I am looking for advice on  how other administrators have dealth with a
problem that our unit has recently had to deal with:  the NIH "cap" on
salaries for faculty investigators with 9-month appointments.  My apologies
for the wordiness of what follows:

The NIH has long imposed a salary cap (now at $125,900) on the RATE at
which researchers may be paid for work on NIH-funded projects.  For people
on 12-month appointments, this is fairly straightforward:  divide 125,900
by 12 and one arrives at a monthly rate of $10,492.  (This is the example
provided in the NIH Guide.)  But what of people (faculty, generally) on
9-month appointments?

At research universities, this is a fairly common appointment:  one's
institutional base annual salary is paid in return for working 9 months of
academic year time.  At many universities, one is allowed to work
"overtime" during the summer for a maximum of 3 months and receive 1/9 of
one's annual salary per month.  For junior faculty, this is relatively
straightforward.  But for senior faculty, it is likely that their salaries
may exceed the capped RATE.  How to compute their salaries?  The problem
arises both for academic year salaries and for summer salaries.  For instance:

Your PI has a salary of $150,000 on a 9-month appointment.  Were he funded
by some combination of, say, university funds and funds from a private
foundation, his monthly salary would be $16,666 (150,000/9), and he could
receive up to $200,000 total annual compensation (9x16,666 +  3x16,666).

Suppose, however, that the PI wants to use NIH research funds to pay for
one summer month?  One's immediate reaction is to say:  well, the 125,900
cap applies, so divide $125,900 by 9, and the summer month is reimbursed at
$13,989.  A bit of a cut from what he would have received for work done on
non-NIH funding, but a nice salary nonetheless.

But, someone says, Aha!  One does not divide an annual salary by 9 (even
though the university considers that the institutional base annual salary),
one divides an annual salary by 12!  Thus the maximum monthly compensation
permitted is $10,492--same as for people on 12-month appointments.  Hmmm.
Now the PI's salary for one-month of summer work is taking a hit vis-a-vis
what it would have been under the first two scenarios.  Is this a problem?

Well, yes.  Imagine you are a PI on a nine-month appointment.  At what
point does your 9-month appointment's annual salary exceed the NIH salary
cap?  Answer:  at $94,425.  If you make more than that, you take a pay cut
to work on NIH-funded projects.  Can it get worse?

Try this:  your hypothetical PI has an institutional annual base salary of
$150,000 per year on a 9-month appointment.  She gets two grants from NIH
agencies:  1) she is PI one that funds her one summer month; 2) the other
provides for 50% buy-out time so that she can do research during the
academic year.  NIH says that grant #2 is limited to paying $62,950 (one
half of the $125,900 cap) for 4.5 months during the academic year and that
the PI can use no other NIH funds to pay summer salary.  So your PI could
not take ANY salary for work on any NIH project over the summer.  That is a
serious salary "hit."

It is possible, of course, to "top up" PI salaries from other, non-Federal
sources, but this truly begs the question.  If this interpretation of
9-month salary structures is indeed immutable, this is not a good incentive
for senior PIs to do work on topics of interest to NIH.

Do all NIH agencies interpret the salary cap issue in this manner?  Is
there some obvious solution to the problems outlined above?  Do others see
this as an issue that needs to be addressed?

With thanks for your advice,

Bob Barde, Academic Coordinator
Institute of Business and Economic Research
F502 Haas  UC Berkeley 94720-1922
tel. (510) 642-8351  fax 642-5018
xxxxxx@uclink4.berkeley.edu

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