[pps-news] UCRP Supplemental Assessment Rate

[Gabriel Nwandu]

August 22, 2011

Dear PPS USER,
The Benefits Rate table (http://accounting.ucr.edu/payroll/benefits_cal.html) has been updated with the new 'UCRP Supplemental Assessment Rate' of 0.68 percent effective August 2011 payroll earnings.  The new rate will appear on the Distribution of Payroll Expense (DOPE) report (PPP5302) under existing column GSTR/IAPOF, modified to accommodate the new benefit.  The new column is now labeled GSTR/IAPOF/UCRPSU.  UCRP supplemental assessment will be calculated on the employee's combined earnings for the month subject to UCRP.

Here are the new benefits account codes:
400410 - UCRP Supplemental Assessment (BC20)
600410 - UCRP Supplemental Assessment (BC30)

Background:
At their September 2010 meeting, The Regents approved increasing both UCRP employer and employee contributions for fiscal years beginning 2011 and 2012, based on recommendations from the President to mitigate UCRP's growing unfunded liability. Effective July 1, 2011, the employer UCRP contribution increased to 7 percent of covered compensation of all active UCRP members.

Given the scheduled UCRP contribution rates, total employer and employee contributions to UCRP were still substantially below the Annual Required Contribution (ARC). Consequently, at their special December 2010 meeting, The Regents delegated additional authority and discretion to the President to fund the UCRP ARC for FT2010-11 & FY2011-12.

Subsequent to the 2011 March Regents meeting, $1.1 billion was transferred to UCRP to close the funding gap for FY2010-11 and approximately $936 million has been transferred in July, for the FY2011-12 modified ARC amount. The $1.1 billion transfer was achieved by advancing funds from the Short-term Investment Pool (STIP) and creating a note receivable that will be paid back through campus assessments over a 30-year amortization period. The interest and principal repayment for this Note is to be reset each year and is currently set at 2.57 percent interest for FY2011-12. The $936 million transfer will be achieved through external financing. The interest rate and principal repayment for the external financing is also to be reset each year and is expected to be approximately 1.50 percent interest for FY2011-12.

Please contact me if you have any questions/concerns.

Thank you
------------------------
Gabe Nwandu
Director of Payroll | Tel: 951-827-1956 | Fax: 951-827-3314
University of California, Riverside | Accounting Services Department | Riverside, CA 92521
E-mail: gabe.nwandu at ucr.edu<mailto:gabe.nwandu at ucr.edu> | Internet:  www.accounting.ucr.edu<http://www.accounting.ucr.edu>

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