SUBJECT:	Fringe Benefit Rates
DATE:	July 11, 2005

The Department of Health and Human Services (DHHS) has now formally approved our federal fringe benefit rates for FY06. The negotiated rates for FY06 and the projections through FY08 are summarized below. These fringe benefit rates should be used for budgeting and long range planning purposes, as well as when preparing grant applications that cross fiscal years.

The FY07 and FY08 rates are very preliminary and are likely to change based on the fall fringe benefit rate analysis and projection process. Please note the FY07 rates have changed significantly from the January 10, 2005 rate announcement. These changes were caused by a significant over-recovery generated in FY05 that will impact the FY07 rates. The FY05 carry-forward was generated by a combination of favorable variance in the Health Care plans and adjustments to our actuarial liabilities.

	Monthly Staff	House Staff	Hourly Staff	Students
FY 05/06 Budget Non-Federal	22.7%	17.9%	25.8%	7.7%
FY 05/06 Budget Federal	20.8%	17.9%	24.7%	7.7%
FY 06/07 Projected Non-Federal	23.9%	23.2%	25.9%	7.7%
FY 06/07 Projected Federal	21.7%	23.2%	24.2%	7.7%
FY 07/08 Projected Non-Federal	24.3%	21.1%	29.7%	7.7%
FY 07/08 Projected Federal	22.5%	21.1%	28.6%	7.7%

Note:

1. The “Federal” rates will be used for: federal grants and contracts, Durham Regional Hospital , Raleigh Community Hospital , and AHS/DASC. The differentiation reflects the elimination of participation in the reimbursement of the tuition grant benefit program for those entities and funding sources.
   
2. The “Non-Federal” rates will be used for all other entities including non-federal grants, contracts, departments, etc.

Please distribute this information as appropriate.