NIH Clarifies Budget Guidelines on Salary Increases

On August 8, 2012, NIH’s Grants Funding Office issued clarifications on their Budget FAQs page on how to treat budgetary increases in 2012 and allowability of salary adjustments which was originally published earlier this year in their Notice 12-036. 

Direct news source (quoted below):     http://grants.nih.gov/grants/news.htm#20120808.119

1.    NIH Guide Notice NOT-OD-12-036 states NIH will no longer be providing cost-of-living/inflationary increases in awards. Can applicants still request such increases in competing grants?

There is an important difference between what an applicant can request and what NIH will actually provide on an award.  In this case, application instructions have not changed.   Applications with a detailed budget can continue to request cost-of-living/inflationary increases in accordance with institutional policy.   We recognize that institutions may desire to do this to document actual needs for budgeting and accounting purposes.  However, under the current budget climate, it is likely that requests associated solely with inflationary increases will be eliminated from the awarded budget.   Requests associated with special needs (e.g., equipment, added personnel or increased effort) will continue to be considered.

When preparing an application using the modular budget format, existing policy remains in place–the number of modules requested should be the same each year and variations must be justified.   Requests for an additional module solely to accommodate inflationary increases will not be considered.

See also FY2012 Salary Cap Question and Answer #18 for similar guidance concerning applications involving the legislatively mandated salary cap.

2.    Once an award is issued, may grantees rebudget to accommodate an institutional-supported salary increase?

Yes.  NIH rebudgeting policy remains unchanged.  Grantees may rebudget to accommodate such an increase without NIH prior approval unless the action triggers a change in scope as described in section 8.1.2.5 of the NIH Grants Policy Statement.  This assumes the cost is otherwise allowable under the applicable cost principals and NIH policy.

3.    Related to Question #2, is such rebudgeting to accommodate a salary increase that exceeds the legislatively mandated salary cap allowed?

No.  Such a charge would be unallowable.  For more information on FY2012 salary cap, see separate Frequently Asked Questions.

4.    In FY2013 non-competing progress reports (Type-5’s), can grantees submit a budget at the committed level that shows an institution-approved and documented salary increase? If yes, will NIH remove these costs?

When budgets are part of a Type-5 progress reports, grantees should always request at the committed level and present a budget that represents the anticipated costs needed for the next budget period.  NIH Grants Management staff will assess the request and determine if any of the rebudgeting reflects a change in scope.  If no change in scope is indicated, then NIH will not adjust the award level based solely on the rebudgeting assessment.   However, the overall fiscal climate in any particular year will continue to affect actual funding levels.

NIH Fiscal Policy for Grant Awards – FY 2012  

Notice Number: NOT-OD-12-036

This Notice provides guidance about the NIH Fiscal Operations Plan for FY 2012 and implements the Consolidated Appropriations Act of 2012 (P.L. 112-74), signed by President Obama on December 23, 2011.   The Act provides NIH with $30.7 billion, an increase of less than one percent over FY 2011 (after transfers).  The NIH will continue to manage its portfolio in biomedical research investments in a manner that includes addressing the need for a highly productive pool of researchers by providing support for new investigators.

The following NIH fiscal policies are instituted in FY 2012:

FY2012 Funding Levels:  Non-competing awards will be issued without cost of living/inflationary adjustments in FY 2012; however adjustments for special needs (such as equipment and added personnel) will continue to be accommodated.    This policy applies to all grants (research and non-research) when applicable.    

The NIH will make efforts to keep the average size of awards constant at FY 2011 levels or lower.  For new and competing grants, NIH awarding Institutes/Centers (IC) will develop funding principles consistent with overall NIH goals, considering the funds provided to their IC this fiscal year. 

Inflationary Increases for Future Years:  Inflationary increases for future year commitments will be discontinued for all competing and non-competing research grant awards issued in FY 2012, however adjustments for special needs (such as equipment and added personnel) will continue to be accommodated.   

FY 2012 awards that have already been issued will be revised to adjust the award level and future year commitments in accordance with these principles. 

Ruth L. Kirschstein National Research Service Awards (NRSA):  The NIH will implement a two percent increase at all stipend levels.  Further information about NRSA stipends in FY 2012 will be published in the NIH Guide in the near future.         

New Investigators:   NIH will continue to support new investigators on R01 equivalent awards at success rates equivalent to that of established investigators submitting new (Type 1) R01 equivalent applications.  Achievement of comparable success rates should permit the NIH to support new investigators in accordance with the policies established in FY 2009 and subsequent years and described at http://grants.nih.gov/grants/guide/notice-files/NOT-OD-09-013.html and at http://grants.nih.gov/grants/new_investigators/index.htm.

Salary Limits:   Section 203 of the Consolidated Appropriations Act prohibits payments for salaries under grants and other extramural mechanisms to rates in excess of Executive Level II.  Guidance related to Section 203 will be published in the NIH Guide in the near future.

Additional Information:   Additional details on Fiscal Operations, including specific funding strategies for ICs will be posted at http://grants.nih.gov/grants/financial/index.htm.