Composite Benefit Rates
This information is intended for ANR Principal Investigators who prepare proposal and/or operating budgets which include employee benefit costs. Please share this information with staff who assist you with budget preparation. We are providing an overview of UC Composite Benefit Rates, which go into effect July 1, 2011 along with links to detailed information that will assist in your budget planning.
Effective July 1, 2011, employee fringe benefit costs will be calculated and applied as a percentage of salary and wages to your sponsored awards/accounts.
Effective immediately, please use the current Composite Fringe Benefit rates when preparing proposal budgets which include employee salary and benefit costs:
ANR Composite Benefit Rate Index
ANR in conjunction with UC Davis is adopting Composite Benefit Rates for posting employee benefit costs to University accounts, and the practice of using actual employee benefit costs per individual employee is being discontinued. A Composite Benefit Rate is an average of all eligible benefits (except tuition and fee remission, leave accrual and General and Employment Liability-GAEL) applicable to an employee based on which employee rate group they are assigned (based on their UC payroll title). The calculation for Composite Benefit Rates is: applicable composite rate multiplied by gross salary.
This change in the way that benefits are calculated does not affect individual employees’ benefit eligibility or personal benefit deductions (reflected on employees’ earning statements) in any way. It only impacts what is being charged to your contract and grant award or operating fund accounts for employee benefits.
WHO DOES THIS APPLY TO (AND NOT APPLY TO)?
All employee benefit charges for employees paid from ANR Chart L and UC Davis Charts 3 and S accounts will post using Composite Benefit Rates. ANR composite rates (chart L) are different than those used by UC Davis for its employees (charts 3 and S). This should be taken into account when preparing budgets that include the participation of UC Davis staff, or when asked for budget figures when participating in UC Davis projects. These rates apply to all employees paid through the UC Davis campus financial system. They do not apply to staff at Office of the President, or those on the Berkeley or Riverside campuses.
The change will be effective July 1, 2011, and will apply to all existing ANR unit operating budgets as well as all existing ANR contracts and grants. All new proposal budgets for projects with a period of performance beginning or extending beyond July 1, 2011 which include salary and benefit costs must include the new composite benefit rates.
Composite Benefit Rates have several advantages over the current practice of using actual rates:
- They simplify the accounting for employee fringe benefit expenses.
- They improve the budgeting process for all University funds and standardize benefit costs across employee groups.
- They provide consistent accumulation and allocation of employee fringe benefits expenses to all functional activities.
KEY POINTS ABOUT COMPOSITE BENEFIT RATES
- Composite Benefit Rates include Workers’ Compensation, but do not include leave accrual or GAEL. The Leave Assessment process is changing with the implementation of the Kuali Financial System Labor Distribution module scheduled to go live in July 2011:http://accounting.ucdavis.edu/doc_help/labor/composite_benefit_rate/index.cfm?opt=4
- Composite Benefit Rates are applied solely based on the salary amount and rate group of the employee, regardless of when the employee is appointed (academic year or summer), whether they work full- or part-time, or whether their appointment is in multiple departments.
- The Composite Benefit Rates reflect increases in health benefit costs, which rose steeply in 2010, and the restart of employee retirement contributions. The rates are not higher because of the change to composite rate calculation.
- Departments will not be responsible for any differences between the composite benefit rate as compared to the actual costs. At year end, UCD Accounting & Financial Services will reconcile actual benefit costs incurred by the University with the amount charged using the composite benefit rates. Any over or under-recovery of expenses will be adjusted in future year rates, similar to a recharge activity.
- A cap to the salaries that will be charged the Composite Benefit Rates has been implemented. This means that the employee fringe benefit rates will only be assessed against the gross pay up to the cap level. ANR employee groups will have a cap set at $180,000.
UC Davis Composite Benefit Rates website: http://accounting.ucdavis.edu/doc_help/labor/composite_benefit_rate/index.cfm
For additional information, please contact Lynn Deetz, ANR’s Office of Contracts & Grants. Proposal budgeting questions may be directed to any C & G staff member.