Cornell plans to introduce a new employee benefit recov ery rate structure for Endowed Ithaca July 1. Although formal approval of this structure change has not yet been received from the Office of Naval Research -- which must review all issues related to the administration of federal grants and contracts at the university -- Cornell officials have confidence it will be accepted and the proposed rate structure approved.
Officials say the changes will make for a more equitable distribution of benefit costs, while at the same time making the process more uniform and more accurate.
The rate structure will not affect individual employee benefit packages, but rather modify the way the university recovers the cost of employee benefits from Endowed Ithaca departments.
"We believe this new plan simplifies the benefit recovery process, enables us to maintain a 'pool' concept for our benefits and aligns rates with costs sufficiently to give managers the appropriate information to make sound man
agement decisions," said Frederick A. Rogers, Cornell senior vice president and chief financial officer. "The move to a new rate structure also addresses concerns of federal auditors, who have reviewed our current structure."
Rogers said the change in rate structure, which has been studied and reviewed for the past 18 months, addresses concerns from many that the present rate structure is overly complex, difficult to administer, confusing and not well -aligned with the actual cost of benefits for some categories of employees.
Highlights of the new rate structure include:
·a decrease -- from six to four -- in the number of benefit rates;
·the elimination of separate rates for academic and non -academic departments;
·a reduction -- from 34 or 36.5 percent to 10.25 percent -- in the rate charged for certain temporary employees who are only eligible for mandated benefits;
·a reduction -- from 36.5 percent to 20.75 percent -- in the
rate charged for postdoctoral associates;
·a reduction in the FY'97 planned benefit rate for fully benefit-eligible employees in academic departments from 38 percent 37 percent.
Under the current rate structure, the university recovers the cost of benefits based on a certain percentage -- one of six different rate levels ranging from 36.5 percent (academic full-benefit employees) to zero percent (student employees) -- of an individual's salary.
As of July 1, only four benefit rates -- 37 percent, 20.75 percent, 10.25 percent and zero percent -- will compose the Endowed Ithaca rate structure.
Charged at the 37 percent rate will be salary expenditures for full-benefit employees in both academic and non-aca demic departments as well as benefits-eligible temporary employees.
Charged at the 20.75 percent rate will be salary expendi tures for employees eligible for retirement or health insur
ance, plus mandated benefits (Social Security, Worker's Compensation, disability and unemployment). This em ployee group includes summer faculty with retirement and visiting academics receiving health insurance.
Charged at the 10.25 percent rate will be salary expenditures for employees who receive only mandated benefits. This employee classification includes visiting faculty, summer faculty without retirement, executive education faculty and mandatory benefits-only tempo rary employees, among others.
Charged at the zero percent rate will be salary expendi tures for student employees during the academic year and students registered during the summer.
Although this new rate structure is effective July 1, 1996, the impact of the rate change on faculty summer salaries paid from grants and contracts will be effective Jan. 1, 1997. This timing will allow principal investiga tors of grants and contracts enough lead time to budget or rebudget their awards.
To illustrate further the need for a new benefit rate schedule, officials cite an example under the current rate structure where there is no relationship between the costs of benefits provided to a certain employee category and the benefit rate charged. According to Yoke San Reynolds, university controller, "the salaries for temporary workers, who are not eligible for full benefits, are currently being assessed a full benefit recovery rate. Conversely, salary expenditures for summer faculty who receive health insur ance, retirement and mandatory benefits are currently being charged a reduced rate or zero rate."
In addition to the reduction in the number of rates, the elimination of separate rates for academic and non-aca demic departments will further standardize the benefit struc ture and guarantee a more equitable distribution of benefit costs across the university, officials say.
The impact of the new employee benefit rate structure will differ from department to department, depending on the
various employee categories in each work force.
The benefit rates charged to salary expenditures reim burse the university's approximately $85 million Endowed Ithaca benefits pool, from which the university pays for all employee benefits, including retirement, health and life
insurance, Social Security, Worker's Compensation, dis ability and unemployment.
Anyone with further questions about the new employee benefit rate structure should contact Pat Fitzgerald, assistant controller, at 255-8905.