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Scope

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

Reason for Policy

The ��ҹӰԺ, 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 reimbursement for all costs in a responsible and equitable manner.

Policy Statement

The University Benefit Rates are used to allocate benefit charges against all cost centers for the University. These rates differ from the federally negotiated benefit rates outlined in the University's Federal Rate Agreement.  The differences between the University Benefit Rates and the Negotiated Federal Rate must be adjusted on all sponsored projects and federal capacity grant programs. 

The University Benefit Rates and Negotiated Federal Rate are entered into PeopleSoft by the UM System Controller’s Office. Sponsored projects are designated with a grant Project chartfield.  Federal capacity grant programs are designated with a Program and Fund chartfield.

The allocation process in PeopleSoft is used to analyze all fringe benefit transactions recorded to the chartfields that meet the above criteria, including payroll correcting entries.  A lump sum journal entry is created which removes the University Benefit Rate charges and then records the Federal Benefit charges for sponsored projects and federal capacity grant programs.  These entries do not update the Bridge Table so individual employees and drill-down records are shown at the full University benefit rate. The entries are included on payroll summaries, but not by employee.

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

Definitions

University Benefit Rates - rates used by the University when charging departments for the cost of benefits on eligible employees. The rate is calculated by the UM System Controller's Office on an annual basis using historical and actuarial data. The per-person component is a specific dollar amount charged per benefit eligible employee and the pay-based component is is applied to all benefit-eligible employees.  Both rates are charged per benefit eligible employee regardless of the benefit programs in which they are enrolled.

Sponsored Projects and Programs - the University uses certain designated Program and Project ChartFields to reflect any revenues that have an original source of dollars from federal and non-federal sponsored projects as well as federal capacity grant programs.

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.  University Extension and the College of Agriculture use a modified version of the federally negotiated rate for certain types of formula funding.

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
• Maintain and run the allocations to adjust the benefit charges.

UM System Benefits Office:

• Monitor the balance in the clearing fund.

Additional Details

Forms

Related Information

History

Reviewed and updated April 19, 2021 to reflect the two-part University Benefit Rate as well as the federal rate being charged to all sponsored awards.

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

Procedure