Financial Basics: Identifying Cost Objects That Are Responsible for Benefits (5:37)
This video explains how employee benefits are paid by University cost objects.
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- [00:00:05.533]This video explains how employee benefits are
paid by University cost objects.
- [00:00:11.700]When a department is looking at the balance of
its cost objects on a financial report,
- [00:00:16.633]it is important to know which cost objects are
responsible for paying for benefits and which
- [00:00:24.433]Knowing how benefits are paid will help you
identify benefits responsible cost objects on
- [00:00:31.600]thereby allowing you to better manage your
- [00:00:37.933]For each University employee, the University
pays wages and incurs other expenses that
provide for employee benefits.
- [00:00:47.433]First, let’s clarify what benefits expenses we are
- [00:00:52.933]Benefit expenses are identified and tracked with
6-digit general ledger account numbers that start
- [00:01:03.033]Benefits expenses include: the University’s
contribution to the funded retirement program;
- [00:01:10.400]FICA contributions which include social security
- [00:01:15.500]the University’s contribution to employee group
health insurance and group life insurance;
- [00:01:22.066]Remission of tuition and fees granted to
University staff and graduate assistants;
- [00:01:27.900]Unemployment compensation and Workers’
- [00:01:33.566]Using funds associated with one or more cost
objects, the hiring department pays an
- [00:01:41.833]However, depending on the source of funds, a
department’s cost object may or may not be
responsible for the employee’s benefits.
- [00:01:52.133]You may recall that UNL is financed by four
major funding sources.
- [00:01:57.833]All cost centers for Revolving/Auxiliary funds
- [00:02:01.833]and WBSs for Grants and Contracts and
University of Nebraska foundation funds are
responsible for benefits.
- [00:02:11.300]This means that benefit expenses will post to
these cost objects and will affect the cost object’s
- [00:02:20.433]On the other hand, in most cases, State-aided
cost centers are NOT benefits responsible.
- [00:02:27.966]Instead, the Chancellor on behalf of the
institution handles benefit expenses for most
state-aided cost centers.
- [00:02:36.700]Therefore, when a department is reviewing a
financial report for most state-aided or 21 cost
- [00:02:44.400]benefit expense postings will NOT affect the final
- [00:02:49.766]However, it is important to emphasize that some
State-Aided cost centers are responsible for
- [00:02:58.366]To identify these benefits responsible state-aided
cost centers, let’s take a look at the smart
- [00:03:05.933]There are two sections of a cost center’s smart
numbering that are crucial to identifying benefits
responsible cost centers –
- [00:03:14.766]the subprogram and the last four digits.
- [00:03:18.866]First, let’s take a look at the benefits responsible
cost centers that are identified by their
- [00:03:25.800]There are three subprograms that are managed
by the Office of Research and Economic
Development, known by its acronym ORED,
- [00:03:34.600]but the funds are assigned to individual
- [00:03:39.300]These “special 21s” are always responsible for
- [00:03:45.566]31s are EPSCOR funds,
- [00:03:48.266]32s are NRI funds,
- [00:03:51.066]and 57s are Tobacco funds. Because these
funds are unique, you will know if one of these
cost centers is assigned to your department.
- [00:04:01.566]There are four additional types of benefit
responsible 21’s that are identified by the last
four digits of the cost center.
- [00:04:09.400]The numbering of these cost centers will start
with 21 to identify state-aided, followed by your
area’s subprogram and department number.
- [00:04:19.666]However, the last four digits will help you identify
these benefits responsible cost centers.
- [00:04:26.100]If the last four digits begin with a 4, they are F&A
or Facilities and Administration funds.
- [00:04:34.366]The last four digits of Programs of Excellence
funds begin with a 51 or 52.
- [00:04:41.400]If the last four digits begin with 57, they are
Distance Education funds.
- [00:04:47.166]Lastly, if the last 4 digits begin with 58, they are
differential tuition funds which are associated
- [00:04:54.733]with certain colleges that charge a higher tuition
- [00:04:59.866]As a general rule, if the last 4 digits of a cost
center are in the 4000 or 5000 series, that cost
center is a “special 21” and
- [00:05:10.333]is responsible for benefits. Knowing if a cost
center is “benefits responsible” is very important
to correctly running financial reports in SAP.
- [00:05:22.300]Thanks for taking time to learn to identify
benefits responsible and non-benefits
responsible cost objects.
- [00:05:29.233]Distinguishing these cost objects on financial
reports is important to managing your
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