Comptroller Fiscal Year Memo Letter Head


To:Chief Fiscal Officers
From:Martin J. Benison, Comptroller
Date:May 7, 2009

Approved FY2010 Fringe Benefit and Payroll Tax Rates

Comptroller Memo

Executive Summary

The purpose of this memo is to notify departments of the approved fringe benefit and payroll tax rates for FY2010.

Comptroller Memo FY2010-01, dated February 2, 2009, advised departments that a fringe benefit rate of 26.21% and a payroll tax rate of 1.38% had been submitted for Federal approval. The early notice was to assist departments in planning for FY2010.

These rates have been calculated with the concurrence of the Secretary of the Executive Office of Administration and Finance and the U. S. Department of Health and Human Services. Please see Administrative Bulletin ANF#5.

The fringe benefit rate proposal has been approved with revisions. The following components comprise the approved FY2010 fringe benefit rate:

Group Insurance 19.37%

Retirement 6.16%

Terminal Leave 0.89%

Total 26.42%

This rate is applicable for both the state "5D" rate used to assess fringe benefit costs on all state funds, other than the General Fund, pursuant to M.G.L. Chapter 29, § 5D, and the "6B" rate used to assess fringe benefit costs on federally supported programs pursuant to M.G.L. Chapter 29, §6B. The rate is applied to salaries expended under object codes A01, A07, A09 and AA1 to determine these particular fringe benefit costs.

Because the costs of terminal leave salaries are allocated through the fringe benefit rate, A12, Sick-Leave Buy Back; A13, Vacation-in-Lieu; and A21, Payments for Deceased Employees object code salaries may not also be claimed as direct costs on federally supported programs whether incurred on Federal grants, contracts, or state appropriations subject to Federal reimbursement.

Separate from the fringe benefit costs identified above, payroll taxes (unemployment, universal health and the employer's share of Medicare insurance) apply to all account types pursuant to M.G.L. Chapter 151A, sections 14C and 14G for unemployment and universal health insurance, respectively, and M.G.L. Chapter 7A, sections 3, 7 and 8 for Medicare insurance. The payroll tax rate has been approved as proposed at 1.38 % of AA and CC object code salaries.

The following components comprise the approved FY2010 payroll tax rate:

Unemployment 0.23%

Universal Health 0.04%

Medicare Tax 1.11%

Total 1.38%

All fringe benefit and payroll tax assessments determined by these rates will be charged to object code D09 at the close of each accounting period.

Please note that certain expenditures made under Interdepartmental Service Agreements (ISA's) may trigger the assessment of fringe benefit and payroll tax costs to the ISA child account, and both the Parent and Child Departments are responsible for ensuring that these amounts are adequately funded in the ISA and identified in the ISA budget.

Questions regarding this memo may be directed to Kevin Moran at (617) 973-2606.


Enc:FY2010 Fringe Benefit Agreement pdf format of fringe_agreement.pdf
 Fringe Benefit and Payroll Tax Rate Summary xls format of rate_summ.xls
CC:MMARS Liaisons
 Payroll Directors
 General Counsels
 Internal Distribution