Costing Policy & Analysis

Research Administration Office

University of California

No. 96-09
May 1, 1996


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.

Applicable May 1, 1996
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:] 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

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.

Barbara Yoder
(510) 987-9848

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

David F. Mears
Research Administration Office


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

Enclosure 1
Schedule 1: Employee Benefits--Composite Rates (effective 5/1/96)
(UCRS) Retirement Contribution0.000.00
Health Plan Contribution4.497.94
Social Security (FICA)7.657.65
Dental Plan0.891.56
Vision Contribution0.180.32
Workers' Compensation Insurance1.111.11
Employee Support Program0.190.19
Unemployment Insurance0.160.16
Non-Industrial Disability Insurance (NDI)0.130.23
Life Insurance (Employer Paid)0.090.15
Annuitant Health/Dental Program2.072.07
Employee Incentive Award AssessmentN/A1.30
Rounded to:17 23
Schedule 2: Employee Benefits--Special Rates
Visiting Academic Titles 50%-100%
Health Plan4.49
Workers' Comp1.11
Unemployment Insurance0.16
CORE Life0.02
7.24rounded to:7.2
9 Month Academic - Summer Employment (exclude FICA if not coordinated)
Fringe Benefits:
Workers' Comp1.11
Unemployment Insurance0.16
8.92rounded to:8.9
Staff Personnel--Casual with CORE Benefits (add OASDI when applicable)
(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, & Stipend Only Employees; and Initial Appointment of Temporary for Less Than 3 Months)
Workers' Comp1.11
Unemployment Insurance0.16
Medicare portion of FICA1.45
CORE Medical1.42
CORE Life Insurance0.02
Employee Incentive Award Assessment1.30
5.46rounded to:5.5
Staff Personnel--Casual without CORE Benefits (add OASDI when applicable)
(Working Less Than 17.5 Hrs/Wk and By Agreement, Stipend Only, Per Diem, and Temporary Employees)
Workers' Comp1.11
Unemployment Insurance0.16
Employee Incentive Award Assessment1.30
4.02rounded to:4.0
Undergraduate and Graduate Students (add applicable GSHIP, fee, tuition remission, incentive)
Academic Year:
Workers' Comp1.11rounded to:1.1
Workers' Comp1.11
Unemployment Insurance0.16
2.72rounded to:2.7
Note: Campuses separately budget Graduate Student Health Insurance and partial or full fee remission and tuition remission according to their local campus plans and the cost of these benefits. Students with academic pay titles are not eligible for incentive awards and their salaries should not be so assessed.

Enclosure 2
1. Workers' Compensation - Self-Insured Program (7/95)
As part of the University's self-insurance program this benefit is assessed at varying campus rates applied to each $100 gross payroll. The current base rates maintained at campus locations are as follows:
San Francisco Campus0.00
San Francisco Hospital1.00
San Francisco NPI5.00
Davis Campus0.00
Davis Hospital0.44
Santa Cruz0.74
Santa Barbara0.52
Los Angeles Campus0.35
Los Angeles Hospital0.00
Los Angeles NPI3.40
Irvine Campus0.33
Irvine Hospital0.59
San Diego Campus1.05
San Diego Hospital1.59
Composite rate:1.11

2. Unemployment Insurance (7/95)
Federal Funds
San Francisco0.10
Los Angeles0.10
San Diego0.03
Santa Cruz0.10
Santa Barbara0.16
Average - All Campuses0.16

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
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
Avg. Cost/Avg. Salary4.49%7.94%
b. Basis for Dental Plan Calculations
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
Avg. Cost/Avg. Salary0.89%1.56%
c. Basis for Vision Calculations
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
Avg. Cost/Avg. Salary0.18%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. Salary1.42%

4. Non-Industrial Disability Insurance (NDI) (1/96)
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
Avg. Cost/Avg. Salary0.13%0.23%

5. Life Insurance--Career Employees (1/96)
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
Avg. Cost/Avg. Salary0.09%0.15%

6. Life Insurance--CORE Benefit (1/96)
Average Cost Per Enrollee/Month$0.47
Average Cost Per Enrollee/Year$5.64
Weighted Average Annual Salary$27,325.90
Avg. Cost/Avg. Salary0.02%

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 payroll2.07

8. FICA (1/96)
FICA is made up of OASDI and Medicare. The legislated employer FICA tax rates are:
Rate (%)Base ($)Maximum ($)
Medicare1.45N/A N/A
OASDI6.2062,700 3,887.40
Total FICA7.65

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:
San Francisco Campus0.20
San Francisco Hospital0.20
San Francisco NPI0.20
Davis Campus0.00
Davis Hospital0.00
Santa Cruz0.30
Santa Barbara0.44
Los Angeles Campus0.04
Los Angeles Hospital0.12
Los Angeles NPI0.04
Irvine Campus0.30
Irvine Hospital0.30
San Diego Campus0.20
San Diego Hospital0.12
Composite rate:0.19