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Salary Limitations

If your department receives funding from any DHHS Agencies, NSF, CIRM and DOD, read the salary limitation (salary cap) guidelines on this page.


Employee salaries funded by the any Department of Health and Human Services (DHHS) Agencies, National Science Foundation (NSF), California Institute of Regenerative Medicine (CIRM) , and Department Of Defense (DOD), are subject to limitations set by these agencies.


To figure out the salary cap, consider the following factors:

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Source and fiscal year of funding

The Department of Health and Human Services (DHHS) salary cap is a limitation on the rate of pay directly chargeable to grants, cooperative agreements, and contracts issued by NIH, SAMHSA, or AHRQ. For FY 2015, the Consolidated and Further Continuing Appropriations Act, 2015 (Public Law 113-235), signed into law on December 16, 2014, restricts the amount of direct salary to Executive Level II of the Federal Executive pay scale. The Executive Level II salary is currently set at $181,500, increasing to $183,300 effective January 11, 2015. The salary cap only affects employees who charge some or all of their salary to awards or sub-awards from NIH, SAMHSA, or AHRQ, and whose rate of pay is above the limitation. Only salaries charged to sources subject to the cap are affected.

Note: As the congressional rate changes, the cap rate will change. For active awards, you can adopt a subsequent FY (higher) cap amount if adequate funds are available and if the cap increase is consistent with institutional base salary. However, no additional funds will be provided to the prior year grant awards and the total estimated cost of the contract will not be modified.

Determining fiscal year for funding

The first month of the award budget period determines the year of appropriation, or the federal fiscal year. The federal fiscal year is from Oct. 1 to Sept. 30 of the following year:

First month of budget year falls within Federal FY designation
Oct. 1, 2012, to Sept. 30, 2013 FY2013
Oct. 1, 2013, to Sept. 30, 2014 FY2014
Oct. 1, 2014, to Sept. 30, 2015 FY2015
Oct. 1, 2015, to Sept. 30, 2016 FY2016

You can find the fiscal information about the award in Section I of the NIH Notice of Grant Award (NGA). The federal fiscal year or appropriation year for the budget period noted in the award document appears after the NIH organizational institute or center (IC/CAN) designation. Although there may be other fiscal years noted after IC/CAN/, those fiscal years are for continuation funding and can be ignored when determining the current funding year.

  • Example

    NIH award 12345A has a notice of grant award number of IC/CAN/FY2015/FY2016/FY2017

    The budget period covered by the award is Jan. 1, 2015, to Dec. 31, 2015. All appointments must conform to the salary cap for 2015 ($15,125.00).

    A no-cost extension is granted for this award. Expenditures are made through May 2016. The salary cap for 2015 remains in effect. You only need to consider the fiscal year in which the money was appropriated, not the year in which the money was spent.

Monthly rate of pay

Employees with University appointments are assigned a rate of pay for each appointment. An employee's pay rate is the dollar amount used to calculate gross pay, which is the amount paid on a pay check before personal deductions. Note: When considering the NIH salary cap, it is important to compare the monthly rate of pay (not gross pay) to the allowed maximum NIH monthly rate of pay.

  • Example

    For an employee hired full-time for 12 months at $192,000 per year, the monthly rate of pay is $16,000 ($192,000 divided by 12 = $16,000). If the grant period is FY2015, the monthly salary cap is $15,125 (see salary cap chart). In this case, the monthly pay exceeds the salary cap by $875. You must charge this to an alternate fund.

Percentage of appointment

For an employee hired part-time or paid from multiple fund sources, the percent of appointment for the capped fund (time worked) and annual or monthly rate of pay are used to calculate the gross pay. It is never appropriate to manipulate the appointment percentage in an attempt to compensate for a salary rate that is above the cap. It is the rate of pay that must be within the cap limit. Further, the appointment percentage should reflect the effort to be spent on the project.

  • Example

    For a half-time appointee with an annual rate of pay of $225,000, the monthly rate of pay is $18,750. The monthly gross pay is $9,375 ($18,750 X 50% = $9,375). If the grant period is FY2015, the monthly salary cap is $15,125 (see salary cap chart). The maximum amount that may be paid per month is $7,162 ($15,125 X 50% = $7,652.50). In this case, the pay exceeds the salary cap by $1,722.50. You must charge this to an alternate fund.
  • Example of what NOT to do

    You have a faculty member who makes $216,000 a year and is working 100% on a NIH fund. Her monthly rate of pay is $18,000. Since the salary cap is $15,125 per month, you adjust the percent of appointment to the NIH fund to 75% and supplement her with a 25% appointment to 19900 funds, which results in a gross monthly pay of $13,500 on the NIH fund.

    Even though the gross pay is below the cap, you are not in compliance because the actual monthly rate of pay ($18,000) exceeds the cap. In this case, you must reduce the rate of pay related to the capped fund (by $2,875) and pay the difference with an alternate fund.

Payout schedule for academic year (nine-month) appointees

Academic-year appointments are for a period of nine months but they are typically paid over 12 pay periods. When the number of monthly payments exceeds the number of months of appointment, the salary cap is effectively reduced and you must use an adjusted salary cap amount as indicated by the payout schedule (See salary cap chart).

  • Example

    An academic year employee has a nine-month appointment at $150,000 and is paid over 12 pay periods. The monthly rate of pay is $12,500 ($150,000 divided by 12 = $12,500). This is the amount subject to the cap. If the grant period is FY2015, the annual salary cap is $181,500. Because this is a nine-month appointment, the adjusted annual cap is reduced to $128,925 ($181,500 divided by 12 = $15,125. $15,125 X 9 = $136,125) and the monthly cap is $11,343.75 (see salary cap chart). In this case, the pay exceeds the salary cap by $1,156.25. You must charge this to an alternate fund.

