1. Pooled Fringe Benefit Rates Proposed Implementation Plan Clemson University February, 2006

2. Current Process Institutional Perspective — E&G funds are used for fringe benefits that could be allocated to other sources Terminal leave for employees paid from non- E&G funded sources Insurance benefits for 9-month employees Tuition waivers for employees with non-E&G funding sources Graduate health insurance subsidies for students funded from non-E&G sources

3. Current Process Budget perspective – E&G and PSA fringe benefits are covered with institutional funds Difficult to estimate the funding level Salary decisions at budget center level Hiring decisions not based on benefit projections Ever-increasing fringe benefit escalation Departmental budgets pay for annual leave payouts Experienced rates sometimes include unidentified data anomalies

4. Current Process Departmental perspective – Fringe benefits charged in detail Seven types 19 variable rates Inconsistent planning methods used by non- E&G funded areas Payroll reporting includes detailed fringe activity

5. Proposed Change in Fringe Benefit Expense Calculation Actual Calculated Fringe Expenses Pooled Fringe Benefit Rates

6. Why change now? More accurate fringe planning associated with all salaries Easier to calculate unexpended grant funds when closing out grant Places accountability at point of decision- making

7. What is basis of the pooled rate? Controller’s office calculates and negotiates annual rates Compiles experienced rates from the previous year across all funds and seeks approval from the Department of Health and Human Services FICA Unemployment Tax Insurance—Health, Dental, Life Retirement Long-term disability Worker’s Compensation Termination Pay Projects and negotiates anticipated rates for subsequent year

8. What are the new proposed rates? 9 Month Faculty23.7% 12 Month Faculty/Staff29.2% Students 2.9% Part-time/Temporary14.9%

9. When are these rates effective ? Payroll expenses incurred on or after July 1, 2006

10. Then what? Fringe expense calculations posted for each payroll Based on benefits eligibility of employee Fringe expense posted to detail chartfield string Terminal leave paid from fringe pool Rates are recalculated and resubmitted by December 31 annually for approval

11. Implementation Plan — Year One FY07 Existing E&G/PSA fringe base Continue to manage centrally in year one to facilitate transition (Funds 10 and 15) Central terminal leave payout Propose a permanent reallocation from operational budgets equal to 1.0% of 12MO salary base in Funds 13 and 15 to fund central terminal leave payout Establish a separate budget node for terminal leave payout tracking Establish four new expenditure nodes for each of the four pooled fringe rates—9MO, 12MO, Student, Part-time/Temp

12. Implementation Plan — Year Two FY08 Existing E&G/PSA fringe base Allocate permanently to budget centers based on FY07 costs in funds 10, 13 and 15 Budget centers have full accountability for all fringe costs Terminal leave payouts covered from pooled fringe

13. Other questions or concerns