University of California, San Diego

September 25, 1996
SUBJECT: New Guidelines for Funding and Paying the Employee Incentive
A new systemwide assessment procedure for funding and paying Employee Incentive Awards was recently announced by the Office of the President, effective 7/1/96. This procedure has been developed to ensure consistent treatment by individual payroll funding sources in implementing the Incentive Award Program (IAP) while promoting compliance with federal contract and grant regulations and collective bargaining provisions.
Under the new procedure, all eligible payroll fund sources will be assessed an amount equivalent to approximately 1.3% of applicable monthly salaries using the base Payroll/Personnel System (PPS) for fiscal year 1996-97. The assessment will be implemented in September, therefore, the actual assessment will be prorated over ten months. This amounts to 1.56% of applicable salaries for the period 9/1/96 - 6/30/97 to achieve the equivalent funding level of a 1.3% assessment for the entire year. The assessment rate may differ from year to year, but will be the same for all funds in any given year.
The funds made available by the assessment will be used to pay the cost of the actual awards, including the cost of fringe benefits associated with the awards (employer share of FICA, Unemployment Insurance, Workers Compensation Insurance). Under this method, all employees eligible for the Incentive Awards are treated equally regardless of the funding sources of their regular pay.
All non-academic employees (career, casual and casual/restricted) are eligible to participate in the IAP program and are therefore covered by the provisions of the IAP assessment plan, except for the following:
- employees in per diem appointments
- employees in certain bargaining units, depending on the provisions
of their bargaining contract. Eligibility will be determined at the conclusion of each bargaining cycle. Currently, no non-academic bargaining unit is exempt from the assessment, although represented Systemwide Technical Unit employees are not eligible to receive awards pending agreement between UC and UPTE.
- employees with contract appointments
- employees in the Senior Management Group (previously categorized as
Executive program), and
- students paid on work study funds.
Awards may be made to Senior Management Group employees and to contract employees if so specified in the employment contract, however, they will not be paid from the IAP assessment fund.
Forms of award will include cash bonuses paid directly to employees as taxable earnings, and professional development awards, including payment of position-related or career-related development activities and associated travel expenses. Other forms of award (paid time off, cash-equivalent gifts, gift certificates) may not be funded by the assessment plan. These may be funded outside of the 1.3% assessment subject to Vice Chancellor and department guidelines.
All regular pay of eligible employees will be assessed. Automated entries will be made by the PPS to record the assessment, the payment of cash incentive awards, and the reimbursement of the salary and benefits sub-accounts from the assessment fund. The Distribution of Payroll Expense report will be modified to reflect the assessments and payments, except for professional development awards. Professional development awards will be paid through the Accounts Payable system by making a direct charge to the reserve account via a Check Request form for all payments, including travel.
Each Vice Chancellor area will continue to provide detailed reports of expenditures at the end of the fiscal year.
Campus-wide total annual value of the Incentive Awards granted should approximately equal the total annual assessments. Year-end surplus balances will be carried forward. Vice Chancellors will be provided an entitlement figure, applicable in total and by fund, which cannot be exceeded to ensure the account is not overdrawn at year-end.
The costs of the Incentive Awards are federally allowable if the award program is conducted in a consistent manner throughout the campus, without regard to funding source, unit or organization, and does not unfairly disadvantage the Federal Government. To ensure the allowance of these costs under federal rules, campuses must make the assessment to all fund sources, including the General Fund. At the end of each fiscal year, campuses must demonstrate that the total incentives paid to federal fund employees are generally equal to the total assessments made to federal funds. Extramural project proposal budgets based on the salary and fringe benefits projections issued by the Contract and Grant Administration office include the estimated average cost of incentive awards. No further adjustment to these projections is necessary.
The General Fund allocation distributed by the Office of the President to the campus for the awards program will be used to supplement the budget appropriation of General Fund accounts as IAP assessments are made.
The following open forums have been scheduled to present additional details regarding the new assessment procedure and answer any questions you may have:
SIO CAMPUS Monday, September 30 Thursday, October 3 3:00 - 4:00 p.m. 10:30 - 11:30 a.m. Hubbs Hall, Room 4500 RIMAC, Green Room
Business Officers, Financial Officers and Key Support Staff are encouraged to attend.
Rogers Davis Donald A. Larson
Assistant Vice Chancellor - Assistant Vice Chancellor - Human Resources Business and Financial Services