Financial Basics: Identifying Cost Objects That Are Responsible for Benefits (4:59)

Cindy Miesbach Author

08/24/2017 Added

129 Plays

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This video explains how employee benefits are paid by University cost objects.

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[00:00:00.000]This video explains how
[00:00:03.840]employee benefits are paid by
[00:00:05.600]University cost objects.
[00:00:08.000]When a department is looking at
[00:00:10.030]the balance of its cost objects
[00:00:12.000]on a financial report,
[00:00:13.000]it is important to know which
[00:00:14.930]cost objects are responsible
[00:00:17.060]for paying for benefits and
[00:00:19.350]which are not.
[00:00:21.000]Knowing how benefits are paid
[00:00:22.680]will help you identify benefits
[00:00:24.510]responsible cost objects on
[00:00:27.000]financial reports,
[00:00:28.000]thereby allowing you to better
[00:00:30.630]manage your department's
[00:00:32.840]finances.
[00:00:34.000]For each university employee,
[00:00:37.270]the university pays wages and
[00:00:39.330]incurs other expenses that
[00:00:41.450]provide for employee benefits.
[00:00:44.000]First, let's clarify what
[00:00:45.990]benefits expenses we are
[00:00:47.820]discussing.
[00:00:49.000]Benefits expenses are
[00:00:50.660]identified and tracked with six-digit
[00:00:53.530]general ledger account numbers
[00:00:56.000]that start with 519.
[00:01:00.000]Benefits expenses include the
[00:01:02.520]university's contribution to
[00:01:04.210]the funded retirement program,
[00:01:07.000]FICA contributions, which include Social Security and Medicare,
[00:01:12.000]include Social Security and
[00:01:12.000]Medicare,
[00:01:12.000]the University's contribution
[00:01:13.890]to employee group health
[00:01:15.410]insurance and group life
[00:01:17.100]insurance,
[00:01:18.000]remission of tuition and fees
[00:01:20.000]granted to university staff and
[00:01:22.290]graduate assistants,
[00:01:24.000]unemployment compensation, and
[00:01:27.390]workers' compensation.
[00:01:30.000]Using funds associated with one
[00:01:32.900]or more cost objects,
[00:01:35.000]the hiring department pays an
[00:01:37.290]employee's wages.
[00:01:39.000]However, depending on the
[00:01:40.790]source of funds,
[00:01:42.000]a department's cost object may
[00:01:44.450]or may not be responsible for
[00:01:46.650]the employee's benefits.
[00:01:49.000]You may recall that UNL is
[00:01:51.150]financed by four major funding
[00:01:52.000]sources:
[00:01:52.000]All cost centers for revolving
[00:01:56.020]auxiliary funds and WBSs for
[00:01:59.830]grants and contracts
[00:02:02.000]and University of Nebraska
[00:02:03.790]Foundation funds are
[00:02:05.380]responsible for benefits.
[00:02:08.000]This means that benefit
[00:02:09.840]expenses will post to these
[00:02:11.950]cost objects
[00:02:13.000]and will affect the cost object's
[00:02:16.030]balance.
[00:02:17.000]On the other hand, in most
[00:02:19.530]cases,
[00:02:20.000]state-aided cost centers are
[00:02:22.060]not benefits responsible.
[00:02:24.000]Instead, the Chancellor, on
[00:02:26.160]behalf of the institution,
[00:02:28.000]handles benefit expenses for
[00:02:30.320]most state-aided cost centers.
[00:02:33.000]Therefore, when a department is
[00:02:35.250]reviewing a financial report
[00:02:37.000]for most state-aided or 21 cost
[00:02:40.200]centers,
[00:02:41.000]benefit expense postings will
[00:02:43.430]not affect the final balance.
[00:02:46.000]However, it is important to
[00:02:48.000]know that some state-aided cost
[00:02:48.000]centers
[00:02:48.000]are responsible for benefits.
[00:02:53.000]Benefits responsible state-aided
[00:02:55.170]cost centers begin with 21,
[00:02:57.000]and their third through sixth
[00:02:59.400]digits identify the responsible
[00:03:01.000]area's
[00:03:01.000]subprogram and department
[00:03:03.170]number as expected.
[00:03:05.000]It's the last four digits of
[00:03:06.610]their smart numbering
[00:03:08.000]that identifies them as
[00:03:09.900]benefits responsible.
[00:03:12.000]These benefits responsible cost
[00:03:13.570]centers are responsible for
[00:03:15.380]benefits
[00:03:16.000]responsible cost centers are
[00:03:18.230]referred to as special 21s,
[00:03:21.000]and they don't follow the 1,000
[00:03:24.650]rule,
[00:03:25.000]which says that parent cost
[00:03:26.500]centers must end in a number
[00:03:28.630]less than 1,000,
[00:03:30.000]and child cost centers must end
[00:03:32.190]in a number equal to or greater
[00:03:35.190]than 1,000.
[00:03:38.000]The following state-aided cost
[00:03:40.350]centers
[00:03:41.000]are responsible for paying for
[00:03:42.830]employee benefits
[00:03:44.000]and are identified by their
[00:03:46.290]last four digits.
[00:03:48.000]The last four digits of F&A,
[00:03:50.000]or facilities and
[00:03:50.950]administration funds,
[00:03:53.000]begin with 4.
[00:03:55.000]The last four digits of
[00:03:56.180]programs of excellence funds
[00:03:58.000]begin with 51 or 52.
[00:04:01.000]If the last four digits begin
[00:04:03.800]with 58,
[00:04:05.000]they are differential tuition
[00:04:06.660]funds,
[00:04:07.000]which are associated with
[00:04:08.770]certain colleges
[00:04:10.000]that charge a higher tuition
[00:04:11.520]rate.
[00:04:12.000]NRI funds' last four digits
[00:04:15.060]range from 6,000 to 6,499.
[00:04:19.000]Funds from the Nebraska Tobacco
[00:04:21.990]Settlement Trust,
[00:04:23.000]known simply as tobacco funds,
[00:04:26.000]use the range of cost centers
[00:04:28.000]ending in 6,500 to 6,999.
[00:04:32.000]Because these funds are unique,
[00:04:34.000]you will know if one of these
[00:04:36.000]cost centers
[00:04:37.000]is assigned to your department.
[00:04:40.000]Thanks for taking time to
[00:04:42.190]become familiar
[00:04:43.000]with benefits responsibility
[00:04:45.000]and to identify benefits
[00:04:46.840]responsible
[00:04:48.000]and non-benefits responsible
[00:04:50.000]cost objects.
[00:04:51.000]Distinguishing these cost
[00:04:53.290]objects on financial reports
[00:04:55.000]is important to managing your
[00:04:57.290]department's finances.

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Financial Basics: Identifying Cost Objects That Are Responsible for Benefits (4:59)

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