Pooled Fringe Benefit Rates

1
Pooled Fringe Benefit Rates

• Proposed Implementation Plan
• Clemson University
• February, 2006

2
Current Process

• Institutional Perspective
• EG funds are used for fringe benefits that could
  be allocated to other sources
• Terminal leave for employees paid from non-EG
  funded sources
• Insurance benefits for 9-month employees
• Tuition waivers for employees with non-EG
  funding sources
• Graduate health insurance subsidies for students
  funded from non-EG sources

3
Current Process

• Budget perspective
• EG and PSA fringe benefits are covered with
  institutional funds
• Difficult to estimate the funding level
• Salary decisions at budget center level
• Hiring decisions not based on benefit projections
• Ever-increasing fringe benefit escalation
• Departmental budgets pay for annual leave payouts
  
• Experienced rates sometimes include unidentified
  data anomalies

4
Current Process

• Departmental perspective
• Fringe benefits charged in detail
• Seven types
• 19 variable rates
• Inconsistent planning methods used by non-EG
  funded areas
• Payroll reporting includes detailed fringe
  activity

5
Proposed Change in Fringe Benefit Expense
Calculation
Actual Calculated Fringe Expenses
Pooled Fringe Benefit Rates
6
Why change now?

• More accurate fringe planning associated with all
  salaries
• Easier to calculate unexpended grant funds when
  closing out grant
• Places accountability at point of decision-making

7
What is basis of the pooled rate?

• Controllers office calculates and negotiates
  annual rates
• Compiles experienced rates from the previous year
  across all funds and seeks approval from the
  Department of Health and Human Services
• FICA
• Unemployment Tax
• InsuranceHealth, Dental, Life
• Retirement
• Long-term disability
• Workers Compensation
• Termination Pay
• Projects and negotiates anticipated rates for
  subsequent year

8
What are the new proposed rates?

• 9 Month Faculty 23.7
• 12 Month Faculty/Staff 29.2
• Students 2.9
• Part-time/Temporary 14.9

9
When are these rates effective ?
Payroll expenses incurred on or after July 1,
2006
10
Then what?

• Fringe expense calculations posted for each
  payroll
• Based on benefits eligibility of employee
• Fringe expense posted to detail chartfield string
• Terminal leave paid from fringe pool
• Rates are recalculated and resubmitted by
  December 31 annually for approval

11
Implementation Plan Year One

• FY07
• Existing EG/PSA fringe base
• Continue to manage centrally in year one to
  facilitate transition (Funds 10 and 15)
• Central terminal leave payout
• Propose a permanent reallocation from operational
  budgets equal to 1.0 of 12MO salary base in
  Funds 13 and 15 to fund central terminal leave
  payout
• Establish a separate budget node for terminal
  leave payout tracking
• Establish four new expenditure nodes for each of
  the four pooled fringe rates9MO, 12MO, Student,
  Part-time/Temp

12
Implementation Plan Year Two

• FY08
• Existing EG/PSA fringe base
• Allocate permanently to budget centers based on
  FY07 costs in funds 10, 13 and 15
• Budget centers have full accountability for all
  fringe costs
• Terminal leave payouts covered from pooled fringe

13
Other questions or concerns