Compensation Limits for Faculty

What are the Compensation Limits for Faculty Working on Federally Sponsored Projects?

Can you work an overload for a federal project?

In general, No – If you are working on a federal project during the academic year- the project should fit within your full time schedule. Exceptions may be granted in specific programs (such as a short-term conference/workshop etc) but this exception would have to be explicitly stated in the proposal budget and justification, and approved in advance by the agency program officer (in writing). If grants funds are used to pay salary during the academic year, the normal workload should be adjusted accordingly (in general the funds are used to pay for the time reallocated to the project).

What are the summer compensation limits for 9-month faculty?

You may be paid up to 33% of you 9-month, base salary if you are getting funds from any federal source. Your base salary does not include overloads, administrative stipends or other pay you may receive over the academic year. This 33% is your total compensation limit, thus it includes any teaching, stipends or other pay you may be receiving from the University. Additional limitations may be set by specific agencies, such as NSF's two-ninths rule which limits faculty summer salary to 2/9 of their base academic year salary (applies to all NSF projects).


Professor Davis Johnson earns a base salary of $105,000 during the academic year. During the academic year he also receives $5,000 for a special administrative assignment and was paid an additional $1000 for receiving a service award. His total compensation for the academic year is $111,000. He receives an NIH grant, and plans to use it to pay his summer salary. His summer salary is limited to $35,000 (= 3/9 of $105,000). He is asked if he want to teach a summer course that would pay $9,187.50. If he accepts the course, he would have to reduce the amount he receives from his NIH grant to $25,812, so that his total summer compensation remains at $35,000 (3/9 of his academic year base salary).

Restrictions on compensation may vary by agency or by grant program, but the federal guidelines that affect Educational Institutions are found in the Office and Management and Budget (OMB) Circular A-21. Direct excerpts from this policy are provided below.

Relevant sections of CIRCULAR A-21 Revised 05/10/04

J. General provisions for selected items of cost.

10. Compensation for personal services.

J. 10. a. General.

Compensation for personal services covers all amounts paid currently or accrued by the institution for services of employees rendered during the period of performance under sponsored agreements. Such amounts include salaries, wages, and fringe benefits (see subsection f). These costs are allowable to the extent that the total compensation to individual employees conforms to the established policies of the institution, consistently applied, and provided that the charges for work performed directly on sponsored agreements and for other work allocable as F&A costs are determined and supported as provided below. Charges to sponsored agreements may include reasonable amounts for activities contributing and intimately related to work under the agreements, such as delivering special lectures about specific aspects of the ongoing activity, writing reports and articles, participating in appropriate seminars, consulting with colleagues and graduate students, and attending meetings and conferences. Incidental work (that in excess of normal for the individual), for which supplemental compensation is paid by an institution under institutional policy, need not be included in the payroll distribution systems described below, provided such work and compensation are separately identified and documented in the financial management system of the institution.

1. Salary rates for faculty members.

(1) Salary rates for academic year. Charges for work performed on sponsored agreements by faculty members during the academic year will be based on the individual faculty member's regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his salary. Charges for work performed on sponsored agreements during all or any portion of such period are allowable at the base salary rate. In no event will charges to sponsored agreements, irrespective of the basis of computation, exceed the proportionate share of the base salary for that period. This principle applies to all members of the faculty at an institution. Since intra university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his regular departmental load, any charges for such work representing extra compensation above the base salary are allowable provided that such consulting arrangements are specifically provided for in the agreement or approved in writing by the sponsoring agency.

(2) Periods outside the academic year.

(a) Except as otherwise specified for teaching activity in subsection (b), charges for work performed by faculty members on sponsored agreements during the summer months or other period not included in the base salary period will be determined for each faculty member at a rate not in excess of the base salary divided by the period to which the base salary relates, and will be limited to charges made in accordance with other parts of this section. The base salary period used in computing charges for work performed during the summer months will be the number of months covered by the faculty member's official academic year appointment.

(b) Charges for teaching activities performed by faculty members on sponsored agreements during the summer months or other periods not included in the base salary period will be based on the normal policy of the institution governing compensation to faculty members for teaching assignments during such periods.

(3) Part time faculty. Charges for work performed on sponsored agreements by faculty members having only part time appointments will be determined at a rate not in excess of that regularly paid for the part time assignments. For example, an institution pays $5000 to a faculty member for half time teaching during the academic year. He devoted one half of his remaining time to a sponsored agreement. Thus, his additional compensation, chargeable by the institution to the agreement, would be one half of $5000, or $2500.

What does this mean??

  • Charges for compensation are allowable at the faculty member’s base rate.
  • Extra compensation above the base rate is allowable under certain conditions.
  • The work must be above and beyond the normal workload.
  • There must be written approval from the sponsor.
  • Caps on summer salary are based on the Faculty member's base salary during the academic year.