The amount of an individual’s salary charged to a HRSA funded project is capped at $179,700 per year. While the announcement does not limit the salary amount paid by an organization from other funding sources, it does have implications for financial budgeting and reporting. The announcement, implications, and recommendations follow.
As posted on the HRSA EHB: Per the Consolidated Appropriations Act, 2012 (P.L. 112-74) H.R. 2055 -297 enacted December 23, 2011, HRSA funds from this Act may not be used to pay the salary of an individual at a rate in excess of $179,700 per year (the Executive Level II salary of the Federal Executive Pay scale). If your organization has received HRSA funds from this Act and your HRSA project includes a salary that exceeds the rate of $179,700 per year, please contact the project officer and/or grants management specialist listed in your notice of award. Please note, the salary limitation also applies to personnel working part-time on a HRSA project. For example, if an individual works 50% of their time on the HRSA project, the salary rate limitation is $89,850.
Total Budget concept. Currently Health Centers funding applications are structured using a “total budget” concept where the applicant specifies funds requested as both federal and non-federal revenue sources on forms 424 and 424A for the scope of project included in the application. Similarly, applicants are also required to identify all non- federal revenue sources indicated on the income analysis form (patient charges, third party revenues, and other sources). The expectation is that federal and non-federal revenues are utilized to cover the costs of the program operations. Given that there is not a clear delineation in the application of how those revenue sources (federal and non-federal) will be applied to specific expenditures within the budget presented for the project scope, to date funded FQHCs have had some flexibility to allocate federal funds for specific costs associated with the program expenditures.
Independent of the “total budget” concept, these changes in the law will require health centers to demonstrate compliance with the new law regarding limitations on salaries charged to HRSA funded projects. Barring any changes HRSA may make to the Section 330 budget application, or subsequent reporting, it will be incumbent on FQHCs to ensure their auditor is aware of the changes in the law for compliance with circulars A-133 and A-122 of their annual financial audits. It is also recommended that FQHCs seek appropriate financial guidance with expert consultants to both ensure appropriate application of the law and documentation to demonstrate compliance.
For the Specific Language in the Law: H.R. 2055 -297 sec. 203
New Feb. 11, 2012 – Language Found in the Most Recent Service Area Competition (HRSA -12-169) FY 2012 SAC AA
iii. Budget (page 19)
A complete budget presentation in HRSA EHB will include the following:
• SF 424A: Budget Information – Non-Construction Programs:
• Form 2 – Staffing Profile: Complete this form for the first year of the proposed project. See Appendix A for detailed instructions.
The Consolidated Appropriations Act, 2012 (P.L. 112-74) enacted December 23, 2011, limits the salary amount that may be awarded and charged to HRSA grants and cooperative agreements. Award funds may not be used to pay the salary of an individual at a rate in excess of Executive Level II. The Executive Level II salary of the Federal Executive Pay scale is $179,700. This amount reflects an individual’s base salary exclusive of fringe and any income that an individual may be permitted to earn outside of the duties to the applicant organization. This salary limitation also applies to subawards/subcontracts under a HRSA grant or cooperative agreement.
As an example of the application of this limitation: If an individual’s base salary is $350,000 per year plus fringe benefits of 25% ($87,500) and that individual is devoting 50% of their time to this award, their base salary should be adjusted to $179,700 plus fringe of 25% ($44,925) and a total of $112,312.50 may be included in the project budget and charged to the award in salary/fringe benefits for that individual. See the breakdown below:
|Fringe (25% of salary)||$43,750|
|Amount that may be claimed on the application budget due to the legislative salary limitation: Individual’s base full time salary adjusted to Executive Level II: $179,70050% of time will be devoted to the project|
|Fringe (25% of salary)||$22,462.50|
v. Staffing Plan and Personnel Requirements (page 20)
In HRSA EHB, staffing and personnel information will be provided through Form 2: Staffing Profile,
Reminder: Award funds may not be used to pay the salary of an individual at a rate in excess of Executive Level II or $179,700. An individual’s base salary, per se, is NOT constrained by the legislative provision for a limitation of salary. The rate limitation simply limits the amount that may be awarded and charged to HRSA grants and cooperative agreements. Please provide an individual’s actual base salary if it exceeds the cap. See the sample below.
|Name||Position Title||% FTE||Annual Salary||Amount requested|
|J.Smith||Chief Executive Officer||50||179,700 *||89,850|
|R. Doe||Nurse Practitioner||100||75,950||79.950|
|D. Jones||Data/AP Specialist||25||33,000||8,250|
*Actual annual salary = $350,000