July 24, 1996
VICE CHANCELLORS
BUSINESS MANAGERS
UNIT HEADS
SERVICE CENTER REPRESENTATIVES
Re: Policy on Staff Employee Benefit Funding
As many of you know, a new policy was implemented July 1, 1996 requiring departments
to contribute funding for employee benefits whenever they establish a new staff position
on Registration Fees or General Funds. Self-supporting activities have always operated
under this policy, but past campus practice did not require departments supported from
Registration Fees or General Funds to budget employee benefits.
The reason for the change is two-fold. First, under the new funding model for the
University of California, it is the responsibility of each UC campus to manage its employee
benefits and to adjust the level of funding to cover the benefit costs associated with new
Reg Fee funded or General funded positions. Second, because these costs are directly tied
to decisions made at the departmental level as to the number of employees hired, funding
for benefits for new employees should be planned for at the time the decision is made to
create a new staff position.
Specific instructions and implementation guidelines are attached, and include the
following: (I) The requirement to contribute employee benefits for all new permanent
staff positions, and (II) A provision for an employee benefit refund if the position is
eliminated at a later date.
Please call or send email to Karen Eckert (eckert@cats.ucsc.edu or extension 2446), or
me (jensen@cats.ucsc.edu or extension 2446) if you have any questions regarding the new
policy or its implementation guidelines.
Sincerely,
Richard Jensen
Associate Chancellor
Planning and Budget
Attachment
INSTRUCTIONS AND GUIDELINES FOR EMPLOYEE BENEFIT
CONTRIBUTIONS FOR NEW REGISTRATION FEE
AND GENERAL FUNDED STAFF POSITIONS
General Guidelines:
• Contributions will be required for all new staff positions funded by Registration Fee
or General Funds.
• 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 establish the contribution rate for each fiscal
year, 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, and before the position is filled.
• 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, unless documentation indicates the unit contributed to the employee benefit
pool for that position. 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. 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 insurance. For
1996-97, this cost is $3,474 for all positions which are .50 FTE or more. For positions
which are less than .50 FTE, but greater than .47 FTE, the fixed rate is $390.1
1
This fixed rate is based on the cost of core medical benefits, which are available to part-time staff who work more
than .47 FTE, but less than .50 FTE per year.
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, etc.) For 1996-97,
this rate is 10.55%, and applies to all new staff positions regardless of FTE.
The table below provides an example of the employee benefit calculation.
EXAMPLE OF EMPLOYEE BENEFIT CALCULATION:
Benefits:
Salary
1.00 FTE Asst. II
.50 FTE Asst. II
.47 FTE Asst. II
.25 FTE Asst. II
1.00 FTE Manager
26,500
13,250
12,455
6,625
60,000
Fixed Cost
@ $3,474
3,474
3,474
390
3,474
Salary Driven
Cost @ 10.55%
2,795
1,397
1,314
699
6,327
Total
Benefit Contribution
6,269 (23.65%)
4,871 (36.76%)
1,704 (13.68%)
699 (10.55%)
9,801 (16.34%)
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
.47 FTE Asst. II
.25 FTE Asst. II
1.00 FTE Manager
26,500
13,250
12,455
6,625
60,000
Fixed Cost
@ $3,474
3,474
3,474
390
3,474
Salary Driven
Cost @ 10.55%
2,795
1,397
1,314
699
6,327
Subtotal
Rebate @
50%
6,269
4,871
1,704
699
9,801
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.
3,135
2,435
852
350
4,900