University of California
Office of the President

Senior Vice President--Business and Finance

Costing Policy & Analysis
Research Administration Office

Memo Operating Guidance No. 99-01

January 14, 1999

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

Subject: CANCELLED 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 February 1, 1999. All rates are expressed as a percent of salaries.

EMPLOYEE BENEFIT RATES

STAFF PERSONNEL--CAREER                       23%

ACADEMIC PERSONNEL                                17%

VISITING ACADEMIC TITLES 50-100%         7.3%

SUMMER EMPLOYMENT, 9 MONTH
ACADEMIC EMPLOYEES                               9.2% (exclude FICA if not coordinated)

STAFF PERSONNEL--CASUAL WITH CORE
BENEFITS 5.2% (plus 6.2% 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, and stipend only employees; and initial
appointment of temporary for less than three months)

STAFF PERSONNEL--CASUAL WITHOUT       4.3% (plus 6.2% OASDI when applicable#)
CORE BENEFITS
(working less than 17.5 hrs/wk and agreement,
stipend only, per diem, and temporary employees)

UNDERGRADUATE AND GRADUATE                1.3% (plus GSHIP, fee, tuition remission##;
STUDENTS, ACADEMIC YEAR (Workers' Comp. only)       or incentive assessment if                                                                                                   non-academic job classification)

UNDERGRADUATE AND GRADUATE                3.0% (plus GSHIP, fee, tuition remission##;
STUDENTS, SUMMER (Workers' Comp., UI and Medicare)       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 fees is available via the Worldwide Web; the URL is: http://www.ucop.edu/ucophome/budget/fees.html#genfees] 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

During the past few years the cost of fringe benefits has stabilized as a percent of salary. Until there are projected changes in the Social Security tax or a reinstatement of contributions to the University of California Retirement Program, projected increases in the fringe benefit rates for subsequent years is discontinued. The fringe benefit rates included in this memo can be used to budget fringe benefits for multi-year periods.

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 back-up 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 were issued by the Office of the President on May 31, 1996 and July 23, 1996.

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 (e-mail)

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

Enclosures

David F. Mears
Director, Research Administration Office

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


ENCLOSURE 1

Schedule 1: Employee Benefits-.-Composite Rates (effective 8/1/97)

                                                   Academic     Staff
(UCRS) Retirement Contribution    0.00           0.00

Health Plan Contribution                  4.28           7.88

Social Security (FICA)                   7.65           7.65

Dental Plan                                      0.90           1.65

Vision Contribution                         0.18           0.33

Workers' Compensation Insurance 1.28           1.28

Employee Support Program            0.18           0.18

Unemployment Insurance                 0.24           0.24

Non-Industrial Disability Insurance (NDI) 0.12 0.21

Life Insurance (Employer Paid)         0.08          0.14

Annuitant Health/Dental Program      1.85          1.85

Employee Incentive Award Assessment N/A     1.30

Total                                                16.74      22.70

Rounded to:                                     17           23


Schedule 2: Employee Benefits-Special Rates

Visiting Academic Titles 50%-100%

Medicare                        1.45
Health Plan                     4.28
Workers' Comp             1.28
Unemployment Insurance 0.24
CORE Life                     0.02
                                      7.27 rounded to: 7.3

9 Month Academic - Summer Employment (exclude FICA if not coordinated)
Fringe Benefits:

Workers' Comp              1.28
Unemployment Insurance 0.24
FICA                              7.65
                                       9.17 rounded to: 9.2

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' Comp          1.28

Unemployment Insurance 0.24

Medicare portion of FICA 1.45

CORE Medical                  0.89

CORE Life Insurance         0.02

Employee Incentive Award Assessment 1.30

                                           5.18 rounded to: 5.2

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' Comp              1.28

Unemployment Insurance 0.24

Medicare                        1.45

Employee Incentive Award Assessment 1.30

                                       4.27 rounded to: 4.3

Undergraduate and Graduate Students (add applicable GSHIP, fee, tuition remission)

Academic Year:
Workers' Comp              1.28     rounded to: 1.3

Summer:
Workers' Comp              1.28
Unemployment Insurance 0.24
Medicare                        1.45
                                      2.97 rounded to: 3.0

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. Students employed in staff personnel pay titles are eligible for incentive awards, and an additional 1.3% should be added to the fringe benefit rate to cover the incentive award assessment.


