Benefit Pool Funding Update

FAQ on the decentralization of the central benefits pool at UCSC

The following is per an August 21, 2024 memo from CFO Reiskin to Principal Officers:

I am writing to notify you of an upcoming process change to how we budget for benefits at UC Santa Cruz.
In alignment with the best practices of our UC peers, we are proceeding with the decentralization of responsibility for employee benefits, currently managed via the Central Benefits Pool, for Core-funded positions. Moving forward, we will proactively budget benefits alongside the associated salary costs, ensuring that unit budgets accurately reflect the full compensation cost for each position.

The benefits budget that will be distributed to units is based on full 2024-25 benefits coverage for all filled, permanently budgeted positions as of July 1, 2024. The transition to decentralized benefits is intended to be cost neutral to your unit, while supporting better visibility, transparency, and alignment of total position costs (and potential savings) with unit of responsibility.

To support this change, the following actions are planned:

• Future year planning: FY26 budget planning in FMW will reflect distributed benefits budgets by fund-org when transactional access reopens to the campus next week.
• Current year: We are planning a mid-year process change (effective January 1, 2025) to shift from our historical practice of automatic monthly transfers for that month’s benefits to this more proactive benefits budgeting. In this way, we will be able to address any anomalies introduced by the transition during this winter and spring (before FY26).

What this means to you going forward:

• For new positions: Benefit costs are the direct responsibility of the unit and will be budgeted in tandem with the salary within the unit; there will no longer be a contribution to the central benefits pool.
• For expense reduction planning: Starting in FY26, benefit savings will be able to be leveraged to satisfy reduction targets.
• Future benefit rate cost increases: This shift does not dictate how future cost increases associated with benefit rate changes and salary actions will be handled. While it is possible that future increases could be absorbed within the divisions, budget augmentations to support Core funded benefit rate/salary increases will be considered as part of the annual budget planning cycle. Strategies to determine the best path forward to establish and maintain sustainable budgets at both the campus and unit level will commence during 2024-25.

Monthly Benefit Pool Offset Reversal

Each month, until the automatic transfers from the benefits pool are disabled, all benefit expenses associated with payroll wages on the above-mentioned funds will continue to be automatically offset with a budget transfer from the central benefits pool.  These budget transfers appear on the general ledger with the description “Benefit Pool Offset”.  Benefits expenses that are ineligible to be covered by the Benefit Pool Offset are the responsibility of the unit paying for the payroll wages.   For these ineligible expenses, the Benefit Pool Offset is reversed.  Reversals appear on the general ledger as budgetary adjustments and reference the name of the staff member and payroll month for which the offset is being reversed.

When are Reversals made?

Benefit Pool Offsets are reversed for all benefits associated with payroll wages on sub 02 for contract staff, career staff, limited-appointment staff, per diem staff, and partial year career staff (Job Appointment Types 1, 2, 4, 6, 7) paid on central benefit pool participating funds.  

Benefit Pool Offsets are reversed for benefits associated with payroll wages on sub 01 (regular, stipend, etc.) for staff in the aforementioned appointment types if the payroll fund-org is not the same as the fund-org where the staff member is permanently budgeted during that pay period OR if they are insufficiently budgeted on the fund-org where their payroll is being charged. (E.g., if a career employee is budgeted on a 0.50 FTE but is working 100% in a month, 50% of that employee’s benefits are the responsibility of the unit. Half of the Benefit Pool Offset will be reversed.)

Benefit Pool Offset Reversals for benefits associated with sub 01 pay are generally processed in the fiscal period following the payroll month of the offset being reversed. For example, reversals for April benefits ineligible for central pool coverage are generally processed in the May fiscal period (period 11). As of July 2022, Benefit Pool Offset Reversals for benefits associated with sub 02 pay are processed in the same month as the offsets they're reversing.

What do I do if I think a Reversal has been made in error?

If you think a Benefit Pool Offset Reversal was made in error, please email Porfirio Buendia in the Budget Office.   To expedite review of your concern, please include relevant documents to support your claim (i.e. DOPE reports, FMW Staffing List, Financial Transactions Reports). 

The Budget Office will correct up to two months of Reversals if the Reversal(s) in question were a result of an error or delay on the part of the unit in updating Funding Entry or BDP. 

To avoid potential overassessment and reduce unit and central workload associated with Reversals:

• Set up Funding Entries and Budget Distribution Pages (BDPs) in UCPATH for all new permanent positions promptly.
• Edit Funding Entries and BDPs without delay when there are changes to funding or effort.
• Monitor staffing lists in FMW routinely to ensure all permanent positions are sufficiently budgeted.