Why is PTO paid on the grant, rather than charged as a fringe benefit?
Rice’s annual fringe benefit agreement with the Federal government addresses the way Rice charges paid absences versus fringe benefits. Excerpts below are from our FY24 agreement.
TREATMENT OF FRINGE BENEFITS:
The fringe benefits are charged using the rate(s) listed in the Fringe Benefits Section of this Agreement. The fringe benefits included in the rate(s) are listed below.
TREATMENT OF PAID ABSENCES:
Vacation, holiday, sick leave pay and other paid absences are included in salaries and wages and are claimed on grants, contracts and other agreements as part of the normal cost for salaries and wages. Separate claims are not made for the cost of these paid absences.
FRINGE BENEFITS:
FICA, Retirement, Disability, Life Insurance, Tuition Remission, Worker’s Compensation, Unemployment Insurance, Health Insurance, Sabbaticals, Parking, Employee Assistance, Child Care, Medical Administration, Flu Shots, Financial Planning, Wellness Program.
The rationale for this treatment is that the fringe benefit rate would be much higher if the costs for paid absences were included.
When an employee is paid on a grant and they leave Rice, does their vacation payout go on the award?
Yes, according to Rice Policy 405 Paid Time Off, III.D., “Payout of PTO at Termination”, the payout of unused PTO to a staff member (other than a postdoctoral research associate as described in IIIA above) with at least six months of continuous benefits-eligible service who terminates from Rice for any reason will be no more than one year’s accumulation based on FTE and years of service (e.g., a maximum of 26 days, or 208 hours, for a full-time staff member with fifteen years of service.) Staff members on research grants are eligible for the payout of unused PTO. However, if the grants from which they are paid do not allow the payout of terminal PTO, principal investigators and departments must identify another appropriate source of funds for the payout.”
Additional background:
The same applies if a person changes employment types, such as staff becomes faculty. In this case, different benefits and policies apply, so the prior assignment is terminated in HR and the person is treated as a new hire. Therefore, accrued PTO is paid out.
Rice’s DS-2 (Cost Accounting Standards Board Disclosure Statement) Part V, 5.1.0 is consistent with Policy 405. Excerpt below:
Method of Charging Leave Costs. Do you charge vacation, sick, holiday and sabbatical leave costs to sponsored agreements on the cash basis of accounting (i.e., when the leave is taken or paid), or on the accrual basis of accounting (when the leave is earned)? (Mark applicable line(s))
A. _X_ Cash
B. ___ Accrual
