Fringe Benefits

In order to simplify the preparation of proposal budgets our Audit Agency has agreed that NCSU can estimate its fringe benefits using established percentage rates. The fringe benefit rate is expressed as a percentage of salary and the dollar amount is calculated by applying the appropriate fringe benefit percentage rate to each employee’s salary to be charged to the project. The rate varies depending on the employee’s classification such as faculty, post doctoral, graduate student, and undergraduate.


Planning for and Complying with the Affordable Care Act

NC State University 3D Memo on complying with the Affordable Care Act. Changes addressed by this memo will go into effect on August 20, 2014. Please review this information carefully and incorporate changes to graduate research traineeships in new, revised new, supplement and continuation proposal budgets from August 20th and onward. The University’s Benefits Office is the appropriate office on campus  to direct questions to regarding the Act.

This Act may cause changes to the number of hours students are appointed for, which health insurance plans the students are eligible for and whether or not Dean or Vice Chancellor approval is required for an appointment.

2014 Fiscal Year Rate Components

Category
Calculation Guidance
Faculty/Staff30.0% - - [detailed benefit components]
Post Doctoral Associates17.0% - - [detailed benefit components]
Grad Asst.(FICA/OASDI non-exempt - most conservative)21.0% (includes health insurance and OASI/FICA/Workers Comp) - detailed benefit components].
Grad Asst.(FICA/OASDI exempt - most likely)15.0% recommended (includes health insurance and Workers Comp) - - [detailed benefit components].
Resident, Full-Time Graduate Tuition(budget as other direct costs)Tuition is required when budgeting for an assistantship and should be excluded from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. Please see Cashier's Office Website for official rates. For further information review NCSU's rule regarding tuition paid for assistantships. Fees, are required of the student and can be budgeted, although optional, in requests for external funding. Fees should also be deducted from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. Both tuition and, when desired, fees should be budgeted in the other direct cost category.
Non-Resident, Full-Time Graduate Tuition(budget as other direct costs)Tuition is required when budgeting for an assistantship and should be excluded from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. Please see Cashier's Office Website for official rates. For further information review NCSU's rule regarding tuition paid for assistantships. Fees, are required of the student and can be budgeted, although optional, in requests for external funding. Fees should also be deducted from MTDC when using the NCSU Federally negotiated indirect cost rate agreement. Both tuition and, when desired, fees should be budgeted in the other direct cost category).
Temporary/Biweekly Employee (OASDI/FICA non-exempt)8.45% recommended {generally reserved for non-assistantship students/employees who have not exempted themselves from FICA/OASI}
Temporary/Biweekly Employee (OASDI/FICA exempt)0.80% {generally reserved for students on assistantship or students not working more than 20 hours per week total and who are full-time enrolled in classes}

Explanation of Fringe Benefits

The Fringe Benefit Rates applicable to Sponsored Projects at NCSU consist of three main categories. The first 2 categories use rates regulated by agencies outside the University. NCSU’s accounting practices charge expenses in these two categories as direct costs incurred based upon either the dollar value of the individual’s salary (FICA) or at an established rate (health insurance). Because these rates are established by Federal and State agencies, the fringe benefit elements are not a part of the indirect cost (F&A) rate negotiations with our cognizant audit agency. The third and smallest category is for a pool of expenses that cannot be directly assignable to specific employees; therefore the rate is negotiated with our cognizant audit agency, DHHS, Division of Cost Allocation. The components of these three categories are as follows:

  1. Health Insurance and Life Insurance, Long Term Disability, and Retirement, the rates are set by the State of North Carolina
  2. FICA (Federal Insurance Contributions Act) / Medicare and OASDI (Old Age, Survivors & Disability Insurance, aka Social Security), the rates are set by Federal Government
  3. Combined negotiated contribution to fringe benefit rate for the following: Workers’ Compensation, Unemployment Compensation, Severance/terminal Leave Pay, Short-term Disability and Associated Benefits and Administrative Costs charged by the North Carolina Flex Plan (pre-tax savings plan). Only this smallest component is published in the rate agreement. See NCSU’s Federally Negotiated Indirect Cost Rate Agreement under Section I: Fringe Benefit Rates.

This explanation on the treatment of fringe benefits can be verified in Section II of NCSU’s Indirect Cost Rate Agreement, in the Section entitled “Treatment of Fringe Benefits.”

NCSU’s fringe benefit rates are in compliance with the Cost Principles for Educational Institutions found under OMB Circular A-21, Section J.10.f.

Reading NCSU’s F&A Rate Agreement:

The accounting method that this university has elected to use when charging fringe benefits to contracts and grants is different from the approved method for preparing proposal budgets. Our Accounting Disclosure Statement, which is also approved by our cognizant audit agency, states that we direct charge the majority of fringe benefit elements using the actual expenses incurred for each employee for each invoice period. The only portions that are not charged directly but rather are charged as a kind of indirect expense, are those few elements that are the subject of our F&A rate negotiations (see category 3 above). Many institutions elect to charge all fringe benefits as an indirect expense, so their rate agreements may look very different from ours.


For specific guidance on this matter call SPARCS at 515.2444 or email sps@ncsu.edu.