A Salary Cap is defined as a maximum annual rate of Stanford Salary for full-time effort that can be charged to an agency's award. NIH salary caps are indexed to a specific Government Executive Pay Level, e. g. Executive Level 2. The salary for the Executive Pay Level may vary for each Government Fiscal Year in which the funds are awarded (usually on January 1).


A Funding Limitation is defined as the limitation on the annual rate of Stanford salary for full-time effort that the agency provides in a given award. This limit is usually established at the time of a competitive award based on the salary cap in effect at that time. However, if, after a competitive award is made, the NIH announces an increased Salary Cap, the agency will allow PIs to rebudget awarded funds, in that or future years, to charge the higher salary level. NIH has not historically provided additional funds for this purpose (see NIH Salary Cap summary and rebudgeting examples.) 


Stanford salary is defined as the pay that an individual receives from Stanford University upon which benefits are calculated. In the School of Medicine, for example, this includes base pay and clinical components, if any.


Annual rate is the amount of pay an individual would receive from Stanford for a 12-month period.


NIH application instructions for competing proposals ask that Stanford calculate requested salary amounts by multiplying the full Stanford salary of the individuals proposed to work on the project by the appropriate percentage of effort to be expended on the project. NIH will adjust these amounts to reflect a Salary Cap, if any. 


When submitting Modular Grants or other grants that limit total direct costs, or when submitting non-competing continuation proposals, whenever a proposed individuals rate of pay exceeds the allowable (capped) rate, Stanford will incorporate the applicable salary cap into the proposed salary budget.

Stanford's procedures in administering awards involving a salary cap will be consistent throughout the University. The salary cap is used to compute the maximum allowed rate for an individual pay period. 


In the examples below, the salary cap is hypothetical. Salary caps in place when funds are awarded are applicable. (See table.)


Example: A salary cap of $100,000.00 per year is equivalent to a maximum rate of $4166.66 per pay period ($100,000.00 divided by 24 pay periods). 



The percentage of effort charged to a sponsored project where a salary cap is applicable cannot be applied to any more than the maximum capped rate for the pay period.


Example: If 50% effort is charged to a sponsored project with an annual salary cap of $100,000, then the 50% is applied against a maximum rate of $4166.66. The maximum actual charge to the project account for that pay period would be $2083.33. 


If the salary cap increases during the life of a competitive award, i.e., subsequent non-competing funding is awarded during a Government Fiscal Year in which the cap is higher, PIs may elect to rebudget awarded project dollars to pay salaries to the higher level.


Example: If a project is initially awarded with a salary cap of $100,000 ($4166.66 per pay period) and subsequent non-competing funding is awarded during a Government Fiscal Year in which the salary cap is $120,000 ($5000.00 per pay period), the PI may be rebudget existing project funds to charge salaries at the higher level. No additional funds will be provided by the agency for this purpose. 



When an individual's salary exceeds the salary cap established by the funding agency, the difference between that individual's actual salary and the maximum amount allowed under the cap for that percent of effort must NOT be charged to another federal award. The difference should be charged to a non-sponsored account. The difference may be charged to a non-federal award, only when specifically allowed by the non-federal sponsor. The difference must be identified on the employee's Labor Distribution schedule using expenditure type 51190, "Regular Benefits Eligible (RBE) Unallowed Salary over a Cap."


These calculations also apply to salaries being charged to cost sharing accounts associated with NIH projects. The salary over the cap identified with the "RBE Unallowed Salary over a Cap" expenditure type may not be charged to a cost sharing account.

Unobligated funds being carried forward into a subsequent budget period are subject to the salary cap in effect within the award year to which the funds are being carried forward.


An excel template is available to assist you in calculating the actual salary caps and salary charges in the following situations. Find them below in the "documents" tab.

Individual Awards

• A full-time person on a 12-month appointment
• A full-time person on an academic-year appointment (usually 9 months)
• A part-time person on a 12-month appointment
• A part-time person on an academic-year appointment (usually 9 months)

For multiple awards

• An individual on a 12-month appointment (full- or part-time)
• An individual on an academic-year appointment (full- or part-time)

• Enter appropriate salaries on competing and non-competing proposals being submitted to agencies reflecting salary caps as applicable.

• Accurately charge salaries to projects and related cost sharing accounts reflecting no more than the percentage FTE identified by the PI on the project multiplied by the applicable salary cap.

• Identify corresponding salary over a cap with the "RBE Unallowed Salary over a Cap" expenditure type on the Labor Distribution schedule.

• Identify any charges identified as salary over a cap as unallowable costs for federal charging.

• Include capped amount in the applicable Modified Total Direct Cost Base for Facilities and Administrative (F&A) rate calculation purpose

Routinely audit salary cap calculations as part of its departmental compliance program.