What Salaries to Enter During Budget Preparations!

Transcription

1 What Salaries to Enter During Budget Preparations! Dhanonjoy C. Saha, PhD, Director Anindita Mukherjee, PhD, Assistant Director Office of Grant Support Albert Einstein College of Medicine New York, USA

2 Basics of Budget: Federal Cost Principles Reasonability Allowability Allocability Consistency NIH Grants Policy Statement: The Cost Principles

3 Basics of Budget: The Key Points Read the FOA Be aware of the LIMITS NIH Link: Developing Budgets

4 Basics of Budget: Key Elements Direct Cost & Indirect Cost Institutional Base Salary Salary, Salary Cap, and Salary Escalation Survey for an Optimized Budget to Develop a Model System Who Fall under Salary Cap on Federal Grants Who Can Be a PI on a Federal Grant

5 Salary Escalation Policy: A Survey While developing budget proposal: Do you put the actual salary for 1 st year if the salary is over the cap? Do you use an inflationary/escalation rate of salary for the 1 st year? Do you use an inflationary/escalation rate of salary for the subsequent years? If so, what salary escalation rate you use for preparing the budget? Do you have a policy to use any preset salary cap escalation rate? What salary cap escalation rate you consider to propose? Do you find consistency in your institutional policy regarding the use of salary and salary cap escalation rates in proposed budgets?

6 Salary: A Direct Cost Broad categories commonly used: Fringe Benefits: The rates are based on institutional policies; NIH has no pre-set limit on fringe benefits. Image Reference: Link

7 Indirect Cost: Keeping the lights on Every year, the US government gives research institutions billions of dollars towards infrastructure and administrative support. This 2014 Nature investigation revealed who is benefiting the most.

8 Institutional Base Salary: IBS Direct Salary/Institutional Base Salary (IBS): 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. [Refer: NIH link] This is exclusive of other indirect payments i.e., fringe benefits.

9 Salary: IBS (Contd ) Should IBS include administrative stipend/supplement for faculty members serving as a) Dean/VCR/Provost b) Chair/Director (department) c) Interim Chair/Director (department) Depends on institutional policy

10 IBS: A Rational Approach These would be included in IBS: a) As long as these come with associated institutional fringe benefits. b) If the supplement is for a part of the employee s primary appointment. c) If the appointment is scheduled to be recurring (e.g., more than a year, in case of interim capacity), or for indefinite period. Usually overload payments and summer salary are excluded from IBS. A well-defined Federal and Institutional policy and guidelines for IBS are needed.

11 IBS: Example Dr. Lopez is a physician scientist. Her institutional base salary is $150,000 per year. She has an agreement with her institution to receive payments based on patient Relative Value Units (RVUs). She usually receives about $200,000 additional payment per year. Additionally, she receives $50,000 bonus per year for her outstanding work. What would be her IBS?

12 Salary Cap It is the maximum annual rate of salary for fulltime effort that can be directly charged to agencies awards, contracts, grants, and cooperative agreements. Different federal agencies have different salary cap levels. Salary cap does not limit the actual salary paid by an organization. An organization can pay an investigator in excess of the salary cap.

13 Who Fall Under Salary Cap Regulations on DHHS/NIH Grants? Salary limitation applies to PDs/PIs and all other key personnel who directly contribute to the scientific development or execution of a project in a substantive, measurable way, and request for salaries. Salary caps are not applicable for personnel whose efforts are not measured in calendar months or percent efforts. Salary limitation does not apply to Consultants under NIH grants/contracts; however, the consultant payments must be reasonable and consistent with institutional policy. Under no circumstances may an individual be paid as a consultant and an employee under the same NIH grant. Salary caps apply to Sub-contracts/Sub-awards. NIH links: NOT-OD ; NOT-OD ; Salaries and Wages DHHS: Salary Limitation FAQ

14 NIH Salary Cap: Background Congress first instituted it in 1990 through the Annual Appropriation Bill funding NIH. The fiscal appropriation signed by the President each year imposes the salary cap level an agency will follow for their grants, cooperative agreements, and contracts. Since 2012, the cap has been tied to the federal Executive Level (EL)-II salaries, the cap increases when the EL-II salary rates go up. Effective January 8, 2017, EL-II has been increased from $185,000 to $187,000; it changes periodically. Ref: salary cap2015.pdf and

15 NIH Salary Cap: Background Ref: Dede Rutberg, Grants Administration Branch, NIDCR

16 NIH Salary Cap: Applicability The Salary Cap may fluctuate by the award dates e.g., two NIH grants for the same investigator, both award starting on the same date may be subjected to two different salary caps. If one was issued before the issuance of Salary Cap for the year, and another was issued after the release of the notice. In these situations, internal re-budgeting of the NIH grant is allowed to increase the salary up to the new salary cap level if there are sufficient funds in the budget of the project (without changing the scope of the work). Refer: Link

