ESTIMATED PAYROLL LOAD RATES FOR FY2016
The preliminary 2016 Payroll Load Rates (i.e., fringe benefit rates) have been published on the Financial Accounting webpage. These preliminary rates reflect our current best estimate of fringe benefit costs to be incurred by the UW in fiscal year 2016 based on budget proposals currently being considered in Olympia.
Increases or decreases in the load rates from year to year are primarily driven by changes in the state-mandated costs charged to the UW for employee healthcare and for the PERS, TRS and LEOFF 2 retirement plans. Although 2016 is no exception, what is unusual is the magnitude of the increase for the healthcare component of the rates currently projected by budget writers in both houses. Both the Washington State House and Senate budget proposals published in recent weeks assume a large, 31 percent annual increase in the cost charged to the UW for employee healthcare over the current fiscal year. It is important to clarify that this rate is very similar to those paid prior to 2013.
The projected employer contribution increase does not reflect a dramatic increase in the actual costs or claims experience of the PEBB employee health plans. Rather, the legislature had determined in an earlier session that the PEBB reserve account held excess reserves, and they directed that reserves be used in the current biennium, which kept employer rates artificially low.
The preliminary payroll load rates reflect the healthcare cost being proposed by the House budget ($867/person), but the final healthcare cost for 2016 won’t be known until House and Senate budget negotiators finish their work over the coming weeks. Additionally, the UW contribution rate for PERS is increasing 10 percent in 2016 compared to 2015, and has more than doubled in the past six years.
It is possible that a final budget deal won’t be reached until June, which is why this correspondence assumes an increase for planning purposes.
The impact of these cost increases on the payroll load rates, primarily the healthcare component, is significant. Incorporating these estimated increases into the 2016 rates adds approximately 2 percent to the faculty load rate; 3 percent to the load rate for professional staff; and, 6 percent to the load rate for classified staff.
As every year, the payroll load rates will be updated prior to the start of fiscal year 2016 if we are made aware of any material changes to the estimated benefit costs. For example, if the final, compromise budget agreed to in Olympia results in a healthcare cost materially different from the $867 currently assumed in the House budget, we will incorporate that change prior to finalizing the load rates and inputting them to FAS.
Communication from the Office of Sponsored Programs (OSP) regarding the use of these preliminary rates in proposals for sponsored projects will follow via the Monthly Research Administration Meeting (MRAM) listserv.
If you have any questions about these rates, please feel free to contact either Dan Schaaf in Financial Accounting (schaafd) or Lupe Valencia in Management Accounting & Analysis (gvalenci).