Ever wonder how to budget for employee benefits like health insurance and retirement in your grant proposals? Illinois State University uses a system called “pooled fringe rates” to make this process simple and predictable.
Think of it as a standard, pre-calculated “price tag” for the benefits package that accompanies an employee’s salary. Instead of calculating every individual’s specific benefit cost, we use one set rate based on their job category. This saves a lot of time and guesswork.
What are the rates?
The rates are determined by job type. Just find the classification for the person you plan to hire and apply the corresponding rate to their salary.
| If your employee is a… | Use this fringe rate |
| Tenure-track faculty | 29.60% |
| Civil Service, Administrative Professional, or non-tenure track faculty | 47.60% |
| Extra-help, graduate assistant, or student worker | 7.65% |
When do I use these rates (the most important part)?
This is the key rule: these rates apply when you are paying an employee from an external fund.
You MUST apply these fringe rates for salaries paid from:
- External grants (e.g., federal grants from NSF, NIH, etc.)
- Private foundation funds (e.g., grants from the Mellon Foundation)
Why? When an outside organization funds a position, they must cover the full cost of that employee, which includes their salary, the value of their benefits (like the university’s contribution to health insurance and SURS retirement), and the applicable federal payroll taxes including Social Security (up to the taxable wage base) and Medicare. This process ensures those costs are reimbursed to the state.
You generally do not need to calculate these costs for employees paid from state-appropriated funds or your department’s regular operating budget, as those benefit costs are handled through the state’s central budget process.
Putting it into practice: A grant budget example
Let’s say you’re writing a grant proposal and plan to hire a non-tenure track faculty member with a proposed salary of $60,000.
1. Find the rate: The rate for non-tenure track faculty is 47.60%.
2. Do the math:
- Fringe cost = $60,000 (salary) x 0.476 (fringe rate) = $28,560
3. Calculate the total cost for your grant budget:
- Total cost = $60,000 (salary) + $28,560 (fringe) = $88,560
In your grant budget, you would list the salary and the fringe benefit costs separately. That $28,560 covers the university and state’s share of that employee’s health insurance, retirement contributions (SURS), and FICA/Medicare taxes.
Why this system is better for you
- No more guesswork: You don’t have to worry about whether your new hire will choose a single or family health plan. The rate is the same, making your grant budget accurate and easy to prepare.
- Predictable costs: You can plan your project and department budgets with confidence, knowing exactly what the benefit costs will be.
- Keeps us compliant: Using these federally negotiated rates ensures our grant budgets are compliant with state and federal regulations.
The bottom line
When you are preparing a budget that uses restricted or foundation funds, you must include the cost of fringe benefits. Simply multiply the employee’s salary by the appropriate rate from the table above to get the fringe cost and add that to your budget.
