Composite Fringe Benefit Rates Job Aid Adjustment to FY12 Payroll Expense Last Revision: August 8, 2012

Adjustment to FY12 Payroll Expense – Introduction Our employee benefit programs management has changed. We will now use the same methodology to budget and expense fringe benefit costs, so we can increase predictability and decrease variability of one of the UC Berkeley’s largest expenses. Adjustments to FY12 Payroll Expenses are affected by this change. Here is how. What changed for me? There will be no change to how we transact payroll cost transfers.  What do I need to do differently? Continue to use PPS data to transact payroll cost transfers. In some cases you will see legacy data, that’s OK, the system will recognize the legacy account codes and convert them to the new values. How is this impacted by the new fringe rates? FY12 contract and grant payroll expenses that are transferred in FY13 will require adjustment from the fringe benefit assessment amounts to the legacy costs to ensure compliance with federal and other sponsored agreement requirements. The central campus will calculate, prepare and process the adjusting entries. 

Example 1 – Adjustment to FY12 Payroll Expense For example: Mary is a staff member. Her May 2012 earnings were $3,000 and her fringe benefit costs for the month of May were $1,200. These costs are transferred in August 2012 to a new chartstring. Mary’s Original Transaction Original Charge Debit 51010-23111-10121-44 $3,000 53XXX (various codes)-23111-10121-44 $1,200 Example continued on next page…

Example 1 – Adjustment to FY12 Payroll Expense (Cont’d) Since all cost transfers will be transacted through the new Fringe Benefit Rate Process, Mary’s Fringe Costs are automatically calculated as follows: Mary’s staff member fringe rate = 38% Therefore: $3,000 x 38% = $1,140 in transferred May 2012 fringe costs But that leaves a $60 fringe cost on the original chartstring that now needs be adjusted ($1,200 - $1,140 = $60). See tables below: Mary’s Transferred Salary and Benefits System-Generated Transfer Debit Credit 51210-23111-10121-44 $3,000 53020-23111-10121-44 $1,140 51210-32105-10121-44 53020-32105-10121-44 Adjusting Entry Debit Credit 53020-23111-10121-44 $60 53020-69999-00400-44

Example 2 – Adjustment to FY12 Payroll Expense Using the new composite fringe rate process for the transfer of pay posted in FY12 will in some cases create fringe benefit cost overages or shortfalls that will need to be adjusted. For example: Jenny is a staff member. Her May 2012 earnings were $3,000 and her fringe benefit costs for the month of May were $900. These costs are transferred in August 2012 to a new chartstring. Jenny’s Original Transaction Original Charge Debit 51010-23119-10121-44 $3,000 53XXX (various codes)-23119-10121-44 $900 Example continued on next page…

Example 2 – Adjustment to FY12 Payroll Expense (Cont’d) Since all cost transfers will be transacted through the new Fringe Benefit Rate Process, Jenny’s Fringe Costs are automatically calculated as follows: Jenny’s staff member fringe rate = 38% Therefore: $3,000 x 38% = $1,140 in transferred May 2012 fringe costs But that moves an excess of $240 in fringe costs from the original chartstring that now needs be adjusted ($900 - $1,140 = -$240). See tables below: Jenny’s Transferred Salary and Benefits System-Generated Transfer Debit Credit 51210-23119-10121-44 $3,000 53020-23119-10121-44 $1,140 51210-10135-10121-44 53020-10135-10121-44 Adjusting Entry Debit Credit 53020-23119-10121-44 $240 53020-69999-00400-44

FY12 Payroll Expense Adjustment Process Fringe Overage / Shortfall Adjustments Process The central campus will prepare and process the adjusting entries. The adjustments will not be passed along to the receiving chartstring; they will be absorbed by the center. Adjusting entries will be made only for sponsored funds and we expect most to occur during the allowable cost transfer period, currently 120 days.