Salary Cap Overview

Overview of DHHS Salary Cap Considerations with an L&S point of view. Links to RSP and sponsor resources. Information regarding how salary cap interacts with payroll and effort, and a definition implied cap cost share. Brief overview of the salary cap cycle. Discussion of the L&S alternative distribution of research support.

What is the Salary Cap?

As part of the agreement to accept grant money from the Department of Health and Human Services (DHHS) and its subsidiaries, like the National Institute of Health (NIH),  the UW agrees to comply with a salary cap that limits the salary paid to individuals working on the grant.  This salary cap is not new, it's been part of DHHS/NIH grants for a long time, but, until a few years ago, the salary cap was high enough to not affect us.  Unfortunately, the salary cap level has dropped in recent years, and now multiple L&S faculty members are paid above the salary cap level and are subject to the policy.

Any person whose salary is above the salary cap level is required to use institutional non sponsored funds to match that person's salary on every NIH dollar paid to that person during a given pay period.  Because our faculty and academic staff are paid monthly, that salary match must be present every month, which turns out to be a challenge for L&S 9-month, C-basis faculty.

The salary cap level effective January 1, 2016 is $185,100 for 12-month salary, which is prorated to $138,825 for 9-month salary.  The rate that applies to any particular grant, however, may be different, depending on the issue date of the award (see the RSP website, link below, for more info).

Here's the RSP website with all the background:

Here's the NIH salary cap guidance: 

Salary Cap Basic Concepts

Over the cap by how much?

Use the RSP tool to determine how much over the cap an individual is: (select the Tool tab):

  • Enter the FTE annual rate.  Note: you must convert the salary rate from 9-month C-basis to 12-month FTE.  Here's the equation: FTE Rate = (C-Basis Rate / 9) * 12.
  • Select the appropriate cap.  To determine this, check here: (select the Payroll tab, and refer the first paragraph).
  • Enter 100% in the effort blank.  The results will give you the required cap cost share each month.
This ratio applies to every dollar the person is paid on NIH funds. 

Let's say a person is 10% over the cap.  EVERY DOLLAR the person is paid will require a 10% match.  If the person is paid $1 of salary on DHHS funding in a given month, the person must be paid at least $0.10 of salary cost share in that month alongside the DHHS payment, and that person's effort on the project will be equivalent to $1.10.  As you can see, things get a little complicated. 

Looking at it from another angle, let's say this same person must put forth 10% effort on a DHHS grant during an effort period.  To fulfill the 10% effort level, this person must be paid 9% on DHHS funding and 1% on non-sponsored funding.  Furthermore, this non-sponsored match must be present in the correct ratio every month this person is paid.

This can be a real problem for 9-month faculty that want to be paid on DHHS funds in the summer, when they have no 101- funding in place.  Non-sponsored funding must be found and put in place that month.  In order to avoid having to find new non-sponsored money to put alongside the DHHS payment, L&S has developed the Alternative Distribution of Research Support plan, described below.


Effort is key to the salary cap.  For a person above the salary cap, effort on any DHHS project will be comprised of two elements: payroll from DHHS source + non-sponsored cap cost share.  In the example above, 10% effort on the grant is comprised of 9% payroll on the DHHS source and 1% non-sponsored cap cost share.

A rule of thumb is that an over the cap person will always certify effort at a higher level than the payroll amount.  If the person certifies exactly the payroll amount, this will require a transfer of a portion of the salary paid on the DHHS source to a non-sponsored source.

Cost Share vs. Cap Cost Share

The non-sponsored matching that must be present in every month the over-the-cap person is paid on DHHS funds is referred to as Cap Cost Share.  Cap Cost Share will never be entered into the system as official cost share.  It cannot be tracked through the cost share system because any official cost share must then be counted as part of the DHHS payment, and will require Cap Cost Share on the total amount of DHHS payment plus the official cost share.  This can be very confusing because there is no tracking of the amount of Cap Cost Share needed in the cost share system or in ECRT.  During the effort period, RSP shares a report, the Salary Cap Consideration, that provides the Cap Cost Share amounts needed, but this is all outside of the ECRT system in a stand alone report.  The PI and the department must pay close attention to the Salary Cap Consideration report in order to remain in compliance.

Salary Cap Cycle


The Salary Cap cycle begins with proposal.  L&S pre-award will work with the department if the PI or other key personnel are over the cap.  It will be taken into account in the proposal budget.