Enclosure 2

BASIS FOR PRICING OF COSTS

1. Workers' Compensation - Self-Insured Program (7/98)

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:
Berkeley 1.74
San Francisco Campus 0.85
San Francisco Hospital 0.94
San Francisco NPI 2.51
Davis Campus 0.77
Davis Hospital 2.74
Santa Cruz 1.95
Santa Barbara 0.99
Los Angeles Campus 0.92
Los Angeles Hospital 0.00
Los Angeles NPI 3.11
Irvine Campus 0.60
Irvine Hospital 0.87
Riverside 1.13
San Diego Campus 0.91
San Diego Hospital 1.93
Composite rate: 1.37

2. Unemployment Insurance (7/98)

                Federal Funds

Berkeley 0.33
San Francisco 0.10
Davis 0.19
Los Angeles 0.40
Riverside 0.30
San Diego 0.21
Santa Cruz 0.10
Santa Barbara 0.12
Irvine 0.18
Average - All Campuses 0.21

3. Employer Contributions to Employee Health, Dental and Vision Plans (1/97) (per month)

The contribution rates are determined by dividing the average annual cost per employee by the annual academic and staff weighted average salaries as of 4/98.

                                                        Academic    Staff

a. Basis for Health Plan Calculations

Average Cost Per Enrollee/Month    $260.34      $26O.34

Average Cost Per Enrollee/Year     $3,124.08      $3,124.08

Weighted Average Annual Salary  $70,569.50      $38,946.52

                                                         Academic      Staff

Avg. Cost/Avg. Salary                        4.43%         8.02%

b. Basis for Dental Plan Calculations

                                                       Academic         Staff

Average Cost Per Enrollee/Month     $52.96         $52.96

Average Cost Per Enrollee/Year       $635.52      $635.52

Weighted Average Annual Salary   $70,569.50  $38,946.52

                                                         Academic       Staff

Avg. Cost/Avg. Salary                       0.90%           1.63%


c. Basis for Vision Calculations

                                                         Academic        Staff

Average Cost Per Enrollee/Month         $10.42          $10.42

Average Cost Per Enrollee/Year         $125.04         $125.04

Weighted Average Annual Salary   $70,569.50     $38,946.52

                                                          Academic        Staff

Avg. Cost/Avg. Salary                            0.18%        0.32%


d. Basis for CORE Health Calculations

                                                    CORE Health

Average Cost Per Enrollee/Month      $34.15
Average Cost Per Enrollee/Year       $409.80
Weighted Average Annual Salary   $24,852.00

                                                     CORE Health

Avg. Cost/Avg. Salary                       1.65%


4. Non-Industrial Disability Insurance (NDI) (1/97)

                                                        Academic      Staff

Average Cost Per Enrollee/Month      $7.21          $7.21

Average Cost Per Enrollee/Year       $86.52        $86.52

Weighted Average Annual Salary  $70,569.50  $38,946.52

                                                       Academic      Staff

Avg. Cost/Avg. Salary                      0.12%          0.22%


5. Life Insurance-Career Employees (1/97)

                                                       Academic       Staff

Average Cost Per Enrollee/Month       $4.82         $4.82

Average Cost Per Enrollee/Year        $57.84       $57.84

Weighted Average Annual Salary   $70,569.50 $38,946.52

                                                    Academic          Staff

Avg. Cost/Avg. Salary                    0.08%             0.15%


6. Life Insurance-CORE Benefit (1/97)

                                                    CORE Life

Average Cost Per Enrollee/Month     $0.47

Average Cost Per Enrollee/Year       $5.64

Weighted Average Annual Salary  $24,852.00

                                                    CORE Life

Avg. Cost/Avg. Salary                      0.02%


7. Annuitant/Benefit Administration Fund (7/97)

The components of this rate are: 1.50% 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         1.57


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         65,400            4,054.80
Total FICA      7.65


9. Employee Support Program (7/96)

This benefit is assessed at varying campus rates, 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 0.15
Santa Barbara 0.39
Los Angeles Campus 0.00
Los Angeles Hospital 0.00
Los Angeles NPI 0.12
Irvine Campus 0.30
Irvine Hospital 0.00
Riverside 0.24
San Diego Campus 0.23
San Diego Hospital 0.12
Composite rate: 0.15