Change to Payroll Assessment Calculation for UCRP Supplement

University and member contributions to the University of California Retirement Plan (UCRP) were restarted in April 2010.  The total employer and employee member contributions to UCRP remain substantially below total funding policy requirements requiring additional contributions from the short term investment pool (STIP) and external borrowing.  Beginning fiscal year 2011-12, a supplemental benefit assessment was enacted to repay STIP funds and external borrowings transferred to UCRP.  Currently there is a single payroll assessment rate charged to all covered payroll.  As the federal Office of Management and Budget considers interest expense on borrowings for pension contributions an unallowable cost for federal fund sources, federal funds are not used towards the payment of the interest cost on these borrowings.  All payroll assessments to date have been applied to pay down the principal of the borrowings only.

To more clearly delineate the assessment on federal fund sources from the assessment on all fund sources, beginning on May 1, 2018 there will be two assessment rates. One principal assessment rate to pay down the STIP note principal and external borrowing principal (charged to all sources of covered payroll) and an separate interest assessment rate to pay down the interest (charged to all non-federal sources of covered payroll).  Beginning on May 1 through the remainder of FY 2017-18, the assessment for principal will be 1.07% (assessed on all sources of covered compensation) and the assessment for interest will be 0.20% (assessed on all non-federal fund sources of covered compensation).

Due to the unique characteristics of the interest assessment, there will be some differences to how you will view this benefit expense. The interest assessment calculation will take place after each payroll compute and will post to the general ledger the day following the compute.  The journal id for the assessment will be MMPRCCOPB where “MM” is the accounting period and “CC” is the pay cycle (XX, B1, MO, etc.); for example the PeopleSoft journal containing the UCRP supplemental interest that will post following the May monthly pay compute will be 11PRMOOPB.  The interest assessment is calculated separately from the month end payroll expense distribution process and, therefore, will not appear on the Distribution of Payroll Expense (DPE).  The principal portion of the UCRP supplemental assessment will continue to be included in the DPE and will post at month end as part of the monthly payroll journal.

  Principal Assessment on All Sources of Covered Compensation Interest Assessment on All Non-Federal Sources of Covered Compensation
May 1, 2018 – June 1, 2018 1.07% 0.20%
Expense Accounts

50553 - UCRP supp assess prin-staff

50605 - UCRP supp assess prin-FA

50705 - UCRP supp assess prin-NFA

50538 - UCRP sup assess interes-staff

50638 - UCRP sup assess interes -NFA

50738 - UCRP sup assess interes -FA

Object Code

8630

8690

Assessed Fund Sources

Federal and Non-Federal

Non-Federal

Appears on the Distribution of Payroll Expense?

Yes

No

Timing of Assessment

Monthly

After each compute

How will I transfer the interest expense if it doesn’t appear on the DPE?
Both the principal and interest portions of the UCRP supplemental assessment are transferrable expenses. The tool for transferring payroll and these payroll benefit expenses will continue to be the Payroll Expense Transfer Uploader (PETU).  When payroll earnings are transferred using a PETU, the interest assessment expense will also be transferred.  The interest amounts are not transferable to federal fund sources. In the event that earnings from a non-federal source are transferred to a federal source, the accompanying interest amount will remain with the non-federal fund source.  In the event earnings from a federal source are transferred to a non-federal source, the interest amount will be calculated and assigned to the non-federal fund source.

What will happen when I transfer payroll expenses for periods prior to April 1, 2018?
For expense transfers prior to the effective date, the original assessment rate in place at the time will be used for the transfer following the current practice.

If you have any questions about this assessment or payroll transfers, contact the Controller's Office Solution Center.