Sources of Revenue Required to Pay Benefit Cost (APS 001)

Overview

Applicable To

State agencies and institutions of higher education that pay salaries with federal funds, interagency contract proceeds, or other collected receipts, including those deposited to Appropriated Fund 0001.

Policy

The Legislature requires state agencies (agencies) and institutions of higher education (agencies) to maintain funding equity for employee benefit payments.

Legal Citation

Government Code, Sections 403.011, 2101.035; General Appropriations Act (GAA), Article IX, Sections 6.08 and 13.05, 88th Legislature, Regular Session.

Note

Agencies collecting earned federal funds identified in the GAA, Article IX, Section 13.10 (b), should refer to Earned Federal Funds and Indirect Cost Reimbursements to the General Revenue Fund (APS 023) (FPP A.017) for revised earned federal funds guidelines.

Legend

Background

Note: This document deals with the requirement that wage and salary funding sources also pay for related employee benefit cost, which does not preclude agencies from compliance with Benefits Proportional by Method of Finance (APS 011) (FPP A.010) requirements for proportionality of benefit cost relative to the method of finance.

Introduction

To maintain employee benefit funding equity, the Legislature requires certain collected revenue funding sources for wages and salaries to also fund related employee benefit costs. Three collected revenue sources of salary funding required to pay employee benefit cost are:

• Federal receipts.
• Interagency receipts paid from a different fund.
• Other collected receipts, including those deposited to Appropriated Fund 0001.

Employee benefit costs include:

• Retirement.
• Insurance.
• Social Security.
• Benefit Replacement Pay (BRP).

GAA, Article IX, Section 13.05

According to the GAA, Article IX, Section 13.05, agencies receiving federal employee benefit reimbursements for benefit expenditures made in relation to salaries paid from federal receipts, including federal pass-through funds, must deposit the benefit reimbursements to the appropriated fund that paid the employee benefits.

This section also states:

Reimbursements received from employee benefits paid from General Revenue Fund appropriations of other administering agencies shall be deposited to the unappropriated General Revenue Fund.

GAA, Article IX, Section 6.08 (a)

Section 6.08 (a) states:

Unless otherwise provided, in order to maximize balances in the General Revenue Fund, payment for benefits paid from appropriated funds, including “local funds” and “education and general funds” as defined in Education Code, Section 51.009 (a) and (c), shall be proportional to the method of finance, except for public and community junior colleges.

Sources of Funding Requiring Employee Benefit Reimbursement

Introduction

This section explains the circumstances when an appropriated fund must be reimbursed for benefit cost paid in relation to salaries paid from the following three types of collected revenues:

• Federal receipts.
• Interagency payments paid from a different appropriated fund.
• Other collected receipts.

Effects of Section 6.08 (a) and Section 13.05 on Federal Receipts

Federal receipts may be deposited to many appropriated funds (GR, GR Dedicated and Other Funds). The APS 001 policy applies only to situations where federal receipts are deposited to an appropriated fund, such as the General Revenue Fund or State Highway Fund 0006 that receives both state and federal receipts.

Generally, when federal funds are received, including federal pass-through funds, they are deposited to a single PCA/appropriation. Unless the federal receipts are transferred to fund benefit appropriations, when salaries are paid from the federal receipts, the related benefit cost is paid from the respective appropriated funds’ non-federal cash balance. Therefore, the benefit appropriations must be reimbursed for the cost of benefit payments related to salaries paid from federal receipts.

Sections 6.08 (a) and 13.05 require that federal reimbursements for benefit cost related to salaries paid from federal receipts be deposited to the respective appropriated fund in the benefit appropriation. GAA, Article IX, Section 13.05, also requires an agency that is reimbursed for employee benefits originally paid from the GR appropriations of another administering agency to deposit such reimbursements to unappropriated GR.

The Uniform Statewide Accounting System (USAS) reimbursement transactions discussed later in this document are intended for situations where salaries are paid from federal receipts deposited to an appropriated fund with both federal and state receipts, and federal receipts were not originally used to fund benefit appropriations.

Interagency Receipts Paid From a Different Appropriated Fund

If an agency collects interagency contract (IAC) receipts from another agency that pays from a method of finance other than GR, the recipient agency must also collect the cost of related benefits. If an agency pays salaries from interagency receipts paid from GR, then the recipient agency may draw down committed GR to cover the cost of related benefits.