17 Salary Cap: Federal Sponsors Agency Name All agencies under DHHS (NIH, AHRQ, SAMHSA, CDC, HRSA, ACF, ACL, CMS) DoD, NASA, Coast Guard USDA NSF DoE Salary Cap $187,000 (FY17); EL-II $487,999 (Effective since June 24,2014) (Bipartisan Budget Act/BBA Cap) $161,900 (FY17); EL-III N/A N/A Office of Federal Procurement Policy Notice 03/15/2016

18 Salary Cap: Non-Federal Sponsors Agency Name American Heart Association Anesthesia Safety Foundation Cystic Fibrosis Foundation Michael J. Fox Foundation Salary Cap DHHS Salary Cap DHHS Salary Cap DHHS Salary Cap DHHS Salary Cap Multiple Sclerosis Society $199,700 Patient Centered Outcomes $200,000 Research Institute Susan B. Komen Foundation $250,000 Refer: limitations

19

20 Salary Calculation: When IBS is over the salary cap Actual salary paid to an individual is not constrained by the salary cap. Salary above the salary cap is considered as mandatory cost sharing and must be tracked by department and certified on an annual basis. Over the cap salary: Difference between the total monthly rate and DHHS salary cap rate NIH HHS Salary Cap Calculator Some useful tips and guidance: NIH Salary Cap FAQ

21 Salary Limitation: NIH Fiscal Policy proposals should reflect the actual institutional base salary of all individuals for whom reimbursement is requested. In lieu of actual base salary, however, applicants/offerors may elect to provide an explanation indicating that actual institutional base salary exceeds the current salary limitation. When this information is provided, NIH staff will make necessary adjustments to requested salaries prior to award. [NOT-OD ] Applications with a detailed budget should continue to reflect the actual institutional base salary of individuals for whom reimbursement is requested. NIH will make any adjustment necessary using the applicable salary limit in effect at the time of award.an application using the modular budget format, applicants should use the current salary limit when estimating the number of modules requested. [NIH Salary Cap FAQ] What would you do when the actual base salary is way above the NIH salary cap?

22 Salary Escalation Rate: NIH Fiscal Policy NIH Guide Notice NOT-OD states NIH will no longer be providing cost-of-living/inflationary increases in awards. Can applicants still request such increases in competing grants? [Refer: NIH FAQ] Detailed Budget: Applications with a detailed budget can continue to request cost-of-living/inflationary increases in accordance with institutional policy. We recognize that institutions may desire to do this to document actual needs for budgeting and accounting purposes. However, under the currentbudgetclimate,itislikelythatrequestsassociated solely with inflationary increases will be eliminated from the awarded budget. Modular Budget: Requests for an additional module solely to accommodate inflationary increases will not be considered.

23 Salary Escalation: Outlining NIH Fiscal Policy and Its Impact NIH does not have a well-structured policy on salary increment rate. NIH may align with the institutional policies. While developing budgets, some institutions propose salary increment following their own policies. Some of the institutions do not have uniform policy and guidance for salary escalation rate. The salary escalation rate can vary amongst different departments within the same institute indicating a lack of consistency.

24 Salary Cap Escalation: Outlining NIH Fiscal Policy Problems What if the Salary Cap increases by the time the award starts? Do the institutions propose increment on Salary Cap for future years while developing budgets? Do all NIH ICs follow uniform rules about salary cap escalation? What is the common practice and is it optimized?

25 Examples of Common Practice/Errors while Proposing Budget Assuming the salary cap refers only to salary requested, not to IBS: In case IBS is higher than the salary cap, adjustment should be made. Applying inflation to the salary cap in out years: Thesalary cap should remain flat across the budget years proposed and should not be increased by an inflationary percentage. Not adjusting the salary cap to match the appointment: The salary cap is for a 12-month period; the cap amount is reduced for the 9-month academic period. Not adjusting the salary cap to match the FTE level: Thecap is for a 1.0 FTE; it is proportionally reduced for a 0.75 or 0.50 FTE. Refer: HHS Salary Cap Link DHHS: Salary Rate Limitation FAQs

26 Salary Escalation Policy: A Preliminary Survey Organization Salary Escalation Rate (%) Salary Cap Escalation Rate (%) Institute-1 0 (Existing salary) 0 (Always cap) Institute-2, 3, 9, and 15 3% 0 (Always cap) Institute-4, 5, 6, 7, and 8 3% 3% Institute % 0 (Always cap) Institute % 3-7% Institute-12 4% 0 (Always cap) Institute % 0 (Always cap) Institute % 0 (Always cap)

27 Salary Escalation Policy: Preliminary Survey Results Institute (%) Institute (%) 7% 7% 6% % 7% 7% 26% 7% 7% 7% 7% 7% 6% 26% 33% 33% Salary Escalation Rate (%) Salary Cap Escalation Rate (%)

28 What Would Be the Optimized Practice for Entering Salary? Would you Include inflationary increment for salary rate per year? Would you consider including a slightly higher salary than the cap in case the award starts after a new (increased) cap is in effect? Would you enter actual salary when the PI s salary is far more than the DHHS/NIH salary cap? Would you keep the salary flat and increase the OTPS? Would you ask for additional personnel such as technicians/post-docs?

