SANTA CRUZ: PLANNING AND BUDGET
January 26, 2001
VICE CHANCELLORS
DEANS
BUSINESS MANAGERS
RE: Revised Policy on Staff Employee Benefit Funding
On July 1, 1996, a policy was established requiring departments to provide funding for employee
benefits whenever a new staff position was created or an existing staff position had an FTE
increase on General Funds. This document will update that policy and the associated rate used
to pay for employee benefits, as well as expand the policy to cover certain “soft funded”
employees paid from General Funds, as discussed in this morning’s Joint Operations Group
meeting. Benefits contributions for positions paid from Registration Fees will continue to be
coordinated with the Student Affairs Division and, therefore, will not be addressed here.
New Benefits Contribution Rate:
Effective July 1, 2001, the amount a department is required to contribute for new, budgeted staff
benefits will change, based on updated benefit cost information. The most significant change is
for a newly created position at or above 0.44 FTE, or when an existing position’s FTE is increased
to 0.44 or more. In these cases, the contribution rate will be $4,570, plus 10.4% of the annual
salary. Please refer to the attached guide for the specifics of the policy.
New Assessment for Soft-Funded Career Employees:
Effective July 1, 2001, there will be a new benefits assessment for career, contract and partial-year
career staff employees when the employee is paid from General Funds without permanent
funding to back the FTE (so called “soft funding”). The assessment will not apply to casual
(limited appointment) or student employees. The reason for the change is due to an increasing
number of career employees hired using non-budgeted General Funds, which is negatively
impacting the stability of the central benefits pool. Also, with the implementation of the new
personnel policy on January 1, 2001, where the criteria for casual and career staff is changing, we
anticipate an even greater number of soft-funded employees receiving career benefits. In order
to allow departments sufficient time to incorporate this change into their plans, the effective date
will be July 1, 2001, rather than January 1. On a monthly basis, Planning & Budget staff will
prepare a transfer of funds charging the accounts these employees were paid from for the actual
amount of benefits paid, reimbursing the central benefits pool. Exceptions may be granted in the
case where a career employee is hired to temporarily replace a budgeted staff member who is on
an approved leave (e.g. maternity leave), as long as the budgeted employee is off pay status and
not receiving benefits. Service Centers and units are responsible for notifying Planning &
Budget within 30 days of the date of an erroneous or exceptible charge in order to have it
reversed.
UNIVERSITY OF CALIFORNIA - (Letterhead for interdepartmental use)
Revised Policy on Staff Employee Benefit Funding
January 26, 2001
Please contact Troy Lawson (extension 9-4338 or telawson@cats.ucsc.edu) or Free Moini
(extension 9-4304 or fbmoini@cats.ucsc.edu) with questions regarding the policy or its
implementation.
Sincerely,
Meredith Michaels
Associate Vice Chancellor
for Planning and Budget
cc:
Director Dettman
Assistant Vice Chancellor Eckert
Senior Analyst Moini
Assistant Director Rush
Assistant Deans/Assistant to the Deans
2
INSTRUCTIONS AND GUIDELINES FOR EMPLOYEE BENEFIT CONTRIBUTIONS
FOR NEW GENERAL FUNDED STAFF POSITIONS
General Guidelines:
• Contributions will be required for all new staff positions funded by General Funds, as well as existing
positions when there is an increase in FTE. Student Affairs will determine the contribution required on
staff positions funded by Registration Fees.
• The contribution rate may vary annually, depending on changes in the employer contribution rate for
health coverage, workers compensation, unemployment insurance, etc. The Planning and Budget Office
will periodically review the contribution rate and revise it based on changes in employee benefit costs.
• Contributions to the central employee benefit pool must occur at the time the position is established in
the permanent budget.
• Employee benefit rebates will be made when a staff position is eliminated and will be coordinated with
the appropriate dean or vice chancellor. (Note: Open provisions which have not been filled at any
time during the previous fiscal year do not qualify for a rebate. In the case of a major reorganization
which results in the elimination of several staff positions, the employee benefit rebate is subject to
negotiation, unless documentation is produced indicating the unit contributed to the benefit pool for the
positions eliminated.)
Instructions:
To Contribute Benefits
1. Prepare a BSL form to establish the new staff position and a TOF form for the current year proration.
The on-line Budget System will automatically calculate the permanent funded portion when a journal is
entered; however, a TOF will still need to be prepared for the current year portion. The new position is
established in a departmental organization, and the employee benefit contribution is credited to the central
employee benefit pool (809999). Employee Benefit contributions for new Registration Fee-funded positions
should be coordinated with the VC Student Affairs Office.
2. The employee benefit rate has a fixed rate and a salary driven component. The fixed rate is based on the
average cost of dental, health, vision, and employer paid life and disability insurance. For 2000, this cost is
$4,570 for all positions which are .44 FTE or more. For positions which are less than .44 FTE, there is no
fixed cost. For furloughed positions, the fixed cost will be based on the positions’ percent of full time, rather
than the FTE (see example below).
The variable rate is based on those benefit costs which are calculated as a percentage of the employee salary
(i.e., workers compensation, unemployment insurance, OASDI, etc.) For 2000, this rate is 10.4%, and
applies to all new staff positions regardless of FTE, as well as existing staff positions when there is an
increase in FTE.
EXAMPLE OF EMPLOYEE BENEFIT CALCULATION:
Benefits:
Fixed Cost
@ $4,570
Salary Driven
Cost @ 10.4%
Total Permanent
Benefit Contribution
4,570
4,570
4,570
0
4,570
2,756
1,378
1,295
689
6,240
7,326 (27.6%)
5,948 (44.9%)
5,865 (47.1%)
689 (10.4%)
10,810 (18.0%)
New .42 FTE Asst II (50% full
26,500
4,570
1,158
time with 2-mo furlough)
Existing .75 FTE Manager
15,000
0
1,560
($60,000) increased to 1.0 FTE
Existing .25 FTE Asst II
6,625
4,570
689
($26,500) increased to .50 FTE
Note that the prorated current year amount would also need to be provided.
5,728 (51.5%)
Salary
New 1.00 FTE Asst. II
New .50 FTE Asst. II
New .47 FTE Asst. II
New .25 FTE Asst. II
New 1.00 FTE Manager
26,500
13,250
12,455
6,625
60,000
1,560 (10.4%)
5,259 (39.7% of
total salary)
To Receive An Employee Benefit Rebate
1. Prepare a BSL form to delete the staff position. Rebates will be provided at 50% of the contribution
calculation noted above or the actual benefits contributed by the department at the time the position was
established (which ever is greater). The following table provides an example of how to calculate the employee
benefit rebate:
Benefits:
Salary
1.00 FTE Asst. II
.50 FTE Asst. II
.25 FTE Asst. II
1.00 FTE Manager
26,500
13,250
6,625
60,000
Reduce 1.0 FTE Asst II
to 0.50 FTE
26,500
Fixed Cost
@ $4,570
4,570
4,570
0
4,570
Salary Driven
Cost @ 10.4%
2,756
1,378
689
6,240
Subtotal
7,326
5,948
689
10,810
Rebate @
50%
3,663
2,974
345
5,405
None
Forward the BSL form to Planning and Budget for completion. Note: Rebates will only be provided for
elimination of staff positions which were filled during the previous year, or where the department can provide
documentation indicating that employee benefits were contributed to the central benefit pool by the department
when the position was initially established. Rebates will not be provided if an FTE is simply reduced, but not
eliminated. All benefit rebates will be coordinated with the appropriate dean or vice chancellor.