SIO Salary Recharge Program/ Labor Clearing Account

SIO Salary Recharge Program/Labor Clearing Account Jennifer Davis and Terri Varnell SIO/UCSD

SIO Salary Recharge Program/Labor Clearing Account • Introduction • Overview • Advantages • Demonstrate rate creation • Demonstrate monthly process • Disadvantages • Summary • Questions SIO Salary Recharge Program/Labor Clearing Account

Introduction • SIO has been using since 1977 • Use when you have multiple employees on multiple funding sources • Not necessary or useful for 19900 funded employees • The application is built with FilemakerPro. • This presentation, and more detail about the system, will be on the SIO website within one week - www-sio.ucsd.edu/~terri/salrchg/share2000. SIO Salary Recharge Program/Labor Clearing Account

Overview • Create annualized salary recharge rates for individual employees (Detail in demo.) • Direct labor costs (not recharge rates) charged to single clearing account • Salary recharges then distributed (charged) against individual index numbers (Detail in demo.) • “Income” from recharges goes back into clearing account SIO Salary Recharge Program/Labor Clearing Account

Advantages - (why we do this) • Eliminates PETs • Back pay issues resulting from union negotiation delays not a problem—we charge now for anticipated increases • “Administrative” salaries charged and tracked accurately • Reduces on-line timekeeping effort • Annual rate is stable, allowing for accurate projections • Minimizes monthly PPS activity • Simplifies PAR process • Compensatory time earned is recharged when it is earned • Simplifies proposals, agency reports, in-house cost tracking, etc. SIO Salary Recharge Program/Labor Clearing Account

Advantages (Continued) • Only productive hours are charged to extramural funds • Employee awards simplified • Provides a variety of management and PI financial reports • Pay salaries before accounts are fully set-up • Provides ability to request actual salary amount needed for specific effort on grant/contract. • Can be used as a personnel management system SIO Salary Recharge Program/Labor Clearing Account

Rate Calculation Demonstration • The rate calculation is based on the following: • The anticipated annual salary is multiplied by the employee’s actual benefit factor, then multiplied by the employee’s anticipated downtime rate. That produces an anticipated annual recharge cost which is then divided by the number of working hours in the year to yield an hourly recharge rate. • As with other recharge operations, additional calculations are occasionally necessary to make adjustments to prior years. SIO Salary Recharge Program/Labor Clearing Account

SIO Salary Recharge Program/Labor Clearing Account

2088 (working hours in year) – 192 (vacation hours accrued) – 96 (holiday hours accrued) – 78 (sick leave departmental average used) = 2088-192-96-78=1722 productive hours. 2088/1722= 1.21 downtime factor for this specific employee SIO Salary Recharge Program/Labor Clearing Account

Rate Calculation Demonstration( Continued) • The rate calculation is based on the following • The anticipated annual salary is multiplied by the employee’s actual benefit factor, then multiplied by the employee’s anticipated downtime rate. That produces an anticipated annual recharge cost which is then divided by the number of working hours in the year to yield an hourly recharge rate • 59402 x 1.12 x 1.21= basic calculation • As with other recharge operations, additional calculations are occasionally necessary to make adjustments to prior years. • 59402 x 1.12 x 1.21 x adjustments = 83,834 annual • 83,834/12= monthly rate= 6986 • 6986/174 hours= 40.15/hr SIO Salary Recharge Program/Labor Clearing Account

Disadvantages • One more account to reconcile and audit • Requires effort to create rates • Clearing account balances must be analyzed at year end • Recharge rates appear to be high • Costs appear one month in arrears • LASR balances also a month in arrears • Two months of recharges must be processed in the month of June for fiscal closing SIO Salary Recharge Program/Labor Clearing Account

Summary • a system that’s useful for departments with multiple employees reporting time on multiple extramural funding sources • create annualized salary recharge rates for individual employees • charge direct labor costs to a single clearing account • distribute salary recharge costs to individual index numbers • put the “income” from recharges back into the clearing account SIO Salary Recharge Program/Labor Clearing Account

Summary (Continued) • Advantages: • stable rates, • eliminate PETs • simplify PARs • deal with delayed salaries • comprehensive reports • ability to manage and track administrative salaries • Disadvantages: • set up the annual rates • to monitor the clearing account balances • exercise good controls because costs appear a month in arrears SIO Salary Recharge Program/Labor Clearing Account

Questions ??? SIO Salary Recharge Program/Labor Clearing Account

SIO Salary Recharge Program/Labor Clearing Account • This presentation and additional detail about the program will be available on the SIO website within a week • www-sio.ucsd.edu/~terri/salrchg/share2000 SIO Salary Recharge Program/Labor Clearing Account

SIO Salary Recharge Program/ Labor Clearing Account