MEMORANDUM

October 24, 1996

RE: New Policy and Procedure for Funding and Paying Employee Incentive Awards

The purpose of the University's employee Incentive Award Program (IAP) is to reward and motivate the exceptional performance-of staff employees by providing non-base building monetary awards in accordance with University and campus guidelines. This award can be made either to an individual or team. A fundamental precept of this program is that sufficient funding should be made available to ensure that awards are granted equitably to outstanding employees, while conforming to the policy that an employee's salary be charged to the fund source(s) directly benefiting from the performance of his or her University duties. The Office of the President provides funding to support awards for all employees paid from General Funds, and awards for all other employees are charged directly to their regular pay fund sources (hereafter referred to as non-General Funds).

Due to the lack of central funding, this direct charge method has the potential for unfairly disadvantaging non-General Fund employees; therefore, the Office of the President has developed a new policy and procedure to ensure the equitable distribution of incentive awards without regard to individual payroll funding sources. The new methodology, which will add the incentive award component to the employee benefit rate as described below, complies with federal regulations and with collective bargaining provisions for all eligible staff employees and is mandated for all campuses effective July 1, 1996. This new policy was previously announced by Campus Human Resources to all departmental representatives of the Human Resources Management Initiatives Work Group in July, 1996. In addition, UCLA Sponsored Research provided new benefits rate information to the campus in May, 1996 for inclusion in all sponsored projects proposals.

• The Incentive Award Program (IAP) is available to most non-academic employees. It will be funded by an employee benefits assessment made to the payroll fund sources for all eligible employees.
• The assessment process will be implemented through the base Personnel/Payroll System beginning with October 1996 earnings.

Beginning with the 1996-97 fiscal year, the campus will use a new assessment method implemented through the base Personnel/Payroll System. The direct charge method will no longer be used. This change is being made to ensure the equitable treatment of all employees eligible for the Incentive Award Program. Al1 regular pay of eligible non-academic employees in all fund groups will be assessed on an ongoing basis at the same rate to create a campuswide pool of funds for the Incentive Award Program. The gross amount of the Incentive Award and associated employee benefits costs will be funded from the pool of funds generated by the assessment process.

1. The assessment. The assessment rate for fiscal year 1996 - 97 has been set at 1.3% of salaries. For the remaining nine months of the 1996-97 fiscal year, the rate per salary dollar will be 1.73% (approximately $1.73/$100 of salary). The first assessment is currently scheduled to begin with October, 1996 earnings. Assessments made against those funds where the campus provides central support of benefits will be reimbursed to the department through the usual employee benefit funding procedure. The following entries will automatically appear as a debit on your ledger at the time of fund assessment, fund by fund as assessed.

IAP Assessment-Benefits Expense (sub 6)

2. Payment of the Incentive Awards. All Incentive Awards will be paid directly to employees as taxable earnings from department salary accounts.. The cost of employee benefits associated with the awards will be recorded when the awards are made. The following entries will automatically appear as a debit on your ledger at the time of payment of the award, fund by fund as paid.

IAP Award Payment - Salary & Wages (sub 1, 2, 5, or 7)

and

IAP Award Payment-Associated Benefits Expense (sub 6)

3. Funding the Award. The gross amount of the employee Incentive Awards and associated employee benefit costs will be funded from the Incentive Award account. The following entries will automatically appear as a credit on your ledger at the time of payment of the award, fund by fund as paid.

IAP Award Payment-Salaries & Wages (sub 1, 2, 5, or 7)

and

IAP Award Payment-Associated Employee Benefits (sub 6)

Campuswide, the total annual value of the employee Incentive Awards paid should approximately equal the total annual assessments. This provision applies to the total program and also applies specifically to the federal fund group and to individual collective bargaining units in accordance with labor agreements. At the end of each fiscal year, the campus will analyze the results to ensure that the total awards paid to federally funded employees are generally equal to the total assessments made to federal funds. Similarly, the total awards paid to employees in specific bargaining units generally should be equal to the total assessments charged to funds that paid these employee groups.

Reports of control totals will be produced monthly at the organization level and must be monitored by the appropriate Provost, Dean or Vice Chancellor. By the end of the fiscal year, surpluses or deficits in any fund must be mitigated to the extent possible. Minor surpluses or deficits may be carried forward to the following fiscal year, however, the campus has an obligation to refund the Federal Government for any campus surpluses on federal funds that exceed 15%.

Consistent with information that was forwarded to the campus in May, 1996 by Sponsored Research, this assessment should be incorporated into all budgets for extramural funding. Departments using actual rates rather than estimated rates in proposal preparation should add the assessment to totals in anticipation of these new charges.

The attached question and answer format provides additional detailed information about the program. If you have any questions or require additional information, please contact:

Campus Human Resources will provide specific guidelines for granting 1996-97 Incentive Awards by November, 1996. Informational meetings will be scheduled with departmental personnel to provide details regarding criteria for Incentive Awards and to answer questions about the new program in the next few weeks.

Sincerely,

Attachment

INCENTIVE AWARD PROGRAM GUIDELINES QUESTIONS AND ANSWERS

• Employees in Per Diem appointments are not eligible for IAP awards and are not covered by the IAP assessment provisions.
• Employees in certain bargaining units may not be eligible depending on the provision of their bargaining contract. Eligibility of specific bargaining units will be determined by the Office of the President - Human Resources Department at the conclusion of each bargaining cycle.

Associated Benefits:

Q8: How will the cost of associated benefits be funded?

• Employer share of FICA
• Unemployment Insurance
• Workers' Compensation Insurance

These benefit costs shall be funded from the Incentive Award liability pool.