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NIH Issues Guidance on Salary Cap Reduction, Inflationary Increases

Legislative Update
January 20, 2012

Salary Cap:

Today, the National Institutes of Health (NIH) issued guidance on the Fiscal Year (FY) 2012 Consolidated Appropriations Act’s (P.L. 112-74) reduction of the direct salary in grants from Executive Level I ($199,700) to Executive Level II ($179,700), which reflects a ten-percent reduction. A 17 percent cut had been proposed in the “Chairman’s Mark” of legislation put forth by House Labor, Health and Human Services, and Education (LHHS) Appropriations Subcommittee Chair Denny Rehberg (R-MT), but advocacy by the research community reduced that proposed cut. The cut applies to the base salary, exclusive of fringe benefits and facilities and administrative expenses, also referred to as indirect costs.

Per the NIH guidance, researchers who were awarded new grants before December 23, 2011, (the day that President Obama signed the legislation into law) are not affected and can collect up to $199,700 in salary from their grants. New awards granted on or after December 23 will be limited to the top salary of $179,700. And for competing awards issued on or before December 22, 2011, no adjustment will be made to the FY2012 award, however, future year commitments will be adjusted when applicable to reflect Executive Level II. Non-competing awards will not be adjusted to reflect Executive Level II for either the FY2012 award or any future year commitments.

Despite being limited in scope as compared to the House proposal, the salary cap will have a significant impact on academic institutions. NAEVR is joining with ARVO in supporting a coalition being formed by the Association of American Medical Colleges (AAMC) to roll back the salary cap in FY2013 appropriations legislation.

Inflationary Increases:

The NIH also announced that non-competing awards will be issued without cost of living/inflationary adjustments in FY2012; however adjustments for special needs (such as equipment and added personnel) will continue to be accommodated. Inflationary increases for future year commitments will be discontinued for all competing and non-competing research grant awards issued in FY2012, however adjustments for special needs (such as equipment and added personnel) will continue to be accommodated.