The benefits rate covers the broad range of costs that Princeton incurs on behalf of its employees and their dependents for retirement plan costs (which include the university’s share of FICA taxes), medical insurance, life insurance, long-term disability insurance, worker’s compensation, unemployment, and some smaller miscellaneous programs such as the Occupational Medicine services provided through University Health Services, forgiveness of employee educational loans, and subsidized employee cafeterias. The rate charged in academic departments also includes faculty sabbatical leaves. Tuition assistance for employee dependents is no longer included in the benefits pool as of fiscal year 1999-2000 because of changes in federal regulations. None of the costs funded by the employees themselves through payroll reductions/deduction are included in the benefits rate applied. The rate calculation is the ratio of total plan costs divided by the total applicable salaries paid to non-student employees.

We currently have three major employee benefits rates- one for all academic departments and programs, one for administrative departments, and one for the Princeton Plasma Physics Laboratory. All three rates are submitted in advance to our federal cognizant negotiating agency, the Department of Health and Human Services. Our agreement with them provides that the rates be applied to all non-student salaries. This means that salary account codes 201 through 210, excluding 208 and 209, incur the benefits rate charge.

It is frequently not recognized that hourly employees do generate costs and participate in several components of the benefits rate, the largest of which is the employer’s share of FICA tax. They are also covered under our Worker’s Compensation policy and have access to subsidized cafeterias. In certain cases, state law requires that we extend temporary disability coverage to these employees as well. These costs pools generate roughly 8 points within the total benefits rate. While it would not be difficult to calculate a separate rate for casual employees, Princeton has for decades preferred the administrative simplicity of applying an average rate to all salaries. With any average rate, there are by definition individual cases above and below the average. Creating a separate rate for casual employees would necessarily drive up the rate for all other classes of employee. The casual hourly workers – at least in terms of their impact on actual benefits costs – are not unlike those full-time regular employees who are hired and enroll in various plans, but then for various reasons leave before vesting in our pension plan, becoming ill, giving birth, dying, or otherwise generating costs in the benefits pool. Finally, the average benefits rate is a budgeting convenience if one wishes to convert a casual employee position to regular status, in that the benefits are in effect already paid for.