Fringe Benefit Accounting


Fringe Pool Methodology 

All University employees have certain fringe benefits that are associated with their University appointments. The fringe benefits pool method is a concept involving the establishment of different employee groups, each of which includes employees with similar fringe benefits. Once the various employee groups are established, the fringe benefits costs of each group are pooled to determine the fringe benefits rate for each group to be used in budgeting and accounting for University fringe benefits.

Under the fringe benefits pool method, fringe benefits are budgeted and expensed as a percentage of actual salary or wage costs. Each salary Institutional Account (5002 - 5797) is assigned to one of the twelve categories (referred to as “fringe pools”).  Fringe charge rates are analyzed and reviewed annually prior to the beginning of the annual budget cycle and adjusted to reflect differences between the rates charged and actual benefits costs as well as future benefit projections.  Most of the fringe charge rates are approved by a federal agency (Division of Cost Allocation) prior to the rates being finalized.

The actual fringe benefits costs for each employee continue to be accumulated in a central control account to be compared with the rate-based fringe benefits costs charged to individual departmental Master File Keys (MFK's). Charges to individual MFK's appearing on the detail accounting statements (TDR and Grant Reports) appear as lump sum amounts for each applicable institutional account.

For further information, contact: Ted Welter, Assistant Controller, Financial Analysis, email: or phone: (319) 353-2027.


Annual Budgeting for Fringe Benefits   

Each year as the annual budget worksheets are distributed, departments must establish fringe benefits budgets based on the pool rate methodology. For departments who use Microsoft Access templates, fringe benefits will be budgeted automatically based on the salary budget. Additional guidance may be provided along with the budget worksheets.

Fringe rates are based on the principle of allocating a group (i.e. Clinical Faculty, Non-Clinical Faculty, etc.) of employee's total benefit cost over that group's total salary base for a given fiscal year. The salary base includes the academic year salary plus summer appointment salary. This is based on the assumption that summer session salary is subject to FICA and is entitled to receive the full employer funded contribution to a retirement program. Generally the retirement contribution is 10% of gross salary and the FICA component is 7.65% of gross salary.