Specific Identification (SI) of Fringe Benefits frequently asked questions (FAQ's)
Why am I being charged full SI fringe instead of the 7.65% when I hired a part-time employee for 8 months (2/08)? Please exercise caution when hiring a current MSU employee into a temporary position. MSU employee contracts differ on what qualifies as part-time and may involve bridging of past time worked that will make the current position/person benefit eligible, which then triggers full SI fringe charges. Also, part –time employees have been known to fill the remainder of their time with other MSU employment opportunities which again might make the employee benefit eligible and therefore full fringe. Questions should be addressed to Human Resources.
What will the monthly charges for Graduate Assistants be for 2007-08? The Tuition and Health benefits will be charged on a monthly basis except for the month of January. Since the January pay (1/15/yy) can be for either fall, spring or both, it is less complicated to charge the benefits over 4 months per semester, i.e., $1,089 per month for Fall (Sept, Oct, Nov, & Dec), and $1,089 per month for Spring (Feb, Mar, Apr, May). The $1,089 will be split into two object class codes with $220 assigned to 015 Fringe Benefits - Health and $869 assigned to 018 Graduate Tuition and Fees. Summer costs will be 100% to 018 Graduate Tuition and Fees or $594 per month for June, July and August. The above amounts will be applied to all Grads regardless of percent employment (1/4, 1/2 or 3/4). Awards using the F&A rates effective 7/1/04 will not be applied to the tuition and fee portion (object class code 018).
When are grant accounts charged the health care component of the SI fringe rate (9/22/05)? Grant accounts are charged the health care component of the SI fringe rate for any faculty or staff member that meets MSU's elifibility criteria for health care. To be eligible for health care coverage through MSU, a faculty or staff member must have a regular appointment of 50% time of greater for nine months or more.
When are post-doc's (research associates) eligible to receive the MSU matching portion of retirement (8/22/05 & 3/3/06)? Effective October 1, 2006 they are eligible for the match at 36 FTE, and it is required mandatory with the combination of age 35 and at least 36FTE's. For example, a newly hired research associate who is 35 at the time of hiring will have to participate in the retirement program upon their 37th month of employment (or age 37).
Is it true that hand-drawn checks for Grad students will be over-assessed fringes (8/15/05)? Not if this is the only appointment for the student. However, if the Grad Student already has an appointment and a late appointment form is processed to add, i.e. 1/4 to 1/2 time, then a second full allocation of fringes will be applied. It is the department's responsibility to prepare a JVE to remove these extra fringes. JVEs should be prepared with the description and the credit portion completed and then sent to to Ann Rhodes in the office of Planning and Budgets, 320 Administration Building .
When does Grandparent rates end? Grandparent rates end effective 6/30/07.
Recall that for research accounts, 61-0000 – 61-9999, fringe grand
parenting was created (three years ago) to provide time for those projects that
were originally budgeted using the old salary rate-based fringe system to
prepare for the conversion to the SI fringe system. With the first payroll of
2007-08 (July 13, 2007), these accounts will now follow all SI fringe rules.
Please contact Contracts & Grants with any questions.
What is Grandparent rate (9/26/06)? The fringe rate used to grandparent projects that were budgeted using the old rate system will be: 38.6% for 2006-07;and was 37.7% for 2005-06; and was 36.1% for 2004-05
Will Grad fringes be grandparented (9/12/04)? No, Grandparenting was created to protect budgets from the effect widely varying salaries. For example, a technician earning $25,000 has an SI fringe rate of 58%, where a faculty member earning $150,000 has an SI fringe rate of 23.6%. Projects with large amounts of salaries at either end of the salary scale could be significantly advantaged or disadvantaged if the budget that wasn't budgeted under SI. Since Grad salaries don't vary to this degree, their fringes under SI are a flat dollar amount grant-parenting shouldn't be necessary.
Will Grad students be charged FICA in the fall and spring semesters as well if they do not take the minimum number of credit hours? (9/12/04)? Yes
How will I know if my account will be Grandparented? From the CGA web page select the "Reference/Proposal Information" link, log-in then select the "Account Search" tab, then "Accts for SI Grandparenting".
For a link to HR to determine who is eligible for retirement contributions and when From here click the Eligibility option towards the bottom middle
Will departments becharged for student FICA/Medicare under SI?
- Generally no during the academic year and yes during the summer depending on the number of credits they are enrolled for.
- Student hourly employees and graduate assistants are normally not assessed FICA/Medicare tax unless: Undergraduate students enrolled for less than 6 credits; Master's level students enrolled for less than 5 credits; Doctoral level students enrolled for less than 3 credits. (Credit levels are verified, prior to each student hourly and Graduate Assistant payroll.)
- International students (graduate and undergraduate) may be eligible for an exemption from Social Security and Medicare tax based on VISA type and length-of-stay criteria. Students must file the appropriate documents with the Payroll Division to determine eligibility.
- Graduate students (Master's/Doctoral) completing their final semester, are eligible for an exemption from Social Security and Medicare tax on a case-by-case basis.
- Doctoral Graduate Assistants (1/2 time or ¼ time assistantships) may be exempt from Social Security tax if they meet the UGC 1-credit full-time status. These individuals are identified by the University and the Social Security and Medicare tax exemption will apply as long as the student meets eligibility criteria.
- For additional questions please contact payroll at 517-355-5010.
