What You Should Know
The employee benefits rate is a set percentage applied to non-student salaries. It includes the costs Princeton incurs on behalf of its employees and their dependents for:
- retirement plan benefits
- the University’s share of FICA taxes
- medical insurance
- life insurance
- long-term disability insurance
- workers' compensation
- unemployment insurance
- occupational medicine services provided through University Health Services
- staff educational assistance
- subsidized employee cafeterias
- childcare subsidies
- mass transit subsidies
The rate charged in academic departments also includes faculty sabbatical leaves and short-term disability.
Three Different Rates
We have three employee benefits rates: one for academic departments and programs; one for administrative departments; and one for the Princeton Plasma Physics Laboratory (see the main campus rate agreement.)
Rate Calculation & Application
The rate is the ratio of total plan costs divided by the total salaries and wages paid to non-student employees. It is applied to every non-student salary dollar processed through the Labor Accounting system: account codes prior to July 1, 2014, 201-207, 210, 301-307, and 501-503; on and after July 1, 2014, 5003-5005, 5051-5053, 5093, 5101, 5151-5155, 5181-5184, and 5301-5303. Student salary account codes exempt from the benefits rate charge: prior to July 1, 2014, 208 and 209; on and after July 1, 2014, 5201-5206 and 5251-5252. Labor Accounting calculates the benefit charge based on staff class and department.
The two main campus billing rates are based on projected costs. Any over- or under-recovery is carried forward and built into future rates. The separate PPPL benefits rate is estimated in advance and adjusted to recover actual costs each fiscal year. The tables below apply only to the main campus rates.
|FY 2016 Employee Benefit Rates|
|Major Components (Expense/Salary)||Rate|
|Employer Retirement Contribution||9.5|
|Total Administrative Department Rate (Base)||29.2|
|Total Academic Department Rate||34.8|
The projected FY2017 rates are approved by the federal government as provisional until amended. The FY2018 and FY2019 rates are provided for internal University planning purposes only and have not been approved by the federal government. The ORPA website shows the benefit rates that are approved for use in preparing budgets for federally sponsored awards.
Historical Benefit Billing Rates
Casual Hourly Employees & the Benefits Rate
Although casual hourly employees don’t participate in all Princeton benefit programs, they generate benefits costs. The largest is the University’s share of FICA tax. Hourly employees also are covered by our workers’ compensation policy and have access to subsidized cafeterias. In some cases, state law requires that we extend temporary disability coverage to these employees. These costs make up approximately seven points of the total benefits rate.
While it would be possible to calculate a separate rate for casual employees, doing so would drive up the rate for all other classes of employee. The impact of casual hourly employees on actual benefit costs is essentially equivalent to costs for full-time regular employees who leave the University before vesting in our retirement plan, giving birth, or otherwise generating benefits costs beyond the FICA tax.
In addition, the average benefits rate is a budgeting convenience if a department wishes to convert a casual employee position to regular status since the associated benefits are already part of the department’s budget.