University of Illinois System
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16.2.3 Compliance with Health and Human Services Salary Rate Limitation

Policy Statement:

It is the policy of the University of Illinois System that salaries charged directly to U.S. Department of Health and Human Services (HHS) funding or captured as part of the system’s HHS indirect cost rates will not exceed the salary rate limit (SRL) as published in the Federal Executive Pay Scale for Executive Level II. The system may pay salaries at a rate higher than Executive Level II of the Federal Executive Pay Scale provided the amount beyond the HHS SRL is paid with institutional funds.

Reason for Policy

This policy alerts the system to the HHS Salary Rate Limit in the HHS Grants Policy Statement and the National Institutes of Health (NIH) Guide Notice NOT-OD-25-025. Therefore, the University of Illinois System establishes these policies and procedures to ensure adherence to the legislative mandate limiting salaries to Executive Level II of the Federal Executive Pay Scale on HHS awards.

Applicability of Policy

This limitation applies to:

  1. Direct Salaries: Compensation for individuals working directly on HHS-funded projects (e.g., National Institutes of Health (NIH) awards).
  2. Indirect Salaries: Salaries within indirect cost pools that contribute to the system's Facilities and Administrative (F&A) cost rate.

This policy applies to all HHS awards, including new awards, competing renewals, non-competing continuations, and supplements issued on or after October 1, 2024.

Procedures

  1. Salary distribution for individuals working on HHS-funded projects must be reviewed on a continuous basis and appropriately charged to ensure compliance with the SRL.
    1. Salaries must be budgeted and charged to HHS awards at a rate that does not exceed Executive Level II of the Federal Executive Pay Scale multiplied by the corresponding effort percentage. The SRL must also be prorated for any appointments less than 12 months and/or less than 1.0 FTE.
    2. Salaries above the HHS SRL must be allocated to institutional funds.
    3. If the SRL increases during the period of performance and adequate funds are available on the award, recipients may re-budget funds to accommodate the current Executive Level II salary level.
  2. Indirect cost rates for HHS projects must exclude salaries above the SRL from applicable cost pools.
    1. Federal indirect cost rates will be analyzed and reduced if necessary to establish separate HHS indirect cost rates.
    2. HHS proposal and award budgets will utilize the applicable HHS indirect cost rate for the life of the project.

Definitions

  • Salary Rate Limitation (SRL): The maximum allowable annual salary rate for individuals whose salaries are charged to HHS awards, as specified by Executive Level II of the Federal Executive Pay Scale.
  • Direct Costs: Costs that can be specifically identified with a particular project or activity.
  • Indirect Costs: Costs incurred for common or joint objectives that cannot be readily assigned to a specific project.

Responsibilities

  • Principal Investigators (PIs): Ensure salary charges to HHS awards are within the allowable rate and comply with this policy.
  • Department Administrators: Oversee the accurate allocation of salary costs and adherence to cost-sharing requirements.
  • Sponsored Programs Offices: Provide guidance to ensure compliance across all units.

Additional Resources

First published: June 2025 | Last Updated: June 2025 | Last Reviewed: June 2025