011 20% CDC No Cap 38,000.00

38,000.00

3,166.67

90% 171,000.00

168,425.00

14,035.42

Non-Sponsored 19,000.00

21,575.00

1,797.92

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Monthly Salary: $ 15,833

Not factoring in cap:

Monthly charge on grants: 90.00% $ 14,250 Monthly salary on non-grants: 10.00% $ 1,583

CAP factored in: Monthly charge on grants: 88.64% $ 14,035 Monthly salary on non-grants: 11.36% $ 1,798

Additional cost share from over the cap salary $ 215

Example # 5 Salary: 215,000 Award Issue Date Effort Sponsor Applicable Cap

Annual, Ignore CAP

Annual, with CAP

Monthly, with CAP

Award 1 Feb. 1, 2012 15% CDC ELII (179,700) 32,250.00

26,955.00

2,246.25

Award 2 Jan. 1, 2012 10% NIH ELII (179,700) 21,500.00

17,970.00

1,497.50

Award 3 Dec. 1, 2011 25% NIH ELI (199,700) 53,750.00

49,925.00

4,160.42

Award 4 Nov. 1, 2011 10% AHRQ ELI (199,700) 21,500.00

19,970.00

1,664.17

Award 5 Oct. 1, 2011 20% CDC No Cap 43,000.00

43,000.00

3,583.33

80% 172,000.00

157,820.00

13,151.67

Non-Sponsored 43,000.00

57,180.00

4,765.00

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Monthly Salary: $ 17,917

Not factoring in cap:

Monthly charge on grants: 80.00% $ 14,333 Monthly salary on non-grants: 20.00% $ 3,583

CAP factored in: Monthly charge on grants: 73.40% $ 13,152 Monthly salary on non-grants: 26.60% $ 4,765

Additional cost share from over the cap salary $ 1,182

Example # 6 Salary: 230,000 Award Issue Date Effort Sponsor Applicable Cap

Annual, Ignore CAP

Annual, with CAP

Monthly, with CAP

Award 1 Apr. 1, 2012 10% DoD No Cap 23,000.00

23,000.00

1,916.67

Award 2 Dec. 31, 2011 5% NSF No Cap 11,500.00

11,500.00

958.33

Award 3 Feb. 1, 2012 30% NIH ELII (179,700) 69,000.00

53,910.00

4,492.50

Award 4 Oct. 1, 2011 5% HRSA No Cap 11,500.00

11,500.00

958.33

Award 5 Dec. 31, 2010 15% NIH ELI (199,700) 34,500.00

29,955.00

2,496.25

65% 149,500.00

129,865.00

10,822.08

Non-Sponsored 80,500.00

100,135.00

8,344.58

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Monthly Salary: $ 19,167

Not factoring in cap: Monthly charge on grants: 65.00% $ 12,458 Monthly salary on non-grants: 35.00% $ 6,708

CAP factored in: Monthly charge on grants: 56.46% $ 10,822 Monthly salary on non-grants: 43.54% $ 8,345

Additional cost share from over the cap salary $ 1,636

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HHS Guidance

Only NIH (and now, HRSA) have issued guidance on this.

NIH Guidance: • FY2012 NIH Guide Notice:

http://grants1.nih.gov/grants/guide/notice-files/NOT-OD-12-035.html

• Salary Cap – FY12 FAQ: http://grants.nih.gov/grants/policy/fy2012_salary_cap_faqs.htm

• Salary Cap Summary Webpage: http://grants.nih.gov/grants/policy/salcap_summary.htm