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 FY12 the Consolidated Appropriations Act, 2012 (Public Law 112-74) signed into law on December 23, 2011, restricts the amount of direct salary to Executive Level II of the Federal Executive Pay scale.  The Executive Level II salary is $179,700.

For the purposes of the salary limitation, the terms "direct salary," "salary," and "institutional base salary" have the same meaning and are exclusive of fringe benefits and facilities and administrative (F&A) expenses, also referred to as indirect costs.  An individual's institutional base salary is the annual compensation that the applicant organization pays for an individual's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities.  Base salary excludes any income that an individual may be permitted to earn outside of the duties to the applicant organization.

This is the first year that the salary limitation has been reduced; it is now restricted to Executive Level II of the Federal Pay Scale.  For guidance regarding the implementation of changes in salary cap, (Click here to read the full notice.)  

In summary, the guiding document for the salary cap level will be your NOGA for FY12, and more specifically, the issue date for that NOGA.   

  • For NIH FY12 awards with a NOGA issue date on or before 12/22/11, the salary cap is Executive Level I ($199,700 for a 12-month appointment and $149,775 for a 9-month appointment) for the remainder of the current budget period for both competing and non-competing awards.
  • For NIH FY12 awards with a NOGA issue on or after 12/23/11, the Executive Level II ($179,700 for a 12-month appointment and $134,775 for a 9-month appointment) salary cap applies for both competing and non-competing awards.
   1.     For Competing awards:
  • If a detailed budget was submitted with the proposal, then the awarding Institute will adjust the award prior to issuing the NOGA to reflect the Executive Level II salary cap and the reduction in associated F&A costs.  Future years will also be adjusted.
  • If a modular budget was submitted with the proposal, then it will be up to Vanderbilt to ensure that no funds are spent on salaries above the Executive Level II salary cap.  No reduction in the total award will occur, therefore, re-budgeting will be required.
 2.      For Non-competing awards:
  • These awards will not be adjusted by the Institute.  If otherwise unrestricted, these awards maybe re-budgeted.
NIH awards from previous fiscal years are NOT affected by NOT-OD-12-035 and therefore, carry forward funds can be spent on salaries using the Executive Level I cap.

For competing applications that include detailed budgets, please continue to note in the budget justification an explanation that indicates that actual institutional base salary exceeds the current salary limitation.

The salary cap level does NOT apply to payments made to consultants under an NIH award although, as with all costs, those payments must meet the test of reasonableness and be consistent with institutional policy.

The salary cap provisions DO apply to subawards/subcontracts for substantive work under an NIH award.

For more specific assistance, please contact your Sponsored Programs representative.