Costing Policy & Analysis

Research Administration Office

University of California

No. 96-09
May 1, 1996

CONTRACT AND GRANT OFFICERS (CAMPUS AND LAB)
VICE CHANCELLORS--ADMINISTRATION

Subject: Revised Employee Benefits Projections

Summarized below for use in calculating budgets for all contract and grant proposals are the revised composite employee benefit rates applicable beginning May 1, 1996. All rates are expressed as a percent of salaries.

EMPLOYEE BENEFIT RATES
	Applicable May 1, 1996
STAFF PERSONNEL--CAREER	23%
ACADEMIC PERSONNEL	17%
VISITING ACADEMIC TITLES 50-100%	7.2%
SUMMER EMPLOYMENT, 9 MONTH ACADEMIC EMPLOYEES	8.9%	(exclude FICA if not coord.)
STAFF PERSONNEL--CASUAL WITH CORE BENEFITS (working more than 17.5 hrs/wk, excluding students in casual restricted jobs or an academic title designated as student assistant; per diem, by agreement, and stipend only employees; and initial appointment of temporary for less than three months)	5.5%	(plus 6.2% OASDI when applicable#)
STAFF PERSONNEL--CASUAL WITHOUT CORE BENEFITS (working less than 17.5 hrs/wk and agreement, stipend only, per diem, and temporary employees)	4.0%	(plus 6.2% OASDI when applicable#)
UNDERGRADUATE AND GRADUATE STUDENTS, ACADEMIC YEAR (Workers' Comp. only)	1.1%	(plus GSHIP, fee, tuition remission##, or incentive assessment if non-academic job classification)
UNDERGRADUATE AND GRADUATE STUDENTS, SUMMER (Workers' Comp., UI and Medicare)	2.7%	(plus GSHIP, fee, tuition remission##, or incentive assessment if non-academic job classification)

#During the period July 1991 through October, 1992, casual employees were allowed to choose between the Old Age, Survivors, Dependents Insurance (OASDI) program under Social Security and the University Defined Contribution Plan (also called 'Safe Harbor'). Effective October 19, 1992, newly hired or rehired per diem, casual, housestaff, and other temporary employees excluded from membership in the University retirement program are automatically enrolled in the DCP Plan and may no longer elect OASDI. There is no employer contribution to the DCP Plan. Therefore, in forecasting fringe benefits, the OASDI portion of Social Security should be added to the projected fringe benefit rates only for current employees who elected OASDI during the period when it was available. Persons selecting the DCP option and all new hires and rehires after October 19, 1992 are not eligible for OASDI.

##The University fringe benefit program for graduate students includes Graduate Student Health Insurance and partial or full fee remission and/or tuition remission according to plans developed at each campus. [Information on tuition and fee increases is available via the Worldwide Web; the URL is: http://www.ucop.edu/ucophome/commserv/regfeb96.html.] Because each campus plan is different, to budget fringe benefits for graduate students, each campus should estimate the Worker's Compensation component and then add on the projected cost of their campus GSHIP/fee/tuition remission program. Student salaries should also be charged for unemployment insurance and the Medicare portion of FICA during the summer (on the assumption that the student will be working more than 50% time). Student employees who have non-academic pay titles are eligible for incentive awards, in which case the 1.3% assessment should also be added.

Long-Range Fringe Benefit Projections
CALENDAR YEAR	STAFF	ACADEMIC
1997	23.5	17.5
1998	24.0	18.0
1999	24.5	18.5

Schedules of Rates (Enclosure 1)

The enclosed Schedule 1 provides a detailed breakdown of the components of the revised employee benefit composite rates. Schedule 2 provides a revised breakdown of rates for students, casual staff personnel working more than 17.5 hours/week, casual staff personnel working less than 17.5 hours/week, academic visiting titles, and academic summer employment.

Basis for Pricing of Fringe Benefits (Enclosure 2)

Enclosure 2 to this Memo sets forth the calculations, documentation, and rationale used in the development of the various fringe benefit components presented in the Enclosure 1 Schedules. Campus Contract and Grant offices may want to inform campus personnel that detailed backup for the composite rates is available.

Use of Fringe Benefit Rates

The Schedules provided in Enclosure 1 may be used for pricing proposal budgets and are not to be used for billing purposes. Charges to contract and grant awards are based upon the actual fringe benefit payments.

Alternatives to Use of the Composite Fringe Benefit Rates

Under special circumstances, the use of the composite fringe benefit rate will understate actual costs for employee benefits (e.g., the actual average salaries are substantially lower than the University-wide weighted average or the majority belong to family dental and health plans). In those unique situations, or when a more precise measurement of fringe benefit costs is desirable, the costing of actual fringe benefit costs would be warranted in proposal budgets, rather than total reliance on composite rates.

