Fringe Rates & Guidelines

The term “fringe benefits” refers to non-wage expenses paid by an employer on behalf of their employees. These expenses include insurance premium sharing, employer matching, Social Security (OASI) and Medicare, Teacher Retirement System (TRS) and Optional Retirement Program (ORP) matching, as well as assessments for Unemployment Compensation Insurance (UCI), Workers’ Compensation Insurance (WCI), vacation and sick leave.

Fringe Rates

Fringe benefits are a direct cost to a sponsored project (§200.431). They are budgeted as a percentage of the salaries and wages and shown as a separate entry in the budget. Fringe is charged on all payroll transactions processed in Workday (See a detailed list here).

The University’s fringe rates are negotiated with its cognizant agency (DHHS) and are part of the University’s F&A Cost Rate Agreement. Rates beyond August 31, 2023 are estimates and are provided for budgeting purposes. The table below shows subsequent years budgeted with a 0.5% increase. To comply with OMB Uniform Guidance Cost Accounting Standards, the method for budgeting must be used consistently throughout the entire proposal (i.e. if fringe is increased by 0.5%, it must be increased for all eligible personnel in that proposal).

The actual fringe benefit rate will be charged to the project when the expense is incurred, regardless of what rate is budgeted in the proposal. It may be necessary to rebudget during the project period to pay for actual fringe benefit costs.

Approved Projections for Planning Purposes
Benefits Eligibility FY24
9/1/23 – 8/31/24
9/1/24 – 8/31/25
9/1/25 – 8/31/26
9/1/26 – 8/31/27
9/1/27 – 8/31/28
Full-time 26.10% 26.60% 27.10% 27.60% 28.10%
Graduate Students 16.40% 16.90% 17.40% 17.90% 18.40%
Ineligible 7.20% 7.20% 7.20% 7.20% 7.20%

Additional fringe benefit rate information can be found at UT Austin Payroll.

Fringe Mitigation

The transition to pooled fringe rates in FY19 may impact existing sponsored projects or previously submitted proposals; therefore, action was taken to mitigate grant/contract accounts (26- accounts) whose proposals were submitted prior to August 10, 2018 with fringe budgeted at less than the new rates:

September 1, 2018 – March 31, 2019 Fringe Overdrafts

For fringe expenses charged to eligible 26- accounts between Sept. 1, 2018 and April 1, 2019, a one-time journal voucher for that period will remove fringe equal to 4% of salaries/wages (prior fringe expenses will not be moved off any 26- account that is already closed).

April 1, 2019 – August 31, 2024 Fringe Overdrafts

Fringe will be re-directed from eligible accounts starting with payroll runs after April 1, 2019. This re-direct will reduce fringe charges to eligible grants by 4% of the salary expenses. Each month, fringe equal to the pooled rate (currently 29% for most employee categories) will be charged to the grant and immediately following 4% of these charges will be moved off. OSP will bill sponsors for the pooled rate less 4%. In a few cases, this 4% redirect will be insufficient, so all 26- accounts will be monitored for deficits in the fringe category and additional mitigation will be applied an as-needed basis. This mitigation will continue until August 31, 2024 for eligible 26- accounts.

Questions about fringe mitigation can be directed to:

Impact on Sponsored Awards

With the implementation of Workday, the institution is also changing the methodology for allocating fringe benefits. A specific overview of the new pooled fringe benefits methodology is available on the Financial and Administrative Services.

The Workday implementation also changes the way fringe posts within financials records. While most accounts will now be charging fringe to the same subaccount as salaries, this is not the case for 26-accounts. 26-accounts will maintain a separate posting for fringe, with fringe most normally posted to the 14 subaccount.

