University of Oregon

Blended OPE

 

Blended OPE Overview

 

Effective July 1, 2017 University of Oregon will establish Blended OPE rates for each of the major employee groups at the campus based on prior year actual expenses. These Blended OPE rates will be reviewed and approved annually by the Department of Health and Human Services. OPE expenses (health plan expenses, retirement plan expenses, taxes and workman's compensation expenses, among others) are determined by applying the appropriate percentage based on employee category to actual salary expense. The OPE rate will be charged against salaries less an Average Leave Adjustable rate, and excluding some pay types (Excluded Earn Codes). The University will be moving “leave” from being paid by the unit, to being charged to a central pool. 

Timeline

  • Summer 2015 – OPE workgroup recommended moving to a Blended OPE rate structure to CFO
  • Proposal Packet based upon FY16 data and proposed rates for FY17 and FY18 with proposal due to Federal Government (DHHS) by January 2017
  • Federal Government reviews proposal in the spring and informs institute once approved
  • January and February, 2017 – Budget Manager trainings and meetings to discuss all aspects of Blended OPE rate structure and process
  • February, March and April, 2016 – Banner System testing
  • July 1, 2017 – "Go Live" with Blended OPE structure in HRIS payroll and FIS financial systems

 

Benefits Included in the Blended OPE Rates

  • Athletics rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation, all leave.
  • 12mth Faculty/All OA's (Faculty/Staff A) rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation, all leave.
  • 9mth Faculty/Exec (Faculty/Staff B) rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation, 9 month faculty sick leave only, Executive skill code 10 all leave.
  • Summer (Faculty/Staff C) rate includes: Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation.
  • Classified Service rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation, all leave.
  • Classified Skilled/Clerical rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation, all leave.
  • Classified Technical rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement, Unemployment Insurance, Workers Compensation, all leave.
  • Retirees-Temps rate includes: Medical, Dental, Vision, Life, LTD Bus Pass, Mass Transit Tax, FICA, Retirement (Temp Staff only based upon hours worked), Unemployment Insurance, Workers Compensation, Sick Leave
  • Students (Hourly and Graduate Employees, formerly GTFs) rate includes: Mass Transit Tax, FICA, Unemployment Insurance, Workers Compensation, and Sick Leave.

 

How were the Blended OPE rates developed?

The University of Oregon (UO) uses multiple blended OPE rates developed under the requirements of the Department of Health & Human Services, Cost Allocation Services. Starting July 1, 2017, UO will begin using nine separate blended OPE rates for different categories of employees based on prior year actual costs. To arrive at these employee categories, a review was done of the OPE eligibility for each class of UO employees. Employees are grouped into nine categories of blended OPE eligibility, which are Athletics, 12mth Faculty/All OA's (Faculty/Staff A), 9mth Faculty/Execs (Faculty/Staff B), Summer (Faculty/Staff C), Classified Service, Classified Skilled/Clerical, Classified Technical, Retirees-Temps, Students.

A Blended OPE rate for each employee category is calculated by the development of a pool of OPE actual costs (the numerator) and of a salary and wage actual base (denominator). The pool consists of costs for the OPE provided to a particular category of employees. When the pool is divided by the base applicable to that category of employees, a rate results; this rate represents the percentage that must be added to employees’ salary and wage dollars. It is important to note that for the Fiscal Year 2018 all Employee Leave is being reduced from the salary and wage base (denominator) and being included into the cost of OPE (the numerator). Going forward Leave will be included in the applicable OPE rate based upon historical actuals within each pool.

The proposed blended OPE rates for Fiscal Year 2018 are noticeably higher than in previous years for several reasons. First, the new blended rates contain the average leave taken (vacation, sick, comp time, etc.) within each rate group; this accounts for the majority of the increase in OPE. In addition to the inclusion of leave, the proposed rates also include known and projected salary increases, an increase in PEBB based upon historical averages, and a large increase in PERS for the Fiscal Year 2018. To see examples of how OPE costs will change under the new Blended Rate model, see The Transition to Blended Rates. To see how the inclusion of leave affects the Blended Rates, see our FAQ's

 


 

How are Blended OPE Costs calculated?

 

The total cost of OPE is calculated using the following steps;

1. Reduce the Gross Salary by the relevant Average Leave Adjustable rate and any compensation from Excluded Earn Codes to calculate the Adjustable Base Salary.

          Adjusted Base Salary = Gross Salary - Average Leave Adjustable rate - Excluded Earn Codes

2. Multiply the Adjustable Base Salary by the applicable Blended OPE rate. This returns the OPE Cost of the employee.

          OPE Cost = Adjusted Base Salary * Blended OPE rate

3. Add the Adjusted Base Salary to the OPE Cost to arrive at the Total Cost of the Employee, Salary and OPE.

          Total Cost of Employee = Adjusted Base Salary + OPE Cost

 

For questions regarding calculating OPE Cost, or for more detail regarding this method, see Calculations Guidance under the "Related Items" menu at the top of this page.

For guidance regarding the budgeting of OPE on sponsored project (grant) proposals, please refer to the Quick Reference Card or contact your Pre-Award Sponsored Project Administrator.