Note: Agencies participating in an IAC arrangement are advised to include a clause in the agreement prescribing additional payable amounts related to funding equity for employee benefit payments (Ex: An additional percentage to be paid in addition to other billable services for agencies that intend to pay an IAC invoice from funds other than GR).

Other Collected Receipts

Section 6.08 requires that benefits be paid proportionally to the method of finance. Agencies that receive a portion of their funding from collected receipts deposited to GR and appropriated through agency or Article IX riders (gifts, grants, appropriated receipts, etc.) must report the actual amount of such receipts in Section I of the Benefits Proportional by Method of Finance Report Form (Excel). This ensures that the available methods of finance include the actual amounts collected, instead of the estimates published in the GAA, to determine the proportional shares of employee benefit cost.

Required USAS Transactions for Employee Benefit Reimbursements

Introduction

When the benefit expense is reimbursed, transactions must be processed in USAS to deposit or transfer the reimbursed amount to the following benefit appropriations, salary-related appropriations and direct strategies (only for retiree insurance):

• Social Security (91142).
• BRP (23102).
• ORP (97646).
• Retirement (90327).
• Insurance (99327).
• Retiree Insurance (from direct strategies).
• Article IV agencies eligible for JRS-2 retirement (94327).
• LECOS Retirement (91327).

Transferring or depositing reimbursement cash to the benefit appropriation replaces the original benefit committed budget funding with reimbursement cash, which reimburses the appropriated fund that paid the benefit expenditure.

All reimbursements are deposited or transferred to the appropriated fund from which salaries and benefits were paid. To process employee benefit reimbursements, agencies must first determine the separate reimbursement amounts for the benefit appropriations listed above.

Once the separate reimbursement amounts have been determined, the reimbursement transactions identified in the “Agency requirements” section must be processed.

Comptroller’s Office Requirements

As requested by agencies, the Comptroller’s office adds revenue object code(s) of the reimbursing revenue(s) to the Appropriation Number Profile (20) for the following appropriations:

• Social Security (91142).
• BRP (23102).
• ORP (97646).
• Retirement (90327).
• Insurance (99327).
• JRS-2 retirement (94327).
• LECOS Retirement (91327).

The Comptroller’s office monitors agency appropriations for compliance with this document.

Agency Requirements

All agencies will process benefit reimbursement transactions to the respective benefit appropriations for:

• Social Security (91142).
• BRP (23102).
• ORP (97646).
• Retirement (90327).
• Insurance (99327).
• JRS-2 retirement (94327).
• LECOS Retirement (91327).

Retiree insurance reimbursements deposited into GR will be transferred from direct strategies to agency 902.

Agencies may deposit benefit reimbursements directly to benefit appropriations using only T-codes 195, 971 or 273. T-codes 179 and 970 should not be used since they also increase appropriation budgets.

USAS and CAPPS Transaction Coding

Introduction

Article IX, Section 8.02, requires reimbursement revenue to be transferred or deposited to the current appropriation year (AY). Additionally, Article IX, Section 13.05, requires federal reimbursements to be credited to the fund from which the expenditure was originally made.

The following transactions presume that the cash reimbursements of previously paid benefit expenditures were originally deposited to a non-benefit appropriation. Benefit reimbursement deposit T-codes vary depending on the source of reimbursement (interagency receipts, federal, federal pass-through, etc.); however, a revenue transfer is processed in all instances.

Current Fiscal Year Revenue Adjustment

Reimbursements should be deposited directly to the benefit appropriation with T-code 195.

For agencies that deposit the benefit reimbursement revenue to other appropriations, the revenue must be transferred to the benefit appropriation where the expenditure was made. Process a journal transaction for the revenue transfer in USAS on document type J, batch type 2 using the coding block below.

T-Code/Title	Appropriation Number	COBJ	Appropriated Fund/ Agency Fund/PCA
406/Rev Transfer Out	Where federal reimbursement, interagency receipt or excess funding was deposited	Original Revenue Object	Determined by Agency
405/Rev Transfer In	23102 (BRP) 90327 (RET) 91142 (SOC. SEC.) 94327 (RET – Art. IV, JRS2) 99327 (INS) 97646 (ORP) 91327 (LECOS)	Original Revenue Object	Determined by Agency

Note: If the interagency receipt benefit reimbursement was deposited with T-code 970 or excess funding was deposited with
T-code 179 — both of which increase budget — a journal transaction using T-codes 179R/195 must be processed to reduce the budget.

