COMPTROLLER'S SEAL STATE OF CONNECTICUT

STATE OF CONNECTICUT

NANCY WYMAN
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MARK OJAKIAN
DEPUTY COMPTROLLER

MEMORANDUM NO. 2010-19

July 1, 2010

TO THE HEADS OF ALL STATE AGENCIES

Attention: Fiscal and Administrative Officers, Business Managers, Payroll and Personnel Officers
Subject: 2010-2011 Fringe Benefit Cost Recovery Rates

The percentage rates for unemployment compensation and the various retirement plans listed on the attached chart are effective July 1, 2010.  These rates should be used for any fringe benefit cost recovery taking place on or after July 1, 2010.  In 2010-2011, as in the previous fiscal year, there will be no composite rates encompassing all fringe benefit components.

Actual Cost Fringe Benefits
Since November 2003, with the implementation of the Core-CT HRMS module, the state shares of certain fringe benefits have been charged to agencies on an actual cost basis.  This includes group life insurance and medical insurance, which are calculated based on the actual cost of the state's share of insurance premiums.  In addition, FICA-Social Security and FICA-Medicare have been calculated based on the existing Federal tax rates instead of the percentage rate developed in the past by the Office of the State Comptroller.  The actual cost method will continue to be used in Fiscal Year 2010-11.

Fringe Benefit Recovery
All personal service expenditures from Federal and Private Grants and any funds other than the General Fund and Correction Industries Internal Service Fund are subject to fringe benefit recovery.

Charging Employees to the Correct Funding Source
In Core-CT, fringe benefits are charged to the same funding source as the personal services expenditure. If an employee is paid from the correct funding source, Core-CT will charge the actual cost of fringe benefits to the proper funding source. Therefore, coordination is needed between agency payroll and financial staff to ensure every effort is made to pay employees from the correct funding sources.

Avoiding Temporary Funding Sources
To reduce the number of payroll corrections, agencies are asked to charge payroll expenses to the proper funding sources, even in cases where anticipated funding is not yet available, but is expected within the current fiscal year. In these cases, the account will be allowed to go negative temporarily. However, if the anticipated funding does not become available, the agency will be responsible for addressing the negative balance.

Salary and Fringe Benefit Payroll Corrections
If an agency pays an employee from the wrong funding source, fringe benefits will be charged to the wrong funding source as well. For corrections, the agency will be responsible for identifying the salary amounts and fringe benefit amounts that need to be transferred.

Salaries can be transferred through spreadsheet journals using the source code of PC, although there are limitations to this approach. In addition, when the salary transfer is between a reimbursable funding source and a non-reimbursable source (e.g., a Grant Fund SID and the General Fund), the agency will need to submit a CO-826 form to identify the fringe benefit amounts to be transferred by fringe benefit account.

Completed CO-826 forms should be sent to the Office of the State Comptroller, Cost Reporting Unit for processing: 55 Elm Street, Room 109, Hartford, Connecticut 06106. Forms can also be faxed to (860) 702-3699.

The Impact of Payroll Corrections on Financial Reporting
It should be noted that spreadsheet journal transfers of salary and fringe benefits in the Core-CT financials module are not reflected in the HRMS system or in the payroll tables in EPM.  Therefore, if using HRMS for reporting purposes, agencies must track the corrections they make through spreadsheet journals and the use of CO-826 forms.

Fringe Benefit Variances - New Requests Required
All variances approved in Fiscal Year 2009-10 or earlier will be deleted for check date August 27, 2010.  Variances for Fiscal Year 2010-11 will require a new request.
 
Full and Partial Fringe Benefit Variances
In most cases, full fringe benefit variances can be accommodated in Core-CT through the use of fringe benefit allocations that run when payrolls are posted.  Fully exempted fringe benefit expenditures will be transferred to the appropriate central appropriation.

For partial variances, Core-CT will charge the funding source the full amount for fringe benefits.  Agencies with approved partial variances should submit CO-826 forms to recover the portion of fringe benefits that have been exempted.

Deposits to Fund 34005 - Fringe Benefit Recovery Fund
In certain situations, state agencies bill another state agency, municipality or private firm for services provided by an employee.  The bill can include both salary and fringe benefit costs to be reimbursed.

Payments for the fringe benefit portion should be deposited or applied to the following coding:

Fund: 34005
SID: 40001
Account: 44338
Budget Reference: Current Fiscal Year

In addition, the agency should use its own Department ID, Program and Project values. 

Alerting OSC of the Fund 34005 Deposit Using the CO-826 Form
Once a fringe benefit recovery payment is deposited or applied to Fund 34005, the agency should alert the Office of the State Comptroller (OSC) using a CO-826 Reimbursable Cost Recovery Form.  This allows OSC to credit the recovery to the proper central fringe benefit appropriations.  A sample CO-826 form for Fund 34005 fringe benefit recovery deposits is available as a General Ledger job aid on the Core-CT website at http://www.core-ct.state.ct.us/user/finjobaids/gl.htm.

If there are questions, please call the Cost Reporting Unit of the Budget and Financial Analysis Division at (860) 702-3352.


NANCY WYMAN
STATE COMPTROLLER

NW: REG
 


Actual Cost Fringe Benefits

Account
Code

Fringe Benefit Description
 

Actual Cost
Expenditure Basis

50410 Employer Share Group Life Insurance State Share Premiums
     
50420

 
Employer Share Medical Insurance

 
State Share Premiums
for Medical, Dental and
Prescription Coverage
     
50441

 
Employer Share FICA-Social Security

 
Federal Tax Rate of 6.2%
of applicable wages up to
Federal maximum limit.
     
50442

 
Employer Share FICA-Medicare

 
Federal Tax Rate of 1.45%
of applicable wages - no
maximum limit.

 

Percentage Rate Fringe Benefits

Account
Code


Fringe Benefit Description


FY 2010-11 Rate

50430 Unemployment Compensation 0.16%
     
50471 Employer SERS Retirement Regular Employee 40.00%
     
50471 Employer SERS Retirement Hazardous Duty 37.19%
     
50472 Employer Alternative Retirement Program 10.03%
     
50473 Employer Teachers Retirement 32.78%
     
50474
 
Employer Judges/Compensation Commissioners
Retirement Plan
6.89%
 

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