Inclusion of Incentive Award Assessment

Beginning July 1, 1996, all funds supporting regular salary payments to non-academic employees eligible for incentive awards will be assessed a standard amount, currently projected at 1.3%. The assessment will be charged to a benefit expense object code. When incentive award payments are paid to individual employees, the payment will be made as taxable salary from the sponsored project account/fund; funds sufficient to cover the incentive award salary and associated fringe benefits will be transferred from the Incentive Award Assessment Pool to the sponsored project account/fund. Thus, beginning FY 1997, the incentive award program portion of the salary will be budgeted and charged to each fund source as a fringe benefit. The announcement of this mandatory assessment was made in a February 20, 1996, memo to Vice Chancellors--Administration by Senior Vice President Kennedy. Implementing procedures will be issued by the Office of the President.

HHS Region IX Notification of Fringe Benefit Changes

A copy of this Contract and Grant Memo has been transmitted to the Division of Cost Allocation, HHS Region IX to satisfy the requirement that the University notify its cognizant agency of changes in the University's employee benefit rate projections.

Refer:
Barbara Yoder
(510) 987-9848
barbara.yoder@ucop.edu

Subject Index: 02, 07, 10
Organization Index: U-115

David F. Mears
Director
Research Administration Office

Enclosures

cc:
Vice Chancellors Research
Accounting Officers
Internal Audit Managers
David Low/DHHS Audit

2. Unemployment Insurance (7/95)
	Federal Funds
Berkeley	0.27
San Francisco	0.10
Davis	0.19
Los Angeles	0.10
Riverside	0.30
San Diego	0.03
Santa Cruz	0.10
Santa Barbara	0.16
Irvine	0.18
Average - All Campuses	0.16

3. Employer Contributions to Employee Health, Dental and Vision Plans (1/96)
(per month)
The following contribution rates are determined by dividing the average annual cost per employee by the annual academic and staff weighted average salaries as of 10/95.
a. Basis for Health Plan Calculations
	Academic	Staff
Average Cost Per Enrollee/Month	$249.81	$249.81
Average Cost Per Enrollee/Year	$2,997.72	$2,997.72
Weighted Average Annual Salary	$66,712.00	$37,761.69
	Academic	Staff
Avg. Cost/Avg. Salary	4.49%	7.94%
b. Basis for Dental Plan Calculations
	Academic	Staff
Average Cost Per Enrollee/Month	$49.23	$49.23
Average Cost Per Enrollee/Year	$590.76	$590.76
Weighted Average Annual Salary	$66,712.00	$37,761.69
	Academic	Staff
Avg. Cost/Avg. Salary	0.89%	1.56%
c. Basis for Vision Calculations
	Academic	Staff
Average Cost Per Enrollee/Month	$10.01	$10.01
Average Cost Per Enrollee/Year	$120.12	$120.12
Weighted Average Annual Salary	$66,712.00	$37,761.69
	Academic	Staff
Avg. Cost/Avg. Salary	0.18%	0.32%
d. Basis for CORE Health Calculations
	CORE Health
Average Cost Per Enrollee/Month	$32.26
Average Cost Per Enrollee/Year	$387.12
Weighted Average Annual Salary	$27,325.90
	CORE Health
Avg. Cost/Avg. Salary	1.42%

4. Non-Industrial Disability Insurance (NDI) (1/96)
	Academic	Staff
Average Cost Per Enrollee/Month	$7.21	$7.21
Average Cost Per Enrollee/Year	$86.52	$86.52
Weighted Average Annual Salary	$66,712.00	$37,761.69
	Academic	Staff
Avg. Cost/Avg. Salary	0.13%	0.23%

5. Life Insurance--Career Employees (1/96)
	Academic	Staff
Average Cost Per Enrollee/Month	$4.82	$4.82
Average Cost Per Enrollee/Year	$57.84	$57.84
Weighted Average Annual Salary	$66,712.00	$37,761.69
	Academic	Staff
Avg. Cost/Avg. Salary	0.09%	0.15%

6. Life Insurance--CORE Benefit (1/96)
	CORE Life
Average Cost Per Enrollee/Month	$0.47
Average Cost Per Enrollee/Year	$5.64
Weighted Average Annual Salary	$27,325.90
	CORE Life
Avg. Cost/Avg. Salary	0.02%

7. Annuitant/Benefit Administration Fund (1/95)
The components of this rate are: 2.00% to cover the cost of health & dental premium payments for annuitants; .07% to help support the cost of benefits administration
Rate per $100 of covered payroll	2.07

8. FICA (1/96)
FICA is made up of OASDI and Medicare. The legislated employer FICA tax rates are:
	Rate (%)	Base ($)		Maximum ($)
Medicare	1.45	N/A		N/A
OASDI	6.20	62,700		3,887.40
Total FICA	7.65

9. Employee Support Program (7/95)
This benefit is assessed at varying campus rates applied to each $100 gross payroll, and is used to support employee wellness programs, training, education, and loss-prevention programs. The current base rates maintained at campus locations are as follows:
Berkeley	0.28
San Francisco Campus	0.20
San Francisco Hospital	0.20
San Francisco NPI	0.20
Davis Campus	0.00
Davis Hospital	0.00
Santa Cruz	0.30
Santa Barbara	0.44
Los Angeles Campus	0.04
Los Angeles Hospital	0.12
Los Angeles NPI	0.04
Irvine Campus	0.30
Irvine Hospital	0.30
Riverside	0.24
San Diego Campus	0.20
San Diego Hospital	0.12
Composite rate:	0.19