Previous Fiscal Year Revenue Adjustment

If the benefit reimbursement is for the prior fiscal year, use T-codes 466 and 465 and backdate to 08-31-XX for processing all types of benefit reimbursements. Backdating of transactions in GR can only be processed until the GR Reconciliation spreadsheet is finalized. After finalization, only the current fiscal year adjustment previously described may be used. To backdate to 8-31-XX, enter a document type J, batch type 5 in USAS using the coding block below.

T-Code/Title	Appropriation Number	COBJ	Appropriated Fund/ Agency Fund/PCA
466/Accrued Rev Transfer Out	Where federal reimbursements, interagency receipt, or excess funding was deposited	Original Revenue Object	Determined by Agency
465/Accrued Rev Transfer In	23102 (BRP) 90327 (RET) 91142 (SOC. SEC.) 94327 (RET - Art. IV, JRS2) 99327 (INS) 97646 (ORP) 91327 (LECOS)	Original Revenue Object	Determined by Agency

Note: Adjustment transactions may be needed if the original receipt increased budget. T-codes 179R/195 must be processed to reduce the budget and processed with a current fiscal year date.

Additional Adjustments by Fund and Appropriation Type

Budget Adjustment for Committed Appropriations Financed by Appropriated Fund 0001 (GR)

Since the reimbursement cash is replacing the original benefit committed budget funding for Appropriated Fund 0001 appropriations, an entry must be made to adjust the revenue budget for each benefit appropriation using the following budget revision coding in USAS on a document type A, batch type 1. Due to USAS sequence processing, enter the coding block below in USAS the day after the revenue adjustment transactions.

T-Code/Title	Appropriation Number	COBJ	Appropriated Fund/ Agency Fund/PCA
009/Adjust Revenue Budget	23102 (BRP) 90327 (RET) 91142 (SOC. SEC.) 94327 (RET – Art. IV, JRS2) 99327 (INS) 97646 (ORP) 91327 (LECOS)	Original Revenue Object	Determined by Agency

Cash Adjustment for Committed Appropriations Financed by Funds Other Than GR

Since the reimbursement cash is replacing the original benefit committed budget funding, an entry must be made to adjust the cash balance for each benefit appropriation using the following journal transaction coding in USAS on a document type J, batch type 2. Due to USAS sequence processing, enter the coding block below in USAS the day after the revenue adjustment transactions if applicable.

T-Code/Title	Appropriation Number	COBJ	Appropriated Fund/ Agency Fund/PCA
404/Cash Transfer Out	23102 (BRP) 90327 (RET) 91142 (SOC. SEC.) 94327 (RET – Art. IV, JRS2) 99327 (INS) 97646 (ORP) 91327 (LECOS)	7968	Determined by Agency
403/Cash Transfer In	00000	3968	Determined by Agency

Cash Adjustment for Collected Appropriations Financed by Funds Other Than GR

Since the reimbursement cash is replacing the original funding for collected budget of the benefit appropriations, an entry must be made to return the cash balance for each benefit appropriation back to the original appropriation from which the cash funding was transferred. Use the following journal transaction coding in USAS on a document type J, batch type 2.

T-Code/Title	Appropriation Number	COBJ	Appropriated Fund/ Agency Fund/PCA
404/Cash Transfer Out	23102 (BRP) 90327 (RET) 91142 (SOC. SEC.) 94327 (RET – Art. IV, JRS2) 99327 (INS) 97646 (ORP) 91327 (LECOS)	7968	Determined by Agency
403/Cash Transfer In	Determined by Agency	3968	Determined by Agency

Retiree Insurance Reimbursements to Appropriated Fund 0001

In USAS, use RTI 103973, vendor number 39029029020000 and the following coding block to transfer retiree reimbursements appropriated in Fund 0001 to agency 902.

T-Code/Title	Appropriation Number	COBJ	Appropriated Fund/ Agency Fund/PCA
475/Accrued Transfers Out w/Liquid	Determined by Agency	7973	Determined by Agency

Note: For retiree reimbursements to funds other than Appropriated Fund 0001, deposit amounts using T-code 195 to unappropriated revenue for the appropriated fund for which the reimbursement is received.