The Senate Source

February 2013

Senate Pushes for Improved Composite Benefit Rate Scenario

Significant faculty concerns about a plan to implement Composite Benefit Rates on the campuses as part of the transition to a single payroll and personnel system have led to important changes in the original plan.

A Composite Benefit Rate pools all eligible benefit costs for an employee group to create an average overall percentage for employees in the group. This methodology affects benefit charges to faculty contracts and grants and consequently how budgets are prepared in proposals. Instead of charging actual benefit expenses per individual, the composite rate charges the flat percent of salary established for the employee’s group.

In summer 2012, UCOP and its consultant began briefing the Senate on a plan to reduce the number of rates charged by employee type at each UC location, with the goal of simplifying the billing system and aligning it with UCPath, the new systemwide payroll and HR system being implemented next year. UCOP had hoped to reduce the number of rates to one or two per campus. But as Senate committees convened in the fall and began reviewing some of the scenarios under consideration, many faculty were alarmed about the projected impacts on some types of faculty grants, about the treatment of summer salary, sabbaticals, and the “Y” salary for those in the Health Sciences Compensation Plan.

“Faculty were concerned that increased benefit expenses due to composite rates would harm faculty grant competitiveness and reduce graduate student support,” said Senate Vice Chair Bill Jacob. “We also argued it would be inequitable to use an academic year composite rate on summer income that is not covered compensation for UCRS.”

The Senate, with the backing of campus administrators, urged UCOP and its consultant to model multiple rates that would account for a wider variety of employee types, to add a separate rate for non-UCRP employees, and to exclude summer salary and “y” salary from modeling, since neither is UCRP-covered compensation. They also asked UCOP to extend the review period to give campuses a chance to understand the proposal and assess its impact.

UCOP responded by modeling additional rates and removing some groups from the rate calculation because they created disparities. UCOP also proposed a cap of $240K so that faculty with a large “Y” salary component would not pay benefits on salary above the cap.

The new methodology also had to pass muster with the U.S. Department of Cost Allocation (DCA), the federal agency that establishes rules for how educational institutions apply costs to contracts and grants. In December, Senate Chair Powell joined a meeting with UCOP and DCA representatives to discuss the addition of a separate rate for summer salary. This meeting yielded a better than anticipated outcome. DCA did not support a scenario that includes a separate rate for summer salaries, so the Steering Committee is recommending that summer salaries be charged a 0% rate for benefits to reduce adverse funding impacts. Summer salaries are currently being charged benefits that average between 10-12%. Emeriti with grants will be treated similarly, since no UCRP contributions are made for them. The Steering Committee also decided not to pursue adding sabbaticals to the rates.

The latest scenario under consideration includes separate rates for (1) faculty; (2) other academics; (3) staff; (4) postdocs and employees with health benefits only; (5) interns, residents, and employees with no benefits; and, on campuses with medical centers (6) faculty on the Health Sciences Compensation Plan with “Y” salaries.

UCOP is modeling additional scenarios, but hopes to reach an agreement with campuses about a final model by late March, so they can send the model to the DCA for review in April. UCOP hopes to implement the model alongside Wave I of UCPath.

“We are pleased with this outcome and with the administration’s responsiveness to our requests for new modeling and revisions to the proposal,” said Chair Powell. “This is an example of shared governance making policy better.”