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Office of Research and Innovation
Research Administration and Compliance

Salaries and Wages

Salary and wages on a sponsored project are budgeted using an individual’s current salary base or their anticipated salary base. A minimum of 3% inflationary increase is recommended for each additional project year budgeted. Inflationary increases are budgeted as of July 1 of each subsequent year. Please note that this is a recommendation only, not a mandatory budgeting requirement.

Current Salary for Faculty and Staff

If an individual being budgeted is a current employee of the university, then their salary should be budgeted based on the individual’s current salary and appointment type. There are two ways to budget faculty or staff time on a project. The first option is to budget based on the number of months being committed to the project. The second option is to budget salary based on a percentage of time being dedicated to the project. Please see below for an example of each method:

Example #1 – Months Committed

A faculty member will be committing two (2) months to work on a sponsored project. This individual earns $90,000 on a 9-month appointment. To find out how much to budget for two months, we first need to find out how much this individual earns on a monthly basis. Therefore, we will take the individual’s salary and divide it by their appointment length (i.e., $90,000/9)*. In this example, our faculty member’s monthly rate is $10,000. We then take the monthly rate and multiple it by the number of months being committed to the project. Consequently, the appropriate amount to budget will be $20,000 in Year 1 (i.e., $10,000 x 2). Then, if the amount of time committed doesn’t change in the next year, the appropriate amount to budget in Year 2 would be $10,300 (i.e., $10,000 x 1.03 — using the recommended minimum 3% inflationary rate).

* This method is the same when budgeting a 12-month employee. The only difference is that we would divide the employee’s salary by 12 months (versus the nine months as used above).

Example #2 – Percentage of Time Committed

A research associate will be dedicating 25% of their time on a project. This individual earns $55,000 on a 12-month appointment. Therefore, in this scenario, we would budget $13,750 in Year 1 (i.e., $55,000 x 25%) and $14,162 in Year 2 (i.e., $13,750 x 1.03).

Things to Keep in Mind

  • Effort should be described in terms of monthly effort — not hourly effort. NC State University’s effort reporting system is based on monthly effort (or a percentage thereof). Review the Monthly Effort Reporting Justification for further information. This information should be added to your budget justification if the sponsor requires hourly rates.
  • Keep in mind that there may be sponsor caps on how much time an individual can commit to a project.
  • Departments may also have guidelines on how much effort an individual should expend on research efforts. Therefore, please find out what your department head’s expectations are when budgeting salary release or summer pay.
  • Honoraria to an employee should be budgeted under salaries carrying the appropriate fringe benefit. Please visit the University of North Carolina System for additional information.
  • Many sponsors will request annualized salary levels, so the following NC State Guidance should be followed for converting 9-month appointments to 12-month annualized rates.

NSF and NIH Guidelines

The National Science Foundation (NSF) permits a maximum amount of two months of salary per year for senior personnel from all NSF awards. Budgeted salary greater than two months in a year must be justified and specifically approved in an award notification.

View NSF Two-Month Salary Policy

The National Institutes of Health (NIH) restricts direct salary reimbursement to $221,900 per year (rate effective January 1, 2024).  

View NIH Guidance on Salary Limitation

Postdoctoral Associates, Graduate Students and Temporary Employees

You should base the salaries of postdoctoral associates, graduate students and temporary employee on either your department’s guidelines (e.g., your department generally pays its graduate students $25K for a 9-month appointment) or on salaries from previous projects with similar positions (e.g., your department paid a webmaster $25/hour on a similar research project last year).

Example #1 – Graduate Students

When budgeting for a graduate student, first determine if the appointment will be for nine months or 12 months. Graduate students should not work more than 20 hours per week during the academic months, and no more than 40 hours per week during the summer months. As an example, if a project will utilize the services of a graduate student earning $20,000 on a 9-month appointment for two project years, the amount budgeted in Year 1 is $20,000 and the amount budgeted in Year 2 is $20,600 ($20,000 x 1.03 — using the recommended minimum 3% inflationary rate).

Example #2 – Temporary Employees

Temporary employees (e.g., undergraduate assistants, specifically required paraprofessionals, etc.) can either be budgeted using an hourly rate or using a flat rate. For example, if a project will need to hire a webmaster for 100 hours during Year 1 and 50 hours during Year 2 and the individual’s rate of pay is $25/hour, the amount budgeted in Year 1 will be $2,500 and the amount budgeted in Year 2 will be $1,250. Please note that temporary employees are exempt from the university’s effort reporting system.