SUBJECT:	Fringe Benefit Rate Update
DATE:	July 23, 2004

The Department of Health and Human Services (DHHS) has now formally approved our federal fringe benefit rates for FY 2004/05. The negotiated rates for FY 2004/05 and the projections through FY 2006/07 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 FY 2005/06 and FY 2006/07 rates are very preliminary estimates. The estimated rate increase for Hourly Staff is driven by increasing contributions to the Employee Retirement Plan (ERP) and projected increases in medical care costs. These rates assume the implementation of cost containment initiatives but additional initiatives and/or benefit reductions will be required to attain these rates.

	Monthly Staff	House Staff	Hourly Staff	Students
FY 04/05 Budget Non-Federal	23.4%	15.3%	26.4%	7.7%
FY 04/05 Budget Federal	21.8%	15.3%	25.5%	7.7%
FY 05/06 Projected Non-Federal	23.8%	19.3%	27.5%	7.7%
FY 05/06 Projected Federal	22.3%	19.3%	26.5%	7.7%
FY 06/07 Projected Non-Federal	24.1%	21.2%	29.0%	7.7%
FY 06/07 Projected Federal	22.6%	21.2%	28.0%	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.