29 NSF: Salary Policy & Limitation For Senior Personnel: NSF limits the salary compensation requested in the proposal budget for senior personnel to no more than two months of their regular salary in any one year. This limit includes salary compensation received from all NSFfunded grants (Link to NSF Grant Proposal Guide). Forallotherpersonnel, including postdocs, research scientists, and other personnel not budgeted as senior personnel, the 2- month salary policy does not apply. For these other personnel, the compensation should be in proportion to the amount of effort the individual(s) in question contribute to the project. At proposal time, requests for exceptions to salary limitations should be disclosed in the proposal budget and justified in the budget justification.

30 NSF: Examples Dr. Lopez is applying for one NSF grant with October 20, 2017 deadline. The award start date is April Dr. Lopez has applied for a promotion for which she will most likely receive a favorable decision. The promotion will be in effect from January What salary would you use for Dr. Lopez s NSF proposal budget, her current salary or the anticipated new salary? Should a PI s salary be budgeted by dollar amount or person months? NSF policy speaks in terms of person months when addressing senior personnel salaries; therefore, always use person months when budgeting a PI s salary. Refer: NSF Grant Proposal Guide

31 Department of Defense (DoD): Background of Benchmark Compensation Since enactment of the statutory formula in 1998, DoD cap has increased more than 300%. The Statutory Formula Cap Benchmark compensation amount for certain executives and contractor employees for FY13 and FY14 are $980,796 and $1,144,888, respectively. The $1,144,888 Benchmark compensation amount is applicable only for contracts awarded before June 24, In December 2013, with the Administration's strong support, Congress reformed the ceiling on the reimbursement of contractor employee compensation to set a new cap. Federal Register: A Notice by the Management and Budget Office on 03/15/2016

32 DoD, NASA, and Coast Guard: New Compensation Limit The new Benchmark compensation cap was set by the Bipartisan Budget Act (BBA) BBA significantly reduce the allowable cost limit/compensation cap for all contractor and subcontractor employees to $487,999 This may allow exception for highly skilled employees such as engineers and scientists to ensure the agency has continued access to needed skills. BBA Cap is only applicable to contracts awarded and costs incurred after June 24, 2014 The BBA Cap was approved by the Senate on Dec 18 The BBA Cap will be adjusted annually to conform to the Bureau of Labor Statistics Inflation Index GCA New compensation cap

33 Who Can Be a PI on a Federal Grant? The applicant/participating PI/PD may not need to hold a PhD/MD/equivalent degree to be eligible to submit a federal grant. Restrictions apply for Training Grants and Career Development Awards.

34 Who Can Be PIs on NIH Grants? A PhD/MD/Equivalent degree is not absolutely necessary for mostoftheapplications;itdependsonthetypeofnihgrant program and the particular FOA. Research Grants (R-grants) and Training Grants (T-grants): Any individual(s) with the skills, knowledge, and resources necessary to carry out the proposed research as the Program Director(s)/Principal Investigator(s) (PD(s)/PI(s)) is invited to work with his/her organization to develop an application for support. Career Development (K) Awards: A research or healthprofessional doctoral degree or equivalent is required in general. Fellowship (F) Programs: PhD/MD/Equivalent degree only required for postdoctoral candidates. Early Stage Investigators: NIH is committed to supporting New and Early Stage Investigator (ESIs). A terminal research degree or end of post-graduate clinical training is required, whichever date is later, within the past 10 years. Refer: Parent Announcements: NIH Link; NIH: Who is eligible; ESI: NIH policy and compliance

35 Who Can Be PIs on NSF Grants? NSF Eligibility Criteria for Senior Personnel: NSF proposals do not require senior personnel (PD/PI/Co- PI/MPI; no distinction in scientific stature) to be PhDs. When does NSF require a PhD or equivalent terminal degree? Of all of these ways for your name to possibly appear in a proposal, only one budget-defined sub-category, Postdoctoral (Scholar, Fellow, or Other Postdoctoral Position) specifically requires a PhD or equivalent. And, these Postdoctoral participants are considered other personnel, no senior involved. Useful Links: NSF Blog Post; NSF Proposal Preparation Instruction

36 Who Can Be PIs for DoD/USAMRAA/CDMRP Awards? DoD Career Development Award: PI has to be independent, earlycareer researcher or physician-scientist within 10 years after completion of his/her terminal degree (excluding time spent in residency or on family medical leave). [link] Innovator Award: PIs must be at or above the level of Associate Professor (or equivalent). [link] Breakthrough Award: Investigators at all academic levels (or equivalent) are eligible to submit an application. [link] Distinguished Investigator Award: PIs must be at or above the level of Assistant Professor (or equivalent) and be more than 6 years beyond their last mentored position. [link] Investigator Initiated Research Award: Investigators at or above the level of Assistant Professor (or equivalent) are eligible to submit applications. [link] Clinical Trial Award: PIs at or above the level of Assistant Professor (or equivalent) are eligible to submit applications. [link]

37 Acknowledgement SRAI Annual Meeting 2017 Team Research Administration Community Albert Einstein College of Medicine, NY THANK YOU!