For any questions regarding terminology please see the Glossary under the "Related Items" menu at the top of this page

 

What is the Average Leave Adjustable rate?

The Average Leave Adjustable rate is not to be confused with the Blended OPE rate; it is simply the percentage that an employee's Gross Salary is reduced (not including Excluded Earn Codes) in order to calculate the Adjusted Base Salary of the employee.

 

Blended OPE, Banner Account Codes, and Average Leave Adjustable Table

Below you will find the Blended OPE rate, the applicable Banner Account Code, and Average Leave Adjustable Rates by Employee Group. These are current Fiscal Year 2018 rates.

Employee Group

Description

Banner Account Code

Average Leave Adjustable Rate

Fiscal Year 2018 Proposed Blended OPE Rate

Athletics

All Athletic department employees.

10921

4.23%

43.8%

12mth Faculty/All OA's (Faculty/Staff A)

The Faculty/Staff A Employee Class consists of all salaried staff employees, and faculty members that are on a twelve month schedule .5+ FTE.  Most of these employees are all eligible for sick leave and vacation leave.

10922

10.34%

72.3%

9 mth Faculty/Exec (Faculty/Staff B)

The Faculty/Staff B Employee Class consists of faculty members that are on a nine month schedule and 12 mo <.5 FTE that are sick leave eligible but not eligible for vacation leave, and employees coded as Executives.

10923

Faculty: 0%

Execs: 8.3%

48.3%

Summer (Faculty Staff C)

The Faculty/Staff C Employee Class consists of all employees excluding students on summer term employment.

10924

0.00%

30.7%

Classified Service

The Classified Service Employee Class consists of hourly employees that are coded as service/maintenance such as groundskeepers, custodians, laborers, and food service workers.

10925

12.29%

108%

Classified Skilled/Clerical

The Classified Skilled/Clerical Employee Class consists of hourly employees that are coded as skilled and clerical.

10926

11.77%

93.6%

Classified Technical

The Classified Technical Employee Class consists of hourly employees that are coded as technical and professional.

10927

10.81%

79.6%

Retirees-Temps

The Retirees-Temps Employee Class consists of retired University of Oregon officers/teachers/researchers and temporary support staff employees. 

10928

1.21%

25.7%

Student

The Students Employee Class consists of graduate employees (formerly GTFs), fellows, and undergraduate student employees.

10929

0.1%

2.5%

 

 


 

Future considerations for Blended OPE

 

Will OPE rates change?

Yes, we will have new Blended OPE rates each fiscal year. Blended OPE rates for each employee group will be reviewed annually to ensure an accurate allocation and increased benefit costs. Any over or under recovery of actual OPE costs will be adjusted for each rate in the next rate calculation plus any additional cost increases.

 

Why change OPE rates?

Overall, this methodology for calculating and charging OPE is considered a best practice at leading research institutions. Several large research universities have already adopted this practice including, University of New York, Emory University, University of Florida, Arizona State University, University of California Davis, Auburn University, Vanderbilt University, and Clemson University.

This new Blended OPE methodology will facilitate planning, budgeting, and other tasks in the ongoing operations of the campus. It will simplify and improve the preparation, administration, and monitoring of budgets and accounting for OPE expenditures; provide for consistent accumulation and allocation of OPE expenses to all functional activities as required by Cost Accounting Standards 501 and 502, and OMB Uniform Guidance; allow the university the opportunity to recover OPE costs from all funding sources.

 

Estimated Projections For Future Years

The FY18 Blended OPE rates were formulated based upon a combination of FY16 actual data and a combination of both projected and known increases in salary and OPE expenses. This includes but is not limited to: Collective Bargaining Agreements, projected Oregon CPI, PERS announcements, and other historical data.

Some of the assumptions utilized in our rate projections are listed below:

  • 13% - 15% increase in PERS every other year
  • Salary increases of 2% - 5.6% every year based upon historical averages, CBAs, and Oregon CPI.
  • Annual 4% increase in Health Insurance based upon 10 year historical average

Disclaimer: The rates for all fiscal years ocurring after FY18 are only projections at this time. It is likely that these rates will adjust as more up to date information is available. If you have any questions regarding these projections, please contact your BRP Analyst or email BRP at budget@uoregon.edu.

Employee Group

Fiscal Year 2019

Fiscal Year 2020

Fiscal Year 2021

Fiscal Year 2022

Athletics*

TBD %

TBD %

TBD %

TBD %

12mth Faculty/All OA's (Faculty/Staff A)

72.8%

76.7%

77.3%

81.7%

9 mth Faculty/Exec (Faculty/Staff B)

48.6%

52%

52.3%

56.1%

Summer (Faculty Staff C)

30.7%

33.6%

33.6%

36.8%

Classified Service

107.2%

110.3%

109.5%

113.2%

Classified Skilled/Clerical

93%

96.4%

95.8%

99.8%

Classified Technical

79.2%

82.6%

82.2%

86.3%

Retirees-Temps

27.4%

28.4%

31.3%

32.5%

Student

2.6%

2.6%

2.8%

2.8%

*Athletics will be calculated on an annual basis due to fluctuations in salaries.


Last update: Apr 19th, 2017 @ 13:54:25 PDT