Financial Affairs Policies

VIII-99.09(A)

UMB Policy on Salary Caps for HHS and Other Federal Agencies

Financial Affairs   |   Approved June 9, 2021

Responsible VP/AVP

Dawn M. Rhodes, DBA, MBA

Revision History

Approved June 9, 2021.

Purpose

To provide guidance regarding the administration of salary caps required by the Department of Health and Human Services (HHS) and other federal agencies that apply to grants, contracts, and cooperative agreements with the University of Maryland, Baltimore (UMB).

Policy Statement

Federal law may restrict the amount of Direct Salary an individual receives under a grant, contract, or cooperative agreement with UMB. When required, the salary cap must be used for all grants, contracts and cooperative agreements charged to federal agencies by UMB, including both direct funding from agencies and pass-throughs of federal funds from a Prime Sponsor. If an individual’s salary is above the relevant salary cap, the portion of an individual’s salary above the salary cap is considered over–the-cap (OTC) cost sharing, must be approved and accounted for in accordance with UMB’s Cost Sharing Policy and Effort Reporting Policy, and cannot be charged to the grant, contract, or cooperative agreement.

For example, as of the date of this policy, the Department of Health and Human Services Appropriations Act, 2020 is the most relevant federal law applicable to HHS and restricts the amount of Direct Salary an individual may receive under a grant, contract, or cooperative agreement to the Executive Level II of the Federal Executive Pay Scale. This applies to all HHS agencies funded by the Department of Health and Human Services Appropriations Act, 2020: National Institute of Health (NIH), Administration for Children and Families (ACF), Administration for Community Living (ACL), Agency for Healthcare Research and Quality (AHRQ), Centers for Disease Control and Prevention (CDC), Centers for Medicare and Medicaid Services (CMS), Health Resources and Services Administration (HRSA) and Substance Abuse and Mental Health Services Administration (SAMSHA). Other HHS agencies - e.g. the Food and Drug Administration (FDA) and the Agency for Toxic Substances and Disease Registry (ATSDR) - are subject to this salary cap only if the agreement or the Notice of Award specifically states a requirement to adhere to the Executive Level II salary cap. A summary of the Executive Level II salary cap for awards issued since the fiscal year 1990 can be found here.


Annual Guidance on Salary Cap:
Although salary caps may be adjusted on an annual basis, HHS and other federal agencies will not provide additional funding for awards when the Executive Level II pay scale is increased. Department Administrators and Principal Investigators must comply with the following requirements when the salary cap is increased:

  • Grants and Cooperative Agreements: Department Administrators and Principal Investigators (PI) must re-budget funds to accommodate the change in the salary cap. Upon issuance of the new salary cap by HHS, the University requires that the new cap be adopted by the departments in their budgets in the next calendar month or 30 days, whichever comes first. Exceptions to the application of the new cap must be approved by the Assistant Vice President (AVP) of Sponsored Projects Accounting and Compliance (SPAC).
  • Contracts: Department Administrators must contact the contracting officer for approval to use the new salary cap. This approval or denial needs to be forwarded to the SPAC Contracting Team. If approved, the OTC must be adjusted in the next calendar month or 30 days from the time of the approval, whichever comes first.
  • Federal Pass-throughs: Department Administrators must contact their Grant Sponsor to provide notice of who will be affected by the salary cap change and when the change will be implemented. If the pass-through is under a grant or cooperative agreement, Department Administrators and PIs must re-budget funds according to the requirements listed under Grants and Cooperative Agreements. If the pass-through is under a contract, Department Administrators must receive approval from the Grant Sponsor in order to use the new salary cap and must adjust the OTC in the next calendar month or 30 days from the time of the approval, whichever comes first.

Definitions

Direct Salary: the monetary compensation that UMB pays employees for services performed. It is exclusive of fringe benefits and facilities and administrative costs.

Prime Sponsor: the organization from which the research funds originate.

Grant Sponsor: the agency or entity from which UMB directly receives project funding.

Salary cap: a limitation placed on the full 12-month salary rate that can be directly charged to grants, contracts and cooperative agreements.

Scope and Exceptions

This policy is applicable to all schools, departments and personnel of UMB involved in administering sponsored awards.

Roles and Responsibilities

Department Administrators:

  • Ensure that the salary cap is used as required for all grants, contracts and cooperative agreements with federal funds, including awards with pass-through federal funds. Adjust salaries accordingly once the limitations are finalized each year.
  • Obtain approval or denial from Contracting Officer to use the new salary cap for contracts.
  • Notify the Grant Sponsor of federal pass-throughs that salary cap changes will be made within the next calendar month or 30 days from the time of the issuance, whichever comes first.

SPAC’s Costing and Compliance Team:

  • Review to ensure all changes in salary caps have been implemented at quarterly effort reporting periods.
  • Notify departments that are not in compliance with the salary cap change and confirm that needed corrections are made.
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