This video explains how employee benefits are paid by University cost objects.
When a department is looking at the balance of its cost objects on a financial report,
it is important to know which cost objects are responsible for paying for benefits and which are not.
Knowing how benefits are paid will help you identify benefits responsible cost objects on financial reports,
thereby allowing you to better manage your department’s finances.
For each University employee, the University pays wages and incurs other expenses that provide for employee benefits.
First, let’s clarify what benefits expenses we are discussing.
Benefit expenses are identified and tracked with 6-digit general ledger account numbers that start with 519.
Benefits expenses include: the University’s contribution to the funded retirement program;
FICA contributions which include social security and Medicare;
the University’s contribution to employee group health insurance and group life insurance;
Remission of tuition and fees granted to University staff and graduate assistants;
Unemployment compensation and Workers’ Compensation.
Using funds associated with one or more cost objects, the hiring department pays an employee’s wages.
However, depending on the source of funds, a department’s cost object may or may not be responsible for the employee’s benefits.
You may recall that UNL is financed by four major funding sources.
All cost centers for Revolving/Auxiliary funds
and WBSs for Grants and Contracts and University of Nebraska foundation funds are responsible for benefits.
This means that benefit expenses will post to these cost objects and will affect the cost object’s balance.
On the other hand, in most cases, State-aided cost centers are NOT benefits responsible.
Instead, the Chancellor on behalf of the institution handles benefit expenses for most state-aided cost centers.
Therefore, when a department is reviewing a financial report for most state-aided or 21 cost centers,
benefit expense postings will NOT affect the final balance.
However, it is important to emphasize that some State-Aided cost centers are responsible for benefits.
To identify these benefits responsible state-aided cost centers, let’s take a look at the smart numbering.
There are two sections of a cost center’s smart numbering that are crucial to identifying benefits responsible cost centers –
the subprogram and the last four digits.
First, let’s take a look at the benefits responsible cost centers that are identified by their subprogram numbers.
There are three subprograms that are managed by the Office of Research and Economic Development, known by its acronym ORED,
but the funds are assigned to individual departments.
These “special 21s” are always responsible for benefits.
31s are EPSCOR funds,
32s are NRI funds,
and 57s are Tobacco funds. Because these funds are unique, you will know if one of these cost centers is assigned to your department.
There are four additional types of benefit responsible 21’s that are identified by the last four digits of the cost center.
The numbering of these cost centers will start with 21 to identify state-aided, followed by your area’s subprogram and department number.
However, the last four digits will help you identify these benefits responsible cost centers.
If the last four digits begin with a 4, they are F&A or Facilities and Administration funds.
The last four digits of Programs of Excellence funds begin with a 51 or 52.
If the last four digits begin with 57, they are Distance Education funds.
Lastly, if the last 4 digits begin with 58, they are differential tuition funds which are associated
with certain colleges that charge a higher tuition rate.
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
is responsible for benefits. Knowing if a cost center is “benefits responsible” is very important to correctly running financial reports in SAP.
Thanks for taking time to learn to identify benefits responsible and non-benefits responsible cost objects.
Distinguishing these cost objects on financial reports is important to managing your department’s finances.