COVID-19 Research FAQs: Fringe Rate
Q: How does BU normally set its fringe benefit rates with the federal government?
Fringe benefits are non-salary costs associated with compensation for employees, including health and retirement plans. On a biannual basis, BU sets its fringe benefit rates for two-year periods to allocate fringe benefit costs on federal grants. BU estimates fringe benefit rates at the beginning of each fiscal year based on prior two-year fringe benefit actuals expenditures (BU’s fiscal year is July 1 to June 30). At the end of the fiscal year, a reconciliation is done between the University’s actual fringe benefit expense and the assessment of fringe benefit expense, any difference in the estimate and actual expenditures is applied to future years and future fringe benefit rates (i.e. “carry forward,” also known as over/under recovery). Fiscal 2020 and Fiscal 2021 negotiated fringe benefit rates, for example, were based on Fiscal 2017 and Fiscal 2018 fringe benefit actual expenditures.
Q: Why is BU reducing its fringe benefit rates for FY21?
The elimination of the University’s contribution to the retirement fund will unexpectantly change our estimated fringe benefit costs for FY21. If BU does not reduce its fringe benefit rates, there will be a significant discrepancy between the current negotiated rate with the federal government and the actual fringe benefit costs, creating a large carry forward. That carry forward could have a negative impact on future rates. The Department of Health and Human Services (DHHS) presented us with an exception opportunity to lower the fringe benefit rates during these unique times.
Q: What is the timeframe for receiving and announcing the new fringe benefit rates for FY21?
Boston University received approval from the DHHS on June 11th to reduce our fringe benefit rates for FY21. Once the University processes the final approvals, the change will be officially announced to the BU community. The changes will be implemented into SAP before there is any undue burden on department and/or grant administrators. Check here for the updated rates following the official announcement.
Q: Do these fringe benefit changes apply to BU employees charged on BMC Sponsored Research awards as well?
Yes.
Q: Do I need to rebudget my award because of a lower fringe rate?
No, we are not requiring that you submit a re-budget to Sponsored Programs. The system will automatically charge the lower FY21 rate and the surplus in the fringe line can be used, as allowed by the sponsor, toward other cost categories in support of the project assuming it does not represent a change in scope.
Q: Do I require sponsor prior approval to repurpose the surplus in fringe benefits to other cost-categories for the project?
Most federal sponsors allow the reallocation funds without prior approval as long as the changes to do not result in a change of scope. For non-federal sponsors, it will be important to confirm what is allowable in the award agreement. If you are unsure, please reference your award agreement or consult with your Sponsored Programs RA.
Q: What fringe benefit rates do I use if I am currently submitting a proposal for FY21?
Please reference our rate webpage here for current active rates. Please use the active fringe benefit rates in proposal submissions.
Q: What will the fringe benefit rates be in future years after FY21? Will the fringe benefits costs be more in line with FY 20 costs?
BU received approval for provisional fringe benefit rates for FY22 as part of our proposal to DHHS. The FY22 submission is based on the FY19 and FY20 benefit costs and therefore includes the University’s retirement contribution resulting in a fringe rate similar to the FY20 rate. The provisional fringe benefit rates will be officially announced along with reduced fringe benefit rates and updated on our rate webpage found here.
Q: What fringe benefit rates do I use in my proposal after the FY21 rate and FY22 provisional rates are approved?
This depends on when the research will be taking place. If you are submitting a proposal that includes starting work in FY21 and continuing work in FY22 your proposal budget should include both the FY21 and FY22 rates. This adds a level of complexity to your budgets as you are calculating fringe based on two different rates for the period of the research.
As an example, if you are submitting a one year proposal where research will begin on 1/1/21 and end on 12/31/21 you must calculate the fringe for the period of 1/1/21 to 6/30/21 using the FY21 rate and for the period of 7/1/21 to 12/31/21 using the FY22 provisional rate.
Q: What fringe benefit rates do I use if I am submitting a proposal for FY22 and beyond?
You should reference our active rate webpage found here for the most up to date rates. Following the approval of the new rates, if all research is taking place in FY22 or beyond (starting 7/1/21) you will use provisional fringe benefit rates. These will be the fringe benefit rates you need to use for any proposals for FY22 and/or future grants.