Since FY2001, the University of Arizona has established flat fringe benefit rates for each of the major employee groups at the campus. These rates have and will be reviewed and approved annually by the Cost Allocation Services. Fringe benefit expenses are determined by applying the appropriate percentage based on employee category to actual salary expense.
As noted in the ERE Rate Announcement the rate categories have been reorganized for FY2016. For specific questions regarding those changes please see the FAQs for FY2016 changes.
- Employee Full-Benefit* - Health, Dental, Long-Term Disability, Retirement, Unemployment Compensation, Qualified Tuition Remission - Employee, Termination Leave, and Employee Wellness is charged on all eligible employees regardless of participation.
- Faculty Ancillary* - Health, Dental, Long-Term Disability, Retirement, Termination Leave, and Employee Wellness is charged on all eligible employees regardless of participation. Employee is generally on a temporary or short-term employment contract. There will be some employees who may reach benefit eligibility. Also included in this category are Postdoctoral Research Associates I-V who are offered benefits with the exception of retirement.
- Classified Temporary/Part-Time* - An employee hired at an .49 FTE or below and/or on a temporary basis. These employees are not eligible to participate in employee benefit or insurance plans.
- Graduate Assistants* - A contracted part-time employee in teaching, research, or outreach.
- Student Employees* - A part-time employee who is concurrently enrolled at the University of Arizona with the primary goal of pursuing their education. These employees are not eligible to participate in employee benefit or insurance plans.
- Tuition Remission - The tuition remission portion for Graduate Assistants will now be a direct charge to all departmental accounts.
*FICA, Workers Compensation, and Liability Insurance is charged on all employee categories.
The University of Arizona (UA) uses multiple fringe benefit rates developed under the requirements of Office of Management and Budget (OMB) Uniform Guidance.
A fringe benefit rate for each benefit category is calculated by the development of a pool of fringe benefits costs (the numerator) and of a salary and wage base (the denominator). The pool consists of costs for the benefits provided to a particular category of employees. When the pool is divided by the base applicable to that category of employees, a rate results; this rate represents the percentage that must be added to employees’ salary and wage dollars.
A federal formula is required to take the above mentioned information and using a “look-back” provision to calculate an on-going rate. The fringe benefit rate for each benefit group will be reviewed annually to ensure an accurate allocation. Any over or under recovery of actual fringe benefit costs will be adjusted in the next rate calculation, utilizing the prescribed federal formula.
Reasons for Charging Fringe Rates
Overall, this methodology for calculating and charging fringe benefits is considered a best practice at leading research institutions. Several large research universities have already adopted this practice including, Georgia Institute of Technology, State University of New York, Emory University, and University of Florida.
This fringe methodology facilitates planning, budgeting, and other tasks in the ongoing operations of the campus. It simplifies and improves the preparation, administration, and monitoring of budgets and accounting for fringe benefit expenditures. It also provides for consistent accumulation and allocation of fringe benefits expenses to all functional activities as required by Cost Accounting Standards 501 and 502. In addition, it allows the university the opportunity to recover fringe benefit costs from all funding sources.
Effective Dates | Changes | Due Dates
The University is awarded rates by fiscal year (FY). For example, FY2017 rates are effective July 1, 2016 - June 30, 2017.
UA will have new fringe benefits rates each fiscal year. Fringe benefit rates for each employee group will be reviewed annually to ensure an accurate allocation. Any over or under recovery of actual fringe benefit costs will be adjusted in the next rate calculation. Also, rates cannot be adjusted mid-year. Rates have to be approved by our cognizant agency (formerly DHHS, now CAS). CAS will only approve rates set forth in a specific proposal format. This process is completed annually. Any unexpected benefit changes that were not considered in the prior proposal will be utilized to estimate the next year’s proposal.
Rates are due December 31 of each year for the following fiscal year. Extensions can be requested, but it is imperative for campus budgeting that rates are available as soon as possible.
ERE cannot be waived, regardless of the funding source, having employees innately incur costs to the University. In order to proportionately collect these costs each employee is charged the ERE rate.