Accounting & Financial Reporting

Composite Benefit Rate Add-On

Background

Under the 2015-16 state budget agreement with the Governor, the University of California received $436 million in one-time funds over three years in Proposition 2 debt repayment funds for the UC Retirement Plan (UCRP), contingent upon Regental approval of a cap on pensionable salary. The Regents approved changes to UCRP in March 2016, and the state confirmed the University is eligible to receive the agreed upon funds. The one-time funds are payable over three years, including $96 million in 2015-16, $170 million in 2016-17 and $170 million in 2017-18.

Since the state funds are contributed directly to UCRP, all the University’s funding sources, rather than just the State General Fund, benefit from these additional retirement contributions. This essentially lowers the composite benefit rate on all funds. As such, UCOP is encouraging campuses to assess funding sources other than core funds of State appropriations and tuition, where allowable, to ensure that State General Funds and tuition fully benefit from the investment by the State. The assessed funds will be used to reduce the campuswide General Funds and tuition deficit.

The UC Office of the President (UCOP) provided information to the campuses to identify amounts to recover. The analysis goes out to 2041-42 so this represents an ongoing cost that is separate and distinct from any future changes that might be made to the UCRP funding plan.

Top

What is Composite Benefit Rate Add-On (CBR Add-On)?

The Composite Benefit Rate Add-On is an automatic process to assess the appropriate funds beginning in 2017-18. It is a payroll assessment, with no impact to income (i.e. no income assessment).

Only Charts 3 and S are included.

The assessments are based on specific payroll Object Consolidations and Expense (EX) account types only.

  • Object Consolidations: SB01, SB02, SB03, SB04, SB05, SB06, SB07, SUBS, SUBG, SUBX

Accounts with the following attributes are excluded:

  • Sub-Fund Group Type: 1, B, C, D, F, G, H, J, L, N, P, S, V, W, X
  • Sub Fund Groups: SSEDAC, SSEDPI, and OSSSO
  • UC Funds: 19942, 20094, 20095, 20321, 20323

The assessment rate is based on UC Office of the President estimates of the payroll assessment that would have otherwise been required if equivalent funds had instead been borrowed from STIP (cash reserves) and repaid over time.  The rate is the same for all Chart 3 and Chart S accounts.  Chart H will be assessed separately. A detailed breakdown of the annual assessments and the 2017-18 estimated assessment by unit and fund type is available on the Budget & Institutional Analysis Composite Benefit Rate Add-On Overview.

As additional funds are transferred from the State to UCRP, the annual assessments will increase for several years and then level off until fully paid off by 2041-42, as follows:

CBR Add-On Assessment Rates

Top

How will it show in FIS Decision Support (DS)?

The CBR Add-On is a monthly assessment that will be generated at the end of the fiscal period, after all payroll has posted.

It will post to Object Code 8510 within Object Consolidation SUB6 - Employee Benefits.

The transaction line description will show as CBR Add-On Assessment Month (MM) - Year (YY)

Top

Questions?

  • Budget & Institutional Analysis (bia@ucdavis.edu) is the contact for general questions on this initiative.
  • Other questions can be directed to the FIS Help Desk at fishelp@ucdavis.edu.

Top

Supplemental content

Accounting & Financial Reporting Menu