LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY, No. 4164
STATE OF NEW JERSEY
220th LEGISLATURE
DATED: JUNE 29, 2023
SUMMARY
Synopsis: Establishes fringe benefit rate for State colleges and universities.
Type of Impact: Annual impact on State revenues.
Agencies Affected: State colleges and universities; Department of the Treasury.
Office of Legislative Services Estimate
Annual Fiscal Impact
State Revenue Impact Indeterminate
 The Office of Legislative Services (OLS) finds that this bill will affect fringe benefit recoveries
from the State colleges and universities, which are recorded as general State revenues.
 Given that the bill does not provide the specific manner in which a new fringe benefit rate for
the State colleges and universities would be calculated, the impact on State revenues is
indeterminate.
 Currently, the State funds the employer share of fringe benefits for public employees at the
State’s colleges and universities. The number of employees for which the State pays the
employer share of fringe benefit costs is determined in the annual appropriations act by each
college or university’s number of State-funded positions. The colleges or universities
reimburse the State for the fringe benefit costs of employees beyond the number authorized in
the annual appropriations act, whether funded from State or non-State sources.
BILL DESCRIPTION
This bill directs the Department of the Treasury to establish a separate fringe rate for the State’s
colleges and universities that reflects the actual cost of employee fringe benefits. The separate
fringe rate would be applied to all federal, dedicated, and non-State funded programs.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS finds that this bill will affect fringe benefits recoveries from the State colleges and
universities, which are recorded as general State revenues. Given that the bill does not provide the
specific manner in which a new fringe benefit rate for the State colleges and universities would be
calculated, the impact on State revenues is indeterminate.
Current Fringe Benefit Recovery Practice
Currently, the State funds the employer share of fringe benefits for public employees at the
State’s senior public colleges and universities. The State senior public colleges and universities
that currently receive fringe benefit funding include: Rutgers, The State University; the New Jersey
Institute of Technology; Rowan University; Montclair State University; Kean University; Thomas
Edison State University; New Jersey City University; William Paterson University of New Jersey;
The College of New Jersey; Ramapo College of New Jersey; and Stockton University. The fringe
benefit costs that the State pays on behalf of these colleges and universities include retirement,
social security, health and dental insurance contributions, workers’ compensation, unemployment,
survivors’ and disability insurance.
The number of employees for which the State ultimately pays the employer share of fringe
benefit costs for each of the colleges or universities is determined through language in the annual
appropriations act that sets each college or university’s number of State-funded positions. All
employee fringe benefits are initially funded by State funds. However, the colleges or universities
reimburse the State for the fringe benefit costs of employees beyond the number authorized in the
annual appropriations act, whether funded from State or non-State sources. The reimbursements
made by the senior public colleges or universities to the State for fringe benefit costs beyond the
costs for the number of State-funded positions authorized in the annual appropriations act are
recorded as general State revenues.
Information from the Office of Management and Budget indicates that the total amount of
fringe benefits paid by the State to the senior public institutions of higher education are as follows:
$981.9 million in FY 2022; an estimated $1.0 billion in FY 2023; and a projected $1.1 billion in
FY 2024. According to the FY 2024 Governor’s Budget, fringe benefit recoveries from State
senior public colleges and universities, as well as University Hospital, totaled $283.6 million in
FY 2022, are estimated at $308.6 million in FY 2023, and are projected at $331.2 million in FY
2024. According to an Office of Management and Budget circular, the applicable fringe benefit
rate for the State’s senior public colleges and universities in FY 2023 is 60.8 percent of base
salaries. The circular also establishes a separate rate for the employer’s share of the Federal
Insurance Contributions Act (FICA) and Medicare taxes, which rate is 7.65 percent in 2023.
According to testimony received during the FY 2023 and FY 2024 budget processes, the State
senior public colleges and universities reimburse the State at a fringe benefit rate that incorporates
a blended average pension component reflecting the overall State workforce and not that of the
colleges and universities. According to the testimony, the blended State average reflects a State
workforce in which roughly two-thirds of the employees are enrolled in defined benefit retirement
plans (primarily the Public Employees Retirement System) and one-third of the employees are
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enrolled in less costly defined contribution retirement plans (primarily the Alternate Benefit
Program). However, it is estimated that approximately 80 percent of the employee profile at the
State senior public colleges and universities are enrolled in the Alternate Benefit Program while
the remaining 20 percent are in the Public Employees Retirement System.
Section: State Government
Analyst: Anna Harris
Assistant Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).