HHS Salary Rate Limit

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HHS Salary Rate Limit Policy

Background

Salary Rate Limit (SRL)
Generally, the United States Department of Health and Human Services (HHS) Appropriations Act includes an SRL. This statutory requirement limits the amount of funds under a grant or other extramural mechanism that can be used to pay individual salaries (including executive salaries) at a rate above the Executive Level II. Recipients such as HWS may pay salaries at a rate higher than the Executive Level II if the amount beyond the HHS SRL is paid with non-HHS funds. Since the Executive Level II rate and HHS Appropriations Act citation changes each year, HHS (and this policy document) refers to the Office of Personnel Management (OPM) posting the most recent information at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/. (From this webpage, click on the “Rates of Pay for the Executive Schedule” link.)

The HHS SRL applies to:

  • The majority of HHS awards.
  • Both direct and indirect (Facilities & Administration) costs under applicable HHS awards.
  • Indirect cost proposals for which HHS is HWS’ cognizant agency.

Effective October 1, 2024, when HHS is the cognizant agency for indirect costs or when HHS is acting as the shared-service provider for another cognizant agency for indirect costs, the HHS component that reviews and negotiates indirect cost rate proposals and cost allocation plans will issue Negotiated Indirect Cost Rate Agreements (NICRAs) that incorporate the HHS SRL, to comply with the HHS Appropriations Act requirement.

Note that, if desired, HWS may request a companion rate on the NICRA from HHS that does not incorporate the HHS SRL if:

  • HHS is the cognizant agency for indirect costs or HHS is the shared-service provider for their cognizant agency for indirect costs; and
  • HWS is applying for an award from another Federal agency or from a program not subject to the HHS SRL.

Policy

Beginning with HHS awards, including continuation and supplemental awards, made on or after October 1, 2024, if the grant includes any salary that exceeds the SRL both in whole and any portion of a salary that at a full-time equivalent exceeds the SRL, OR if the grant uses an indirect cost rate that does not comply with the HHS SRL requirement, HWS must take and document the following actions:

  • Identify those HHS awards where HHS funds are used to pay any salary that exceeds the SRL. This includes both direct and indirect costs, both in whole and any portion of a salary that at a full-time equivalent exceeds the SRL.
  • Ensure that HWS does not draw down HHS award funds, whether as direct or indirect costs, to pay for salaries above the HHS SRL.

Procedures

Where applicable, for any HHS grant awards, made on or after October 1, 2024, that do include salary levels above the current Executive Level II rate in the grant award budget, the Office of Sponsored Programs will work with the Business Office to reduce the wage budget to ensure that it does not include salary levels above the current Executive Level II rate. Further, the Grants Manager in the Business Office will review actual grant expenditures prior to any draw down of funds, to ensure that the expenditures do not include salaries at a rate above the current Executive Level II rate.

If the grant budget uses a NICRA that does not comply with the HHS SRL requirement, if possible, the Office of Sponsored Programs will negotiate with HHS to use a negotiated rate that does comply with the HHS SRL requirement.

If this is not possible, the Business Office will recalculate the utilized NICRA rate so that it excludes salary levels above the current Executive Level II rate.

Effective immediately, the HWS Office of Sponsored Programs will ensure that no HHS grant proposals include salary levels above the current Executive Level II rate. The Grants Manager in the Business Office will also review HHS grant proposal budgets prior to submission to ensure that they do not include salary levels above the current Executive Level II rate. As needed, proposed salary levels and/or NICRA rates will be reduced to comply with the HHS SRL requirement.