NSF Broke Pay Caps by $17 Million, Then Forgave Most of the Debt
Summary
A National Science Foundation inspector general audit finds that NSF paid its highest-tier excepted-service employees $17.1 million above statutory salary caps between fiscal years 2014 and 2024 -- a decade traced to a 2017 legal opinion that wrongly treated the caps as self-imposed. NSF fixed its pay bands only after a 2023 pay-raise controversy drew media and OPM scrutiny and the Justice Department ruled the cap did apply. It then waived collection of $15.5 million in overpayments from current and former employees rather than seek repayment, while a separate $1.6 million the audit flagged as unresolved was later confirmed addressed.
A legal opinion that treated the cap as optional
Federal law caps AD-appointed salaries two ways: basic pay alone may not exceed Executive Schedule level IV (EX-IV), and basic pay plus locality pay together may not exceed level III (EX-III) once locality pay is authorized for the category -- which it has been for 's AD employees every year since 1994. Overpayments above the EX-III limit held under $20,000 a year through FY2016. Then, during a 2017 review of that year's proposed pay bands, 's then-General Counsel opined that the limits tied to 's AD bands were "self-imposed" by the agency rather than statutory. The overpayment total jumped to $599,856 that year and kept climbing every year after -- reaching $3.9 million in FY2023 -- as 633 of 's 992 AD-4 and AD-5 employees, 64% of the group, accumulated $16,570,205 in pay above the EX-III limit.
View data as table
| FY14 | 18,931 | |
|---|---|---|
| FY15 | 16,861 | |
| FY16 | 19,479 | |
| FY17 | 599,856 | The year NSF's General Counsel opined the pay limits were 'self-imposed' |
| FY18 | 1,097,373 | |
| FY19 | 1,586,629 | |
| FY20 | 2,385,178 | |
| FY21 | 2,690,097 | |
| FY22 | 3,229,046 | |
| FY23 | 3,909,638 | Peak year -- and the year OPM contacted NSF about compliance after a pay-raise dispute drew media attention |
| FY24 (Oct-Dec '23) | 1,017,117 | Partial quarter, estimated; NSF fixed its pay bands in January 2024 |
A pay-raise dispute, then a Justice Department correction
The error surfaced only when it collided with politics. In early 2023, announced -- then reversed -- a planned 1% raise for AD-4 employees, well below the 4.6% average increase other staff received; media coverage of the reversal drew the Office of Personnel Management's attention, and contacted that February about its compliance with the Title 5 pay limits. asked the Department of Justice's Office of Legal Counsel to weigh in. In September and November 2023, ruled that the statutory cap does apply to 's AD-appointed employees and that had "no authority" to keep exceeding it "based on a desire (no matter how understandable) to lessen the impact on employees" -- only the time needed to implement the fix in an orderly way.
A separate, smaller problem compounded the first: 15 AD-4 and AD-5 employees also received $617,633 in salary that exceeded 's own internal pay-band ceilings between FY2014 and FY2021, including $216,157 paid to 6 of those employees that breached the EX-IV basic-pay limit too. told auditors it lacked payroll-system controls to stop either kind of overpayment before it happened.
View data as table
| Debt NSF waived (no clawback) | 15,481,362 | FY2017-2023 EX-III overpayments; NSF chose not to collect this from current or former employees |
|---|---|---|
| Unresolved at audit release | 1,636,333 | FY2014-16 and FY2024 EX-III overpayments plus separate pay-band-ceiling overpayments -- OIG's Recommendation 2; NSF OIG later confirmed this was resolved |
Fixed the cap, then forgave the bill
In January 2024, once the opinion left no room to delay, revised its AD pay bands into compliance and adjusted employee salaries. It then calculated $15,481,362 in overpayments from FY2017-2023 -- $12,908,815 owed by current staff, $2,572,547 by former staff -- and waived collection of all of it, writing that the earlier pay adjustments "were made in good faith, in reliance on a legal determination from General Counsel, and it would be against equity and good counsel to require employees to reimburse the government for payments received in excess of allowable amounts." That left $1,636,333 the audit's own tally said had not resolved -- earlier-year EX-III overpayments, the pay-band-ceiling overpayments, and a partial FY2024 estimate the debt waiver never covered. recommended assess and resolve that remainder and tighten its payroll controls; agreed with both recommendations. NSF OIG's own semiannual report⧉ later confirmed had implemented the fixes and addressed the outstanding $1.6 million.
- paid its AD-4/AD-5 employees $17.1 million above statutory salary caps between FY2014 and FY2024 -- 633 of 992 employees in those bands, 64% of the group, went over the EX-III basic-plus-locality limit, and 15 more exceeded internal pay-band ceilings.
- A 2017 legal opinion, not a payroll glitch, drove the surge: 's own General Counsel called the caps 'self-imposed' that year, and the yearly overpayment total jumped from under $20,000 to nearly $600,000 and kept rising for six straight years.
- A pay-raise dispute -- not the audit -- forced the fix: a reversed 1% raise for AD-4 staff in early 2023 drew 's attention, and only a Justice Department opinion that September and November settled that the cap applied and had no authority to keep exceeding it.
- forgave 90% of the overpayment debt rather than collect it -- $15,481,362 waived for current and former employees on good-faith grounds -- and left $1,636,333 for to flag as unresolved, since confirmed addressed in 's Fall 2025 semiannual report.
Figures are drawn from the National Science Foundation Office of Inspector General's Audit of 's Administratively Determined Pay System (Report 25-02-002, issued October 30, 2024), read in full via direct PDF fetch from oversight.gov, and independently corroborated by 's Semiannual Report to Congress for April 1-September 30, 2025 (issued January 22, 2026), which confirms the audit's recommendations were closed. Neither report names any individual employee; this account follows that framing and refers to office and role only. A blind adversarial verifier, working from the primary documents alone with no access to this draft, independently checked every itemized fact; see verification.json.
The recomputed overpayment totals, the unresolved-balance check, and the 64%-of-workforce share are this outlet's own arithmetic performed on the audit's own itemized tables (methods and caveats in analysis.json); all three reproduce the audit's own published totals exactly.
Sources(2) ▾
- National Science Foundation, Office of Inspector General, Audit of NSF's Administratively Determined Pay System (OIG 25-02-002) (2024-10-30) — The 's own performance audit is the sole source for the AD pay band structure, the FY2014-2024 overpayment tables (Tables 2, 4, and 5), the $17,117,695 total overpayment finding, the $15,481,362 debt waiver, the $1,636,333 unresolved balance, the 2017 General Counsel opinion and 2023 Office of Legal Counsel opinion narrative, and both recommendations with 's response. oversight.gov · original document
- National Science Foundation, Office of Inspector General, Semiannual Report to Congress, April 1, 2025 to September 30, 2025 (NSF-OIG-SAR-73) (2026-01-22) — 's own statutory report to Congress, confirming in its recommendation-closure section that implemented all corrective actions from the AD pay system audit -- independent, later-dated corroboration that the $1.6 million unresolved balance the 2024 audit flagged was subsequently addressed and that closed both recommendations. oversight.gov · original document
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's charter lets it hire scientific and technical staff outside the General Schedule, through five "administratively determined" (AD) pay bands -- the top two of which, AD-4 and AD-5, sets above the highest GS level to compete for talent. Those two bands covered 992 of 's 1,245 excepted-service employees, 80% of the group, between FY2014 and FY2023. A performance audit by NSF's inspector general⧉ found that paid those employees $17,117,695 above the statutory caps that govern the bands between FY2014 and FY2024 -- and, rather than collect the debt once the error surfaced, forgave $15,481,362 of it outright.