Academic-year appointments for less than three quarters are paid in line with actual months worked (9/9 appointments). In these cases, the monthly rate of pay is compared to the usual salary cap for the period in question and no adjustments are needed. (See NIH Salary Cap Summary).

How the salary cap relates to effort

The salary of an employee working on a federal award is chargeable to the award in proportion to the percent of effort worked. The same applies for the cap rate. The monthly rate allowed is in proportion to the percent of effort worked. An employee appointed at 50% effort on an award is limited to the capped rate of pay multiplied by their percent of effort, in this case, 50% of the capped rate. It is important that the effort as reported on the effort report for the period in question supports the appointment percentage used by Payroll. If not, payroll adjustments will be required.

Types of pay included and excluded in determining rate of pay

Not all types of pay are included in determining whether the rate of pay exceeds the cap.

  • Included pay

    Categories of pay related to effort can be charged to sponsored projects and are included when considering the salary cap.
  • Excluded pay

    The annual rate of pay excludes benefits and facilities and administrative (F&A) costs. Salary not related to effort isn't part of the rate of pay determination. Excluded pay categories include: administrative stipends, honoraria, consulting fees, supplemental compensation for incidental services, by agreement payments, vacation pay, and termination pay. Any income that an employee is permitted to earn for activities outside the scope of UCSD employment are also excluded. For information regarding DOS codes excluded for the pay calculation, see your department payroll expert.
  • Health Sciences salaries

    For employees covered by a health sciences compensation plan, both the UC Health Sciences Salary Scale base salary (X, X' and Y' component), and the negotiated additional compensation (Y component) are included in determining the employee's rate of pay. If the combined rate of pay (including X, X', Y' and Y) exceeds the capped rate, the maximum amount chargeable to NIH, SAMHSA, and AHRQ awards is the capped rate multiplied by the employee's effort on each award. However, any incentive/ bonus compensation under a health sciences compensation plan (Z component) is not included in the employee's rate of pay and is not an allowable charge to NIH, SAMHSA, or AHRQ awards.

Alternate fund sources that can be used for salary exceeding the cap

When an employee's rate of pay exceeds the cap, can the difference be charged to:

  • Another Federal Award? No
  • Privately Sponsored Contract or Grant? Yes, only when such charges are not prohibited under the guidelines of the award
  • Gifts Fund? Yes, the expense may be charged when it supports the intent for which the donation was given to the University
  • Unrestricted funds, including health sciences compensation plan funds? Yes
  • General Funds (19900)? Discouraged, as state funds typically may not be used to supplement federal research costs

Procedures to ensure personnel charges do not exceed the salary cap

With UCOP guidance, campuses are responsible for implementing local procedures to comply with the salary rate cap requirement. Awards with employees affected by the salary rate cap are subject to internal audit by the Office of Post Award Financial Services (OPAFS) and Audit and Management Advisory Services (AMAS), as well as by the agency.

Salary cap summary and updates

DHHS Salary Cap

Compliance with the salary rate cap requires to limit a University employee's rate of pay to the maximum rate of pay established for all DHHS awards except FDA and IHS. Per the DHHS HHSAR 352.231-70, Salary Rate Limitation, has been revised to indicate applicability to all Operating Divisions except FDA and IHS and the salary rate limitation has been changed from Executive Level I to Executive Level II. 

The cap is a limitation on the monthly rate of pay charged to the sponsor. The cap is not based on averages or a ceiling over a period of time.

FY 2017 Awards Issued

Date Amount
January 8, 2017 through September 30, 2017 (Executive Level II) $187,000
October 1, 2016 through January 7, 2017 (Executive Level II) $185,100

FY 2016 Awards Issued (NIH NOT-OD-16-059)

Date Amount
January 10, 2016 through September 30, 2016 (Executive Level II)  $185,100
October 1, 2015 through January 9, 2016 (Executive Level II) $183,300

FY 2015 Awards Issued 

Date Amount
January 11, 2015 through September 30, 2015 (Executive Level II)  $183,300
October 1, 2014 through January 10, 2015 (Executive Level II) $181,500

More information:

NSF Salary Cap

There is no salary cap for proposals submitted to NSF. IDC is recorded the same rate applicable to the grant Academic Year Salaries, however, are to be based on the individual faculty member's regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his/her salary. Except as provided in GPM 616.2, "Intra-University Consulting," charges to Federal grants, irrespective of  the basis of computation, will not exceed the proportionate share of the base salary for that period. (Reference GPM 611)

NSF's Proposal and Award Policies and Procedures Guide limits faculty to two months of salary per budget year from all NSF sources unless specifically budgeted and approved by the NSF. NOTE: this means that if a PI has three active NSF awards, the total number of months for which support may be received may not exceed a total of two months from all three awards, not two months from each of the three awards. Any deviation from this practice must be disclosed in the proposal budget, justified in the budget justification and must be specifically approved by NSF in the award notice.

NSF Frequently Asked Questions (PDF)

CIRM Salary Cap

CIRM establishes a cap on all annual base salaries charged to CIRM awards in proportion to the % of salary or effort charged to the project as follows:

Effective From: 1/1/2006 1/1/2008 7/1/2010 7/1/2012 7/1/2014 7/1/2016
Effective To: 12/31/2007 6/30/2010 6/30/2012 6/30/2014 6/30/2016 6/30/2018
Salary Cap (100%) $200,000 $207,000 $213,000 $221,000 $230,000 $246,000

Source: http://www.cirm.ca.gov/our-funding/grants-management#salary

No additional CIRM funds will be provided to support salary cap increases.

DOD Salary Cap

Department of Defense does not require a salary cap.

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