Salary Caps

The salary cap, also known as the National Institutes of Health (NIH) Salary Cap, is a legislatively-mandated provision limiting the direct salary (institutional base salary) that can be paid to an individual working on grants and cooperative agreements provided by the Public Health Service agencies, including the NIH.

This provision, which has been in effect every year since 1990, restricts the amount of direct salary to the Executive Level II pay scale. NIH provides a summary page listing all of the applicable pay scales by effective date.

Institutional Base Salary

Institutional Base Salary (IBS) is the base annual compensation set by the University for an employee. It includes salary increments, augmentations and paid overtime, and recurring payments for chairmanships, directorships, and named professorships. It does not include nonservice payroll items such as service awards, bonuses, fellowships, non-service supplements, and overload payments, nor does it include compensation for patient care activities provided through the University of Minnesota Physicians practice plan that are paid through the University's common paymaster.

See a list of earnings codes included and an outline of best practices.

How Does IBS Relate to Cost Share?

Cost sharing is the portion of total costs of a sponsored project borne by the University rather than the sponsor. Anytime the University provides salary support on nonsponsored funds for effort provided on a sponsored project, this is considered cost-shared effort.

When a salary cap is instituted by a sponsor and the IBS paid to an employee by the University exceeds this sponsor-mandated rate of pay, the portion of salary not covered by the sponsor must be treated as “over-the-cap” cost sharing.

Additional information on verifying and calculating cost share is provided in the Salary Cap Payroll and Cost Share Calculations job aid.