To meet the need of sponsored awards, the institution has developed a stepped methodology for pooled fringe posting. The stepped methodology is designed to ‘redirect’ fringe to the necessary budget within sponsored awards when payroll posts:

  1. Does the DEFINE account receiving salary have a fringe redirect account noted on the CA3 Profile?
    1. If Yes, post fringe to the listed redirect account
    2. If Not, proceed to step 2
  2. Does the account receiving salary end in 12 (the salary subaccount)
    1. If Yes, post fringe to the 14 subaccount
    2. If Not, proceed to step 3
  3. Does the account receiving salary end in 11 (the off-campus salary subaccount sometimes used)
    1. If Yes, post fringe to the 15 subaccount
    2. If Not, proceed to step 4
  4. Post fringe to the same account (subaccount) where salary is posting

The stepped methodology is designed to “redirect” fringe to meet sponsored award needs.

There are also times where a sponsor may not allow fringes to be paid or where the salary component earning fringe (Communication Device Allowances, moving expense reimbursements, etc) does not follow the normal salary model. In these cases the institution has created the concept of a fringe redirect (step #1 above) to meet the need. When necessary, Post-Award will add a fringe redirect account on the CA3 profile to direct the fringe.

Example 1

Sponsor does not pay fringes, so the department plans to cover fringe from a designated account (19-xxxx-xxxx). Post-Award would enter the designated account number on the CA3 profile for the salary line of the sponsored award. When payroll posts fringe, the stepped methodology would redirect the fringe (based on step #1 above) to the intended designated account.

Example 2

An individual associated with the sponsored award will be receiving a Communication Device Allowance which is specifically budgeted on its own budget line. Under the Workday process, the fringe associated with the CDA would also post to the budget line for the CDA; however, we would not expect to report fringes within that budget category. The sponsor would expect to see all fringes being reporting in and against the budget category for fringes. To correct this, a redirect would be established on the CDA budget line on CA3 for the award to the fringe line for the same award (normally the 14 subaccount). Now when payroll posts fringe, the stepped methodology would redirect the fringe (based on step #1 above) to the correct budget category.

Example 3

An individual is paid from the normal salary budget line (12 subaccount). When payroll posts fringes, the stepped process would send fringe to the fringe budget (14 subaccount) when it hits step #2 above.

Budget Revisions Requests

The transition to pooled fringes may impact existing awards. While there is a plan to help mitigate any negative budgetary impact, it is expected that budget revisions do not create or worsen budget shortfalls.

To that end, Post-Award will be enforcing fringe requirements on budget transfers in line with expected needs to support the new pooled fringe rates. A budget transfer represents a deviation from the originally planned project and budget. The budget transfer may be sponsor-approved or allowed, but in either case the transfer composition of salary and fringe will need to meet the ongoing budget needs under pooled fringes. This means, all budget transfers will need to carry a fringe-to-salary ratio of 30% (the percentage ratio may be updated annually dependent on the negotiated rate). A budget transfer may increase of decrease only salary, only fringe, or both. To understand how Post-Award will be assessing the proposed budget transfer for approval, please see the budget revision requests flowchart below.

Fringe Rate FAQs

All payroll transactions processed in Workday are subject to pooled fringe. A detailed list can be found here.

Many researchers had multi-year awards and proposals that were awarded and approved at rates different than the negotiated rates that became effective on September 1, 2018. A University mitigation account will be used to address these issues.

The negotiated fringe benefit rates are applied to all employees who are eligible for benefits regardless of whether they accept the benefit and regardless of which benefits options they elect.

The centrally funded rate will be charged automatically to the account and should be used for budgeting proposals as well.

Yes. Student employees receive fringe benefits, and sponsored project accounts will be charged according to the student employee’s benefit eligibility. Graduate Research Assistants are benefits eligible (see fringe benefits table) and should be budgeted as such.

Centrally funded fringe benefit rates are applied based on the salary amount and rate group the employee falls into regardless of when the employee is costed to fund sources.

The benefit cost for an employee is the applicable rate multiplied by gross salary. If the costing allocation is lower, the salary is lower, and thus the benefit cost will be lower, even if the employee receives full benefits.

Please contact with any questions not addressed here.

See more below...