Announcements

Benefits Initiative Update: February 18, 2020

We are writing today with an update to the fringe benefits shared solution work we began with you earlier this fall. Campus constituents came together this past fall and formed small working groups to explore and make recommendations for a shared solution. The small working groups focused on specific benefits...

Benefits Initiative Update: Jan. 15, 2020

Through a collaborative process involving stakeholders from across campus, working groups proposed shared solutions for the benefits initiative. Campus leaders and governance groups reviewed the proposals, and campus leaders approved a path forward intended to provide temporary and permanent budgetary supports to units and help units sustain the mission of CU Boulder. The proposals and path forward are summarized in the Benefits Shared Solution document shared with the campus on February 18, 2020.

Update (May 11, 2020): based on feedback from campus budget officers, the Petition Fund Request Process for FY21 will take place in Sept/Oct 2020 (first round) and spring 2021 (second round). For more information on the Petition Fund, please see the Benefits Shared Solution document (link above).

Summary of Benefits Path Forward

Over the last few years, there have been conversations between Budget and Fiscal Planning (BFP) and campus budget officers about the misalignment of benefits expenses and benefits budgets in General Fund (fund 1X) accounts. Because benefits have historically been budgeted centrally and expenses generated locally, a structural imbalance was created. In addition, General Fund accounts are currently treated differently than any other fund type, where benefits budgets and expenses are in the same location.

In the spring of 2019, the campus, with feedback from campus constituents, decided to focus on better understanding the nuances of how and why surpluses and shortfalls had accumulated. Following this decision, in fall 2019, the campus embarked on a planning process intended to engage campus constituents in collaboratively developing a shared solution to the benefits challenge. The following is a description of the development of this solution.

The campus will be implementing a revised, localized benefits structure in FY21 and used fall semester 2019 and early spring semester 2020 to plan, propose, and solicit stakeholder input around a solution. Benefits budgeting policies to support and guide ongoing implementation will be developed in spring 2020.

 

Milestones:

  • August 21 & 22, 2019 – Benefits Lead Working Group and Academic Affairs Budget Advisory Committee (AABAC) discussed plan for engaging campus in shared solution planning.
  • September 8 – Call went out to Deans/VCs to appoint faculty and staff to small working groups.
  • September 23-October 31 – Small working groups met 3-6 times and submitted their recommendations at the end of October. Lead Group and AABAC received recommendations from small groups during this time. The Lead Group began formulating paths forward, including localization of benefits budgets.
  • November 6-January 22, 2020 – Lead Group and campus leadership drew on small group recommendations to formulate a campuswide proposal.
  • January 23 – Lead Group, AABAC, and working group members met with campus leadership to discuss path forward.
  • Week of February 17 – approved plan communicated to deans at Deans’ Council and all other units via email. Units begin work to ensure that their employees who should be on the merit roster are budgeted correctly for FY20.
  • February-June – Lead Group will continue to work with BFP/Campus Controller’s Office (CCO) to prepare for localization of benefits budgets and actuals.
  • July 1, 2020 – Benefits actuals will be localized in fund 1X for FY21.
  • End of July 2020 – Benefits budgets will be localized (if not sooner).

Previous discussions among campus leaders identified four categories of funds needing special attention during the benefits shared solution planning process:

  1. Cost Share (7% of the benefits shortfall on campus)
  2. DAICR (21%)
  3. Start-up and other research funds (33%)

The development of a shared solution for benefits maintained attention to those categories as well as the other 39% of the campus benefits shortfall.

Steering Committee

The Academic Affairs Budget Advisory Committee (AABAC) served as the steering committee for this endeavor. AABAC reviewed recommendations and, together with the Lead Group, recommended a proposal to senior leadership about a campus-wide shared solution for benefits, inclusive of both campus and unit contributions.

A Lead Working Group and five Small Working Groups were convened to navigate the benefits issue, with a specific focus on their group’s assigned topic.

Campus announced the move of fringe benefits from local accounts to central pools in FY1991, in an effort to reduce the administrative efforts involved in budgeting, monitoring, and reporting on fringe benefits. Today, with improved financial systems and a larger organization, CU Boulder has both the infrastructure and need to localize fringe benefits again. This localization has long been done in restricted and auxiliary funds; the benefits initiative completes the localization of fringe benefits in the general fund.

Although CU Boulder has met its financial obligations each year, the benefits issue arose primarily because of a mismatch between the location of budgets and the location of expenses. Specifically, as units hired and paid personnel, they may not have correctly budgeted for the salaries (and accompanying benefits). In the units’ accounts, since the benefits were held centrally, mismatches were not visible. While years ago, the shortfalls and vacancy savings generally stayed balanced in the central pool at the campus level, in recent years, as the campus has grown and become more complex, the mismatches have become more apparent. This imbalance created the need to address the benefits issue, as we are doing now.

