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Pooled Fringe Benefit Rates. Proposed Implementation Plan Clemson University February, 2006. Institutional Perspective — E&G funds are used for fringe benefits that could be allocated to other sources Terminal leave for employees paid from non-E&G funded sources

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Pooled Fringe Benefit Rates

Proposed Implementation Plan

Clemson University

February, 2006

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Institutional Perspective —

E&G funds are used for fringe benefits that could be allocated to other sources

Terminal leave for employees paid from non-E&G funded sources

Insurance benefits for 9-month employees

Tuition waivers for employees with non-E&G funding sources

Graduate health insurance subsidies for students funded from non-E&G sources

Current Process

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Current Process

Budget perspective –

  • E&G 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

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Current Process

Departmental perspective –

  • Fringe benefits charged in detail

    • Seven types

    • 19 variable rates

  • Inconsistent planning methods used by non-E&G funded areas

  • Payroll reporting includes detailed fringe activity

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Proposed Change in Fringe Benefit Expense Calculation

Actual Calculated Fringe Expenses

Pooled Fringe Benefit Rates

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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

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What is basis of the pooled rate?

  • Controller’s 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

      • Insurance—Health, Dental, Life

      • Retirement

      • Long-term disability

      • Worker’s Compensation

      • Termination Pay

    • Projects and negotiates anticipated rates for subsequent year

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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%

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When are these rates effective ?

Payroll expenses

incurred on or after

July 1, 2006

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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

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Implementation Plan — Year One

  • FY07

    • Existing E&G/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 rates—9MO, 12MO, Student, Part-time/Temp

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Implementation Plan — Year Two

  • FY08

    • Existing E&G/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