I am also reviewing this issue and I'm interested in your opinions of the
solution below.

Problem.  Since total clinical income at MSU varies from year to year, with
the actual amount determined by the amount of time spent seeing patients,
(and other fringe benefit issues - retirement contributions, etc.) we treat
clinical income as a separate additional salary payment even though it's
paid through the University payroll system.  As such, it does not meet the
definition of base salary and cannot be charged to NIH projects.  As a
result, our faculty (rightly) believes we have a disincentive to apply for
research since it's the clinical piece that has to shrink in order to add
the research piece.

Additional problems.  As we look at guaranteeing a piece of the clinical
salary so that it can be considered part of the base salary (and then
chargeable to NIH projects), we found two problems.
The first problem is fringe benefits.  Because we use a composite rate for
all research projects (excluding student, summer, and part time
appointments) the highly compensated employees already feel they are paying
more than their share of fringes.  The addition of clinical salary will only
make this worse.  We are considering stratified rates to solve this problem,
i.e., a lower rate for those that make more than the FICA cutoff, and maybe
another for those above the retirement contribution limit (160k).

The second problem is effort reporting.  Currently, we exclude all clinical
effort from the effort certification system because the rate of pay for
clinical effort can be significantly higher than for other "academic"
duties.  As a result, a salary based effort report for a surgeon (if we
included clinical salary with base salary) can look totally different than
hie/her actual effort.  Also, if we guarantee a portion of the clinical
salary up to the NIH salary cap, how do we publish effort reporting
instructions so that faculty know how much of the clinical effort to include
in the effort reports?  For example, 10% of a surgeon's clinical salary
would take them to the NIH cap but it might take 60% of a psychologists
clinical salary.  If we did this individual by individual wouldn't this be a
CAS consistency problem?

Potential solution.  Recognize that clinical salary is done to offset the
market cost of clinical faculty who work for universities.  Also recognize
that in many cases the non-clinical salary is being subsidized by the
clinical salary.   With the above understanding, create a policy that base
salary is comprised of two parts, first the traditional salary + a
guaranteed portion of the clinical income.  Faculty could also earn an
at-risk portion which could be based on the other clinical work performed.
The fringe issue still needs to be resolved.  The effort reporting would
exclude all clinical effort.  The guaranteed portion of clinical effort
would be considered a fixed part of the faculty compensation package.  Since
the U is responsible for setting the guaranteed portion of clinical salary,
they could set it at any level, up to the 127,900 NIH limit.  Perhaps it
would be better to use department wide averages to determine the % to move
into base salary.

What do you think?

Dan
~~~~~~~~~~~~~~~~~~~~~~~~~~~
Dan Evon,  Director
Contract & Grant Administration
Michigan State University
301 Administration Bldg.
East Lansing, MI 48824-1046

Voice: (517) 355-4727
Fax: (517) 353-9812
E-mail: xxxxxx@cga.msu.edu
Web Page: http://www.cga.msu.edu
~~~~~~~~~~~~~~~~~~~~~~~~~~~

 -----Original Message-----
From:   Evelyn J. Ford [mailto:xxxxxx@MAIL.MED.UPENN.EDU]
Sent:   Friday, September 10, 1999 10:04 AM
To:     xxxxxx@hrinet.org
Subject:        Re: Institutional Base Salary vs. Cap in Applications -
Summary

What about the text from NIH Notice 98-186:

The term "salary" has been interpreted by HHS Legal Counsel to mean "direct
salary", which is exclusive of fringe benefits and indirect costs/general
and administrative expenses.  "Direct salary" has the same meaning as the
term "institutional base salary".  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
duties to the applicant organization

-- Evelyn

At 04:54 PM 9/9/99 -0500, you wrote:
>Evelyn's last paragraph addresses an issue I was preparing to post:
>
>Our University has been struggling with the calculation of the
institutional
>base salary issue on NIH grants.  Many of our faculty are physicians whose
>University base salaries are relatively low (comparatively); however, their
>clinical income compensates for that.  When preparing NIH budgets, our
>faculty are limited to requesting salary based on their University base
>salary only - far below the $125,900 cap.  This is based on A21, J8d(1)
>which states:   "based on the individual faculty member's regular
>compensation for the continuous period which, under the policy of the
>institution concerned, constitutes the basis of his salary".
>
>Our faculty have said they know physicians at other institutions who are
>able to include their clinical income as part of their University base
>salaries.  Since clinical income is not guaranteed by our University, we do
>not feel we are following A21 appropriately if we include that income.
>
>Do any of you have any experience with this or do your instituions
interpret
>A21 differently?  We would love to help our faculty but want to stay within
>the bounds of A21.
>
>In addition, if there is a way we can include clinical income as part of
the
>faculty's regular compensation for NIH awards, would this affect the
>institution's IDC calculation/rate?
>
>Thank you in advance for your responses.
>
>
>Nancy Nisbett

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