All departments with salary budgets will see the full value of accompanying benefits budgets moved to their accounts. Going forward, if departments have vacancies associated with personnel on budgeted salary lines, they will see both salary and benefits budget savings. However, if departments do not have adequate salary budget for their personnel, they will not have sufficient benefits budget either. As part of the benefits initiative, additional budget for benefits is being sent to the schools, colleges, and institutes to provide additional support to departments in need. The Office of Budget and Fiscal Planning will work with deans to allocate these additional funds to departmental accounts. Additionally, for units still experiencing shortfalls, a Petition Fund will be available to request additional, temporary support in fiscal years 2021, 2022, and 2023 to allow units time to adjust to localized benefits.

Benefits were not budgeted evenly across campus, so this change will affect departments differently. The goal of this initiative is to localize the benefits with minimal disruption to the mission of CU Boulder. As part of the initiative, additional benefits budget will be sent to the schools, colleges, and institutes. Those funds will be allocated to departments by Budget and Fiscal Planning, in partnership with deans’ offices, based on where the greatest needs are located. Additionally, for units still experiencing shortfalls, a Petition Fund will be available to request additional, temporary support in fiscal years 2021, 2022, and 2023 to allow units time to adjust to localized benefits. Budget and Fiscal Planning will work with individual departments and faculty to understand the impact of the benefits initiative from February 2020 through the beginning of FY2021. Departments can reach out to Budget and Fiscal Planning at any time with questions at bfp@colorado.edu.

The campus in previous years used any savings left in the centrally held benefits pool to offset any shortfalls and then covered the overall shortfall at year-end. Once benefits localize, units will retain all savings and shortfalls. In the short term, all funds previously used to cover the shortfall in the fringe benefits pool will be used to provide additional benefits budget to unit, both in the form of continuing and temporary funds. Once the temporary funding expires after 3-5 years, depending on the type of temporary support, the campus will use the savings to fund campus strategic priorities.

Both continuing and temporary funds are being provided to deans beginning in FY2021, for allocation to areas of need within schools, colleges, and institutes. While all funds are being provided to support benefits, and will be budgeted accordingly, funding supports are targeted for DAICR-funded areas and existing start-up and retention packages, in addition to other areas within schools, colleges, and institutes. Temporary supports for start-up and retention packages will last five years (FY2021-FY2025), while temporary supports for all other areas will last three years (FY2021-FY2023). Continuing funding supports will stay with the units with no end date.

Continuing and temporary funding supports will be allocated to the deans. Budget & Fiscal Planning will work with deans to allocate these funds to departments and institutes in the form of benefits budget, based on departmental temporary and ongoing needs. Departments will see these funds in their speedtypes, if allocated by the dean, by the end of July, along with any benefits budget they had previously sent to the benefits pool.

Central campus relied upon units to provide budget to the centrally held general fund benefits pool. To the extent that units had salary budget for their personnel, they had provided budget to the pool for the accompanying benefits. To the extent that units did not have sufficient salary budget for their personnel, the central benefits pool experienced a shortfall in benefits budget. At the end of each fiscal year, the campus resolved any shortfalls in the pool, but this practice does not help the campus plan and budget for its expenses.

The shared solution is one piece of the overall benefits initiative and involves additional funding support, on both continuing and temporary bases, being allocated to schools, colleges, and institutes to meet areas of ongoing need. The shared solution was discussed with campus leaders, including deans and vice chancellors, the week of February 10, 2020, and an email to campus was sent the following week notifying stakeholders of the shared solution decision.

Benefit expenses will be localized on general fund speedtypes beginning in July 2020 (the beginning of FY20-21). Benefits budgets will be localized by the end of July 2020.

Beginning in FY21 (July 1, 2020), benefit budgets and expenses will be visible on Fund 10 and 12 financial reports, such as Operating Summary and Revenue and Expenditure Total.

  • Rates are developed annually by a group from Budget & Fiscal Planning and Campus Controller's Office
  • Rates are submitted for approval to the federal Department of Health and Human Services
  • Rates are a cost recovery mechanism:
    • Projected expenses/projected salary = fringe benefit rate 
    • Each employee group has a different rate because different benefits are offered 
  • Prior year over- or under-recoveries must be built into next year's rate
  • Rates include benefits that are traditionally provided to employees in addition to salary, for example health, life and dental insurance (HLD)
  • Many expense items are externally mandated
    • Employer contributions for medical coverage are negotiated with providers by Employee Services
    • Retirement contributions are mandated by state or federal government
  • State has been increasing benefit contributions to try to reach market parity

FY21 fringe rates can be found at https://www.colorado.edu/bfp/planning-resources/campus-cost-allocations, then click “Planning Parameters” on the first line to initiate download. These FY21 fringe rates are preliminary: BFP submitted these rates to the Department of Health and Human Services on Dec. 31, 2019 for approval.

