eFECS Application of New Salary Cap

MRAM - March 13, 2014Michael Anthony

Management Accounting & AnalysisUniversity of Washington

Effective January 12, 2014, the Executive Level II NIH salary cap changed to $181,500 annually

Annual increase of $1,800 from the previous cap of $179,700

Change permits more salary to be charged directly to grants thereby reducing the amount of salary cap cost sharing required

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

Official notification for change found in NIH Notice of Salary Limitations on Grants, Cooperative Agreements and Contracts Notice Number: Not-OD-14-052.

Notice states this applies to “FY 2014 Awards Issued” Further language clarifies ability to “re-budget/charge

up to the new salary cap based on the fiscal year of the award and the time the salary expense is incurred providing the budgets have funds available to cover the increased salary charges.

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

The Notice states that awards issued in years that were restricted to Executive Level II, including competing awards already issued in FY2014, if adequate funds are available and if the salary cap increase is consistent with the institutional base salary, grantees may re-budget to accommodate the current Executive Level II salary level

However, no additional funds will be provided to these grant awards and the total estimated cost of the contract will not be modified.”

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

Maximum impact on a grant is $1,800 per year ($181,500 minus $179,700) which equates to $150 per pay period.

Considering this, the change will be made effective in eFECS January 1, 2014 rather than January 12, 2014.

The impact by starting January 1, 2014 is slightly less than one pay period.

Decision will be left to departments to adjust the salary cap cost sharing on the FEC should they wish to do so given the minimal impact on the majority of grants.

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

When one factors in the percent effort devoted to most grants by faculty exceeding the salary cap, the impact may be incidental.

For example, a faculty member with an IBS at or above the new salary cap providing 10% effort on a grant will impact the salary cap cost sharing and salary charged to the grant by approximately $15 for this 12 day period.

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

To assist academic departments in this transition (i.e., 9/16/2013 – 3/15/2014 FEC cycle) eFECS will average the two salary caps in effect during the autumn/winter FEC cycle.

This will eliminate the need for departments to correct the salary cap cost sharing unless The grant does not cover the full FEC cycle so the

salary caps are not equally weighted and/or Decision is made not to increase the salary

charges to the grant.

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

In those cases adjustments will need to be made to the salary cap cost sharing amounts calculated by eFECS.

Detailed guidance for making adjustments to the salary cap cost sharing amounts on the FEC will be provided closer to the time the FEC reports are to be released.

eFECS Application of New Salary Cap

University of Washington Management Accounting & Analysis

Example FEC Adjustment When New Salary Cap Not Desired

University of Washington Management Accounting & Analysis

Desired FEC CalculationEffort Salary Sal Cap Amount Dir Chg Cst Shr

Annual 20% 200,000 179,700 40,000 35,940 4,060 6 Months 20% 100,000 89,850 20,000 17,970 2,030

18% 2%

Salary from FEC

ELI Sal Cap

Sal as % of Cap

% Dist from FEC

Min C/S Req C/S Adj

From FEC 17,970 90,750 19.8% 18.0% 1.8% 0.2%

Actual eFECS Calculation

Adjustment Required When Previous Salary Cap is Retained

Assumes $200,000 annual salary & 20% grant effort

Capital lease payments must be charged to reserve budgets, not operating budgets. Rates should include depreciation of these assets not the lease payment.

New accrual section on quarterly reports Variance analysis will be required annually MAA will begin sending out reminder emails that

recharge rate proposals are due Other emails, e.g., escalation emails, will be

forthcoming

Recharge Center Updates

University of Washington Management Accounting & Analysis