Why change to SI? The current rate*salary system is proportionally inaccurate the further a salary is away from the average. This provides a huge disincentive to put PI salary (for those agencies that allow it) on grants and contracts. The current system also hides fringe subsidies that occur when large projects are staffed by lower salaried employees. SI, since it based on actual benefits received, will eliminate equity arguments for staff that were charged the full rate, but didn't receive a major benefit (Postdocs don't receive retirement for the first 2 year of employment).
How will 91-accounts be impacted by SI? 91-accounts are classified in the General Fund however these accounts are not covered by the General Fund central fringe accounts. Therefore, 91-xxxx accounts will be directly charged the appropriate amount of fringes just like all other non-General fund accounts.
I have an Academic Year (9-month) appointment andI used a 7.65% fringe rate for my summer salary. What will be charged to my grant if and when I reach the FICA salary cap? All salary earned after you have reached the FICA cap (currently $94,200) will only be charged for the 1.45% Medicare rate. If you reach the cap before your summer salary, the summary salary will only be charged 1.45%.
Will the flat dollar amounts budgeted for health, dental and prescriptions be subject to change every six months like the current rate-based system? No. The amount recommended will be used for the full year.
Why are post doc fringes so high (even afterI remove retirement)? Research associates (post docs) receive the same health coverage as full time/permanent employees. Since most post docs stay at MSU for a short period of time (75% stay 3 years or less) the retiree component of health will be excluded for the first three FTE years of MSU employment.
How will funding agencies react to the SI system? SI is one of the federally accepted default methods for assessing benefits. SI is used by other universities including the University of Michigan.
Why is the Flat Dollar Amount higher than onmy Human Resources Statement of Benefits? Your benefits statement doesn't include the costs of post-retirement benefits and is a University-wide average.
Are MSU healthbenefits higher than other universities? Yes. MSU is one of the few Universities that pay for the health, dental and prescription costs for retirees. Retirees costs account for approximately 25% of the $9,600 project amount for 2004-05.
It seems like the cost of fringes has significantly increased under SI, how come? From July 2001 - June 2004 the research fringe rates that were negotiated with the federal government were too low. These rates were negotiated just prior to the nation-wide health cost explosion. As a result, the research fringe pools have had to be subsidized approximately $2.2M per year (this represents ~ 10% of the research rate or 3.4 points 36% - 32.6%). While MSU couldn't change the predetermined fringe rates for the length of the agreement (7/1/01 - 6/30/04), CGA recommended that all budgets that extend beyond, budget in the range of 36-38%. That is why the transition from the current rate of 32.6% to the composite rate under SI ~ 36.1% seems like a big step.
What are the employment percentages that determine if a part time employee is charged 1/2 or 3/4 of the health care amount? If an employee is appointed between 90-100% (36-40 hrs per week) then they will be charged the full amount for health. If an employee is appointed between 65-89% (26-35 hrs per week) then they will be charged 75% of the health amount. Those appointed between 50-64% (20-25 hrs per week) will be charged 50% of the health amount, and those below 50% employment will not be charged for health.
Will graduate tuition and fees have a separate object class code? Yes. In order to exclude those costs from F&A (overhead) a new object class code (018) will be created to accommodate this change.
Will the overhead exclusion on grad tuition and fees be effective for current projects? No. By removing the grad tuition and fees from the MTDC base on existing projects, it would be the same as reducing the F&A rate from 49.5% to 48%. Accordingly, the new F&A rate that will be negotiated with DHHS in May and be effective for new projects beginning 7/1/04 is likely to increase from 49.5% to 51% because of this change. Approximately 80% of the current grad fringes are for tuition and fees.
Will the new fixed amounts for graduate fringes be different for 1/4, 1/2 and 3/4 appointments? No. While the average number of credits taken by 1/4 and 3/4 grads differ from 1/2 appointments, this difference wasn't significant when compared to the grid that would have been necessary to show all combinations by appointment.
Will agraduate student with two 1/4 appointments pay twice as much as someone with a 1/4 appointments? No. The fringe amount will be prorated over the two appointments based on the proportion of total pay.
To see the current projections for graduate assistants fringe benefits Grad summary chart
To see the current information on the Status of SI
When will CGA require budgets to be prepared using the new SI method? Beginning January 2004 all budgets should be use the new SI method to estimate fringe benefit costs.
Why change on July 1, 2004, and isn't there some way to phase into the new system? The SI change will affect all University accounts and therefore has to be implemented on a specific date. However, we are planning to "grand-parent" existing CGA accounts (61-0000 - 61-9999) that were budgeted under the old rate-based system, using current estimates (36.1%) for the next three years, or until new (significant) funding can be requested.
Since employees with lower salaries have higher fringe rates underthis new system, can I move my (PI) salary from the General Fund (11-xxxx) to a grant and lower salaried people to the General Fund to save the additional cost of fringes? No. Units that permit switching to save fringe benefit costs will have their General Fund budgets adjusted accordingly.
Until just recently I didn't know MSU was considering the change to SI. How long has this been in the works and who knew about it? Various groups and committees have provided input in creating a better system to allocate fringe benefit costs over the past two years. Those groups range from the University Research Council, the Business Issues Advisory Group, the VP for Research Staff, and a separate fringe benefit committee.
If you have other questions , please send them to evon@cga.msu.edu and we will try to add them to this list.
Please make this information available to all appropriate departmental faculty and staff.