Several years ago, my institution decided to budget fringe benefits differently due to the exponential increases to health insurance.  So in our budget, we use a fringe benefit rate (e.g. 18%) for all non-health care benefits (e.g., worker's comp, retirement).  Then we add the health insurance amount on top of that.  So for example, say the annual health insurance for your employee (portion paid by the employer of course) is $10,000.  If the budget proposes 10% effort for that employee for the entire year, then we include $1,000 for that benefit along with the amount from the fringe benefit rate.  We explain how we arrived at our fringe benefit amount in the budget justification.  No sponsor has ever questioned it and I think it has helped our institution budget more accurately.

Terri

Terri White-Jones
_________________________________________________________________
Phone(813)974-4844
xxxxxx@admin.usf.edu

-----Original Message-----
From: Research Administration List [mailto:xxxxxx@lists.healthresearch.org] On Behalf Of Riggs, Mitzi
Sent: Monday, August 22, 2011 10:29 AM
To: xxxxxx@lists.healthresearch.org
Subject: Re: [RESADM-L] Inflation of Fringe Benefits in Proposed Budget

An increase of 5% on your benefit rate, makes your new benefit rate 31.5%, not 35%.

Mitzi

__________________________________________________________
Mitzi M. Riggs, CRA
Research Administration Coordinator
College of Engineering, Architecture & Technology
Oklahoma State University
201 Advanced Technology Research Center, Stillwater, OK  74078
Email:  xxxxxx@okstate.edu
Phone:  405-744-6562; Fax:  405-744-3189

-----Original Message-----
From: Research Administration List [mailto:xxxxxx@lists.healthresearch.org] On Behalf Of xxxxxx@mcdaniel.edu
Sent: Monday, August 22, 2011 9:19 AM
To: xxxxxx@lists.healthresearch.org
Subject: Re: [RESADM-L] Inflation of Fringe Benefits in Proposed Budget

I'm a numbers person at heart. So when looking at things like this, I
always look at the numbers first.

Say you have a PI at 100k, 30% fringe, 20% effort, and 3% inflation rate.

Year 1: 20,000 salary and 6,000 benefits.
Year 2: 20,600 salary and 6,180 benefits.
Year 2 with an "extra" 5% padding for benefits: 20,600 salary and 7,210
benefits

So a 5% increase in the fringe benefit rate is an additional 1,030 burden
to the budget. I personally have to do this to get an idea exactly what
amount of money we are discussing.

Now, I think issue can be looked at from different viewpoints. As a state
institution, do your fringe rates vary that greatly from year to year? At
the private institutions where I have worked, they do not. At one
institution they have not yet changed since I have been here. At the other
institution the changes were less than 1%, and one year they went down and
not up. (Granted, they were self-insured, which I think made a huge
difference). I would think 5%, as used in my example above, would be
extreme.

You also have to consider consistency. In an ideal world, applications
from the same institution to the same funding agency should use the same
calculation methods. Since it's the application stage I don't really think
cost principles apply...but it's just good business practice.

As for fringes being negotiated on the F&A, I can not answer that question.

Robin

On 8/22/11 9:41 AM, "Terri Fayle" <xxxxxx@K-STATE.EDU> wrote:

>This argument has been given, and I don't disagree with it.  However, I
>have been in situations where the salary DID go up and the fringes ALSO
>went up.  This practice is fine if one or the other goes up, but you're
>short if they both go up.
>
>The argument has also been given to increase the salaries by double what
>you normally do to cover the increase in fringes.  I don't see how that's
>any different or LESS inconsistent than inflating the fringes.
>
>Is it true then, if your fringe rates on negotiated on your F&A rate
>agreement (at my previous institution they were not), those are the only
>rates you can use??
>
>t.
>
>Terri L. Fayle
>Senior Grant Specialist
>K-State Research & Extension Proposal Services
>Waters Hall 105C
>Kansas State University
>Manhattan, KS 66506-4008
>xxxxxx@k-state.edu
>
>Voice 785-532-7255
>FAX 785-532-5549
>Cell 660-238-7165
>
>----- Original Message -----
>From: "Randall J Legeai" <xxxxxx@TULANE.EDU>
>To: xxxxxx@lists.healthresearch.org
>Sent: Friday, August 19, 2011 4:01:26 PM
>Subject: Re: [RESADM-L] Inflation of Fringe Benefits in Proposed Budget
>
>If you are using a fringe *rate* (i.e. a percentage of salary), and you
>build in an annual salary escalation as most people do, your fringe
>amounts will be escalated as well.
>- Randy.
>
>-----Original Message-----
>From: Research Administration List
>[mailto:xxxxxx@lists.healthresearch.org] On Behalf Of Nicole Braman
>Sent: Friday, August 19, 2011 3:47 PM
>To: xxxxxx@lists.healthresearch.org
>Subject: Re: [RESADM-L] Inflation of Fringe Benefits in Proposed Budget
>
>We use an inflation rate on the salary, not fringe. Although this year we
>had a significant fringe increase, so I am wondering if it isn't a valid
>practice to increase fringe as well. I am curious what others have to say.
>
>Nicole
>
>Terri Fayle wrote:
>> All,
>>
>> I'd be interested to hear your comments regarding inflation of fringe
>>benefits while creating a proposal budget.  My institution uses a
>>published estimated rate for certain employee classes.  But when the
>>charges actually hit the grant budget, it is the actual amount of
>>charges for that employee, so in most cases different than what was
>>proposed.
>>
>> Typically, no inflation is applied to fringes when creating multiple
>>year budgets.  Since I'm new here, I did!  It has been suggested that I
>>cannot inflate fringes because I am being inconsistent with the
>>institutional published estimated rate.  I say poppycock!  I used the
>>published estimated rate and added a bit!  That's what you do to protect
>>your investigators budget.
>>
>> What say you??
>>
>> Terri L. Fayle
>> Senior Grant Specialist
>> K-State Research & Extension Proposal Services Waters Hall 105C Kansas
>> State University Manhattan, KS 66506-4008 xxxxxx@k-state.edu
>>
>> Voice 785-532-7255
>> FAX 785-532-5549
>> Cell 660-238-7165
>>
>>
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 Instructions on how to use the RESADM-L Mailing List, including
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 Instructions on how to use the RESADM-L Mailing List, including
 subscription information and a web-searchable archive, are available
 via our web site at http://www.healthresearch.org (click on the
 "LISTSERV" link in the upper right corner)

 A link directly to helpful tips:  http://tinyurl.com/resadm-l-help
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 Instructions on how to use the RESADM-L Mailing List, including
 subscription information and a web-searchable archive, are available
 via our web site at http://www.healthresearch.org (click on the
 "LISTSERV" link in the upper right corner)

 A link directly to helpful tips:  http://tinyurl.com/resadm-l-help
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