MUSC Composite Fringe Benefits Rates

1
MUSC Composite Fringe Benefits Rates

• Grants Contracts Accounting
• Spring 2002

2
Background

• December 2000 - Indirect Cost Steering Committee
  requested that GCA develop a Composite Fringe
  Benefits Rates Proposal for submission to DHHS in
  conjunction with FA Cost Rates Proposal
• FA Cost Rates Proposal submitted March 2001
• Composite Fringe Benefits Proposal submitted
  November 2001
• DHHS approved Composite Fringe Benefits Rates
  Agreement dated 2/28/02 establishing fixed rates
  with carry-forward provisions for two-year
  period, 7/1/02 to 6/30/04

3
Applicable Regulations

• OMB Circular A-21 Section J.8.f allows
  universities to charge fringe benefits to
  university activities via
• Direct assignment to employees (current MUSC
  procedure) or,
• An allocation method with fixed rates applied
  through composite fringe benefits rates
  established by selective employee categories (new
  MUSC procedure)

4
Advantages of Proposed Change

• To provide consistent accumulation and allocation
  of fringe benefits expenses to all functional
  activities as required by Cost Accounting
  Standards 501 and 502
• To improve the budgeting process for all
  University funds
• To simplify the accounting for fringe benefits
  expenses

5
Composite Rate Components

Traditional Misc Fringes
Allocated Fringes
FRINGE BENEFIT EXPENSE POOL

• Social Security/Medicare
• Retirement Contributions
• Deferred Compensation
• Health Insurance
• Dental Insurance
• Workers Comp
• Unemployment Insurance
• Retirement Incentive
• Termination Pay
• Tuition Assistance
• Sabbatical Leave

• Employee Assistance Program
• Employee Health Services

Divided by SALARIES EXPENSE BASE
( Miscellaneous Fringe Benefits which are
currently treated as Salaries)
6
Employment Types Composite Fringe Benefits Rates
Employee Benefits Category
Employment Type
Approved Rates
Faculty, 9-Month Faculty, Unclassified
Non-Faculty, Classified, Temp Grant-All Benefits
Click here for current approved rates
Staff
Post-Docs, Temp Faculty, Temp Non-Faculty
Post-Docs / Temporaries
Students / Temporaries with No Benefits
Temp Grant-No Benefits, -Ins. Only, -Leave Only,
Student
7
Transition Implementation

• Scope
• Apply to Sponsored Projects Only during FY 2003
• Consider application to all fund sources in
  future years

8
Transition Implementation

• New Procedures for FY 2003
• Miscellaneous Fringe Benefits (Termination Pay,
  Tuition Assistance, Sabbatical Leave, Retirement
  Incentive) may not be charged directly to
  Sponsored Projects since these are included in
  the composite rates
• Fringe benefit expenses will be calculated using
  negotiated composite rates will be charged to
  Fringe Benefits Expense account (50189) gt these
  amounts will be billed to sponsors
• Over- or under-recovery of fringe expenses will
  be accounted for by function at the Financial
  Statements level (new account 50190) and not by
  individual project

9
Proposed Process
I. PAYROLL LEDGER (Actual)
II. GENERAL LEDGER (Composite Rates)
1. Employee is paid Salary Fringe Benefits
under normal MUSC payroll procedures
1. Project is charged in General Ledger for
Composite Fringe Benefits equal to (Salaries X
Applicable Composite Rate)
2. MUSC employer portion of Actual Fringe
Benefits is recorded in Detailed Payroll Ledger
2. Sponsor is billed for Composite Fringes All
Other Expenses (within budgetary constraints)
III. FINANCIAL STATEMENTS
1. Difference between Composite Fringes and
Actual Fringes is calculated by Function
2. If difference is positive gt MUSC has
over-recovered vs. actual expense
3. If difference is negative gt MUSC has
under-recovered vs. actual expense
10
Allocation of Recovery

• It is anticipated that two percent (2) of
  Sponsored Project Salaries Expenses will be
  recovered from the sponsors and can be set aside
  in order to assist the colleges in funding
  Miscellaneous Fringe Benefits Expenses
• Recovered amounts will be allocated on a
  quarterly basis
• GCA will analyze fringe benefits expenses and
  recovery on a monthly basis recommend
  adjustments as necessary

11
Future Procedures

• Over- or under-recovery of expenses will be
  carried forward included as an adjustment to
  the next fringe rates proposal
• Next proposal will be based on FY 2003
  expenditures must be submitted by 12/31/03
• Possible application of composite rates to other
  fund sources in future years
• Policies and limits to be established for
  Sabbatical Leave, Tuition Assistance, and
  Retirement Incentive so that university does not
  over-commit fringe benefits expenses