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Federal Fringe Rate

About this Policy

Federal Fringe Rate

Policy Number: 27018


Effective Date:
Dec 12, 2017

Last Updated:
Jan 01, 1970

Responsible Office:
UM System Controller’s Office

Responsible Administrator:
UM System Controller

Policy Contact:

Campus Sponsored Programs Office

Categories:

  • Finance

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Scope

This policy discusses the allocation of fringe benefit costs to federally sponsored awards.

Reason for Policy

The University of Missouri, as a land-grant research institution, strongly supports the participation of its faculty and staff in the discovery, application, and dissemination of knowledge including extramurally-sponsored teaching, research, and service projects. The University incurs costs in carrying out sponsored activities and it is, therefore, appropriate for the University to seek compensation for all costs in a responsible and equitable manner.

Policy Statement

The University Benefit Rate is used to post benefit charges against all appropriate cost centers for the University. This rate differs from the federally negotiated rates for the campuses and the School of Medicine. Any differential in the University Benefit Rate and the Negotiated Federal Rate must be adjusted on the federally sponsored project or program and funded by other sources. 

The University Benefit Rate is entered into PeopleSoft by the UM System Benefits Office. The Negotiated Federal Rate adjustment is entered by the UM System Controller’s Office into PeopleSoft. As a control, an independent review must take place in the UM System Controller’s Office to verify the rates and calculations and ensure accuracy with every payroll process.

University Extension and the College of Agriculture use a Program to designate expenses funded by federal dollars on non-grant ChartFields. The determination of whether a grant Project is funded with federal dollars is identified using the CFDA field in the grants tables.

The allocation process in PeopleSoft is used to analyze all benefit transactions that meet the defined criteria as noted above and create an entry to reduce or increase the benefit charges on that ChartField string. These entries do not update the Bridge Table so all employees are shown in the Bridge Table and in the drill down at the full University benefit rate. The adjustment is not shown by employee, only by ChartField string.

The allocation process runs every time a payroll is confirmed and the interface is run. It is also run on the first working day of the month for any correcting entries that have been posted since the last time it was run.

Definitions

University Benefit Rate - rate used by the University when charging departments for the cost of benefits on eligible employees. The rate is calculated by the University’s Employee Benefits office (“Benefits Office”) on an annual basis using historical and actuarial data. The rate is applied to all benefit-eligible employees, regardless of the benefit programs in which they are enrolled.

Federally Funded Projects and Programs - the University uses certain designated Program and Project ChartFields to reflect any revenues that have an original source of federal dollars from federally sponsored projects, federal appropriations or they may flow through state grants or other universities or agencies.

CFDA Number - the Catalog of Federal Domestic Assistance (CFDA) number reflects the program source of federal dollars. This number must be recorded on all federal direct or flow-through Projects in the Award Profile of the PeopleSoft Grants Module.

Negotiated Federal Rate – the benefit rate that is applicable to federally funded awards. This rate is negotiated between the University (Controller’s Office) and the United States Department of Health and Human Services (“DHHS”). All campuses have the same negotiated rate except for a separately negotiated rate for the School of Medicine—Columbia.

Accountabilities

UM System Controller’s Office:

  • Verify the clearing ChartField string is zero and that the balances have been transferred to the proper ChartFields annually.
  • Review the Flat Rate Benefit Charge and Negotiated Federal Rate adjustments in PeopleSoft and test calculations to ensure their accuracy after every payroll is posted to the finance system.
  • Maintain and run the allocations to adjust the benefit charges.

UM System Benefits Office:

  • Monitor the balance in the clearing fund.

Campus Sponsored Programs Office:

  • Ensure the CFDA field on grant projects is correct.

Additional Details

Forms

 

Related Information

 

History

Formerly Accounting Policy Manual 60.40 – Federal Flat Rate (effective 07/01/2009)

Procedure

Reviewed 2017-12-06