  • Medical coverage
  • Health insurance - employer contribution is the same regardless of the provider/plan selected
  • Dental insurance - employer contribution is flat regardless of level of coverage
  • Vision coverage - employees pay the full amount
  • Retirement benefits
  • Employer contributions to PERA
  • Other retirement plans (TIAA, Vanguard, etc.)
  • FICA - Social security
  • Annuitants insurance - HLD (Health, Life, Dental) for retirees
  • Termination pay - separation payouts for accrued sick and vacation leave 
  • Life insurance - flat contribution for all eligible employees
  • Disability insurance - short-term and long-term
  • Unemployment compensation - based on actual claims
  • Worker's compensation - based on actual claims, managed by University Risk Management

For more detailed information on benefits coverage, visit the Employee Services webpage.

Employees working 20 or more hours per week are considered full-time. Note that this is defined as the total standard work hours for all active positions, not as actual hours worked.

For employees under multiple contracts or holding multiple positions, the fringe rate depends on the employee’s total scope of work. If an employee qualifies as full-time, then the employee’s salary will be charged benefits at the full-time fringe rate for each job class. If the employee qualifies as part-time, the employee’s salary will be charged benefits at the part-time fringe rate for each job class.

As an example, consider a 100% FTE staff member who also holds a 25% lecturer position. This employee qualifies as full-time. Their staff salary will be charged benefits at the full-time staff fringe rate, and their lecturer salary will be charged benefits at the full-time faculty fringe rate.

A note on encumbrances: benefits encumbrances are calculated on a position-only basis. Regardless of how many positions are held by a given employee, each position is encumbered as if no other position exists. For this reason, benefits encumbrances may understate forthcoming benefits actuals for full-time employees holding multiple positions if any of those positions are less than 50% FTE.

Yes, all salary expenses will be charged associated benefits. This is true even if employees are not benefits-eligible, or if employees elect not to use CU benefits.

For all questions regarding the benefits initiative, please contact Budget and Fiscal Planning at bfp@colorado.edu.

As set forth in the Budget & Net Position Internal Reporting Policy, Boulder campus departments are expected to maintain adequate resources to cover expenditures, either budget or revenues as appropriate by fund type. Further, the Boulder campus is expected to employ consistent and proper reporting and categorizing of fund balances.

 

To that end, units should align budgets with expected spending. Departments and Programs within the College of Arts and Sciences (CAS) should contact the CAS Budget Office to request salary and benefit-related budget journal entries. Departments and programs within the Institutes should contact the RIO Institutes Liaison for budget journal entries involving TTT faculty.

Merit increase budget will continue to be provided for eligible personnel funded from continuing salary budget, and campus will send accompanying benefits budget along with the merit increase for salary.

Any salary savings from FY19 were t-rolled into the operating account code (460000) as temp funds for FY20. The same will happen for FY20 to FY21. If you continue to carry a surplus balance on the salary account code in FY20, only the salary portion (not the benefits) will t-roll into FY21 (into the operating account code).

Once benefits are localized in FY21, both salary and benefits budget savings and shortfalls will t-roll each year at the speedtype level into the operating account code. For the continuing salary budget, you will see the accompanying continuing benefits budget in your speedtypes by the end of July 2020.

In FY20, continuing benefits budgets associated with salary budgets are held in a centralized pool. Beginning in FY21, you will see the accompanying continuing benefits budget in your speedtypes by the end of July 2020.

Salary and Benefits Worksheet

This worksheet is intended to help with the following questions:

  • Which fringe rates and account codes should I use when budgeting benefits?
  • I would like to hire a new employee; how much are the associated benefits?
  • I'd like to convert funds from operating to salary. How much of this can I devote to salary, and how much goes to benefits?
  • How can I know the associated benefits amounts for salary currently on my speedtype?

Cost Share Salary and Benefits Worksheet

The Cost Share Salary and Benefits Worksheet provides fringe rates and amounts for faculty, researchers, and graduate students involved in Cost Share speedtypes.

For questions and further information on the Benefits Initiative, please email bfp@colorado.edu at any time.

Starting on Oct. 22, BFP will resume group training sessions. A newly updated training, Benefits Localization Update, focuses on the Benefits Shared Solution and changes to General Fund benefits processes that commenced in FY21. Topics are shown below. To RSVP for a training, please click the grey box on the upper right margin of this webpage. Please email bfp@colorado.edu with any questions.

Benefits Localization Update: Topics

  • Brief history of the Benefits Shared Solution
  • Benefits Localization (localization of benefits budget and expenses to the General Fund)
  • Hiring new employees (benefits implications)
  • Converting operating funds to salary/benefits (and vice versa)
  • How benefits now appear on speedtype-level financial reports in the General Fund
  • Benefits Shared Solution start-up category
  • Benefits Shared Solution Petition Fund