This bill mandates the establishment of a separate fringe benefit rate for State colleges and universities, effective from the fiscal year 2025 onward. The Director of the Division of Budget and Accounting in the Department of the Treasury is tasked with determining this rate, which will accurately reflect the actual costs associated with employee retirement programs at these institutions. This new rate will apply to all federal, dedicated, and non-State funded programs, ensuring that the financial implications of employee benefits are appropriately accounted for in the budgeting process.

Currently, the fringe benefit rate applied to public institutions of higher education is not tailored to their specific employee demographics, as it is based on the broader category of State employees. This has led to discrepancies between the actual costs of benefits and the amounts allocated by the State, particularly since many employees at these colleges and universities participate in the less expensive Alternative Benefit Plan (ABP) or do not enroll in any retirement plan at all. By establishing a distinct fringe benefit rate, the bill aims to align funding with the true costs of employee benefits in higher education.