This bill mandates the establishment of a separate fringe benefit rate for State colleges and universities, effective from the State 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 be applicable to all federal, dedicated, and non-State funded programs.

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 paid by the State, particularly since many employees at these colleges and universities are enrolled in the less expensive Alternative Benefit Plan (ABP) or do not participate in any retirement plan at all. The bill aims to rectify this issue by ensuring that the fringe benefit rate is more accurately aligned with the actual costs incurred by these institutions.