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Effort Certification

IU Employee Receiving Indiana University and Practice Plan Compensation

Example: Initial Determination of Annualized Salary Limitation Amount

Consider a Monthly employee also receiving practice plan compensation that works on a project in Spring 2016, Monthly effort period, (2016M02, January 1 to June 30, 2016). The annualized salary cap amount for calendar year 2016 is utilized.

This annualized amount is $185,100 according to the NIH salary cap summary for Indiana University appointments. Since we are only considering the NIH salary cap for a partial year (the Spring 2016 Monthly effort period) the salary cap for the period is 50% of the annualized amount or $92,550.00.

Salary Cap Amount Applicable to an Award:

Since there are two components to employee compensation, Indiana University and practice plan, both must be included in the institutional base salary determination and the NIH Salary Limitation applied to the combined compensation.

Now that the annualized salary cap amount has been determined, the amount applicable to the award effort is determined. Just as the annualized salary cap is prorated for the specific effort period, the salary cap amount applicable to the award is prorated by the percentage effort applied to that award.

For example, we know from the scenario above that the Spring 2016 Academic effort period salary cap amount is $92,550.00, but that cap amount is only applicable if the individual applies 100% effort to the project during the effort period.

Let's assume the individual works 20% of their time (i.e., 20% effort) on the project during the effort period. The salary cap for that project for the Spring 2016 Academic effort period would be 20% of $92,550.00, or $18,510.00. ($92,550.00 x 20% = $18,510.00)

Let's say that same individual's total Indiana University and practice plan compensation during the Spring 2016 Academic effort period is $150,000.00. We stated that 20% of their effort is applied to the project during the effort period, meaning their compensation direct paid by this award is $30,000.00. From the calculations, the individual has exceeded the salary cap by $11,490.00. ($30,000.00 direct charges - $18,510.00 computed salary cap = $11,490.00 required cost share amount)

Total Period Salary ALL IU Institutional Base Total Project Effort for Period Effort Percentage for Period Effort Period Salary Cap Salary Cap Applied to Project Effort Required Cost Share for Project Effort
$150,000.00 $30,000.00 20% $92,550.00 $18,510.00 $11,490.00

This is the total cost share required based on the institutional base salary as the sum of Indiana University and practice plan compensation. The actual allocation of direct charged salary to the award, and the cost share allocation as required by the NIH Salary Limitation are prorated to the Indiana University and practice plan portions of the total institutional base salary.


Practice Plan Portion

Practice Plan Salary for Period Total Practice Plan Salary Applied to Project for Period Practice Plan Effort Percentage for Period Practice Plan Salary Direct Charged to Project Practice Plan Required Cost Share for Project
$100,000.00 $20,000.00 20% $12,340.00 $7,660.00

Indiana University Portion

Indiana University Salary for Period Total Indiana University Salary Applied to Project for Period Indiana University Effort Percentage for Period Indiana University Salary Direct Charged to Project Indiana University Required Cost Share for Project
$50,000.00 $10,000.00 20% $6,170.00 $3,830.00

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