Award Set Up

At time of award, the project will be set up.  At this point the salary cap will be taken into account when entering commitments and effort into the projects tab.  NOTE: implied cap cost share, or the amount of non-sponsored match, will NEVER be entered as official cost share.  It remains outside the cost share system, and must be tracked independently.  The reason is that any official cost share on an award subject to the salary cap will become part of the salary compensation and more non-sponsored funding outside the cost share system will be needed to match the salary and the official cost share.


There are multiple considerations to take into account when payrolling an over-the-cap person.  The over-the-cap ratio needs to be taken into account.  Non-sponsored matching funds need to be in place each month the person is payrolled.  If not, corrective action will be taken following the effort reporting period for the payroll in question.

Effort Reporting and the Salary Cap Consideration Report

Effort reporting for academic staff occurs every 6 months.  The effort periods in a given calendar year are January-June, and July-December.  The effort certification window opens a month after the close of the effort period, in August and February, respectively.  It is very important for over-the-cap people to certify correctly. 

At the beginning of every certification period, RSP sends the Salary Cap Consideration report to all of those affected by the salary cap and their effort coordinators.  The report recommends the correct certification level based on the salary payment and how far the person is over the cap.  Because every DHHS salary payment to an over-the-cap individual is made up of two components, the DHHS payment and a non-sponsored payment, ALL CERTIFICATIONS FOR THOSE OVER THE CAP WILL BE AT A LEVEL HIGHER THAN THE ACTUAL PAYROLL.  If you certify at the level recommended by ECRT, shown in the effort card as "computed effort," you will be incorrect and you must update your certification.  If your incorrect certification holds through the effort deadline, RSP will mandate a salary cost transfer of a portion of the salary to non-sponsored funding.  There will be no opportunity to change the card after the deadline.  Follow the RSP recommendation.  The good news is that RSP sends this report at the beginning and near the end of every three month effort reporting cycle.  L&S follows up with individualized reports for those in L&S.  You have three months to enter the correct values in the effort card, so there is ample time to get the effort certification right.

Salary Cost Transfers for Incorrectly Certified Salary Cap Payments

It is very important to pay attention to the certification recommendation from RSP and the follow up from L&S.  About two months after the closed effort period, RSP will mandate salary cost transfers for those with incorrect certifications or who lack the month to month match.  A report detailing pending transfers is sent to the division, and the division works with the departments to find departmental discretionary funding to accept the transferred salary.  This action can be avoided by certifying correctly and by having the correct amount of month to month non-sponsored salary match.  The three month certification window is the time to correct these problems.  After the certification period is closed, there is no way to reopen an incorrectly certified card, so it is of key importance to certify correctly.

L&S Alternative Distribution of Research Support

The Problem

Because L&S faculty are C-basis and tend to take their non-sponsored 101- funding in the academic year, and their externally sponsored research funding in the summer, they have difficulty meeting the month by month non-sponsored match requirement in the summers that they use DHHS funding.  Their non-sponsored funding is segregated to the 9 month academic year and not available in summer to create the required monthly match. 

The Plan

L&S has created a plan that allows an over-the-cap faculty member to take a portion of their 101- salary in the summer months, giving them the required month by month match in the summer.  The resulting 101- funding gap in the academic year is filled in by the DHHS funding.

Invitations to use this plan are extended early in the calendar year to those we expect to be over the cap in the next fiscal year.  If you use the plan, your overall annual pay will remain the same, but you will now receive a portion of 101- funding in summer months to create the proper match, and an equivalent portion of your DHHS sponsored funding will be used during the academic year to cover the gap created by moving some of the 101- funding to summer. 

There is no requirement to use this plan, but if the PI does not, the PI will be expected to make his or her own arrangements to fulfill the required month by month salary match by deploying his or her own non-sponsored funding.  If this is not done, the PI will find him or herself on the RSP mandatory transfer list and the PI or the  department will have to find non-sponsored funding to receive the transfer.

Salary Cap Questions

Questions about the salary cap, salary cap effort, and the L&S redistribution plan should be directed to Ben Ball at the L&S Post-Award office, 265-1170.

Keywords:salary cap, NIH, DHHS,   Doc ID:42851
Owner:Benjamin B.Group:College of Letters & Science
Created:2014-08-12 15:57 CDTUpdated:2016-07-22 09:14 CDT
Sites:College of Letters & Science
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