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Appendix A
Salary and Vacation Accrual Example – FY05
Executive Summary
This document explains the relationships between salary, vacation accrual and fringe
benefits, how they are calculated and how they appear on Expenditure Detail Reports
beginning in Fiscal Year 2005. For a description of the presentation during FY2004 please
see Appendix B: http://ora.stanford.edu/expenditure/App_B_Vacation_Accrual_Ex.doc
At the request of end-users we present salary and vacation "gross", so that total salary
appears in the appropriate Salary Expenditure Type, and an offsetting credit appears in
the Vacation Used Expenditure Type when the individual is on vacation. At that time, the
central Vacation Accrual account actually pays the employee's salary. Likewise, the
Vacation Accrual charge is separate from the Fringe Benefit burden. In summary, the
salary charges, vacation credits and burdens function as follows:
+ Salary (excluding overtime) + Salary (including overtime)
– Vacation Used (credit) - Vacation Used (credit)
= Net Salary + Vacation Accrual Charge
x Vacation Accrual Rate = Amount subject to Fringe
x Fringe Benefit Rate
= Vacation Accrual Charge
= Fringe Benefit Charge
For Fiscal Year 2005, we have improved the grouping of the vacation-related codes. The
vacation accrual itself has been moved from the Fringe Benefit section and is now
summarized along with Vacation Used in a “Net Vacation” category, which is part of total
salary.
We have also separated the Vacation Used and Beginning Vacation charges for Academic
staff from other Exempt staff. These are included in the Net Vacation category. At this
time we are unable to separate the Vacation Accrual charge for the Academic staff from
other Exempt staff, and therefore we have not moved all of the Academic related
vacation Expenditure Types “closer” to the actual salary of the research and academic
staff and staff physicians who earn vacation.
January 31, 2005 – 1
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Appendix A
This document contains the following sections:
Burden Calculations and Dates
Example Assumptions
A Pay Period Where No Vacation Was Used
Salary
Vacation Accrual Charge
Fringe Benefits
A Pay-Period Including Vacation Time
Salary
Vacation Used Expenditure Type
Vacation Accrual Charge
Fringe benefits
Expenditure Detail Report – Pulling it Together for a Month
Multiple PTA Allocation
Paying for the Beginning Vacation Accrual Balance
Expenditure Detail Report – A Month with More Activity
In addition, please see the Excel Spreadsheet “sal_vac_codes.xls” for a list of all the
Salary, Vacation and Fringe Expenditure Types and Categories. This document contains the
vacation and fringe rules for each of the codes, notations of whether the Expenditure
Type can be used in iJournals and some notes about what is different for FY2005.
The spreadsheet is available online at
http://www.stanford.edu/dept/ORA/training/expenditure/sal_vac_codes.xls
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Appendix A
Burden Calculations and Dates
Fringe benefits and the vacation accrual charge are types of "burdens". A burden is an
automatic charge calculated as a percentage applied to the relevant base (in this case,
salary). Burdens are always “system-generated” entries and may not be changed via an
iJournal. When making an entry to transfer salary and vacation used, the system will
automatically transfer the corresponding vacation accrual and fringe benefits. The way the
vacation and fringe benefit charges are calculated is explained below. However, unlike our
legacy system where burdens were calculated all at once during the closing of a month, in
Oracle Financials the burdens are calculated more frequently.
The program calculates the appropriate burden based on the transactions that have been
posted as of the date the burden process is run. The expenditure-item date presented for
the burden itself is the month of the burden (for example, DEC-2004), rather than a
specific date, so that all the burdens for the month are rolled up together. You can
recalculate the total burden posted to the Expenditure Type (vacation accrual or fringe)
based on the totals posted to the Expenditure Types included in the base for the month.
Example Assumptions
The following example assumptions will be used for all pay periods being reviewed:
John Doe earns $2,000 per pay-period ($48,000 annual salary). John is a non-exempt
employee, and is "regular benefits eligible" (RBE). John's work assignment Org in Labor
Distribution is ABCD, which will print after his name on the salary expense line. The Org
Code could assist you in identifying John's Labor Scheduler in case changes are needed to
his salary allocation in the future. John’s salary is allocated to one PTA in Labor
Distribution.
Jane Smith is another non-exempt employee in the department. She earns $2,500 per pay-
period ($60,000 annual salary). Jane’s salary is allocated to three PTAs in Labor
Distribution. Effective October 1, part of her salary is charged to the same PTA as John’s.
John leaves Stanford on October 15, and his “beginning vacation accrual balance” as of
9/1/03 must be funded. John had 100 hours of earned, but unfunded vacation prior to
Stanford’s implementation of the financial vacation accrual system. This must be funded
when employees transfer departments or leave Stanford, although departments can
choose to fund it earlier if they wish.
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Appendix A
A Pay Period Where No Vacation Was Used
Salary
On September 22, John was paid the salary he earned between September 1 - 15. Labor
Distribution will process the allocation of his salary costs (100% to one PTA in our
example) as an expense in September.
Salary $2,000.00
This will appear on the September Expenditure Detail Report as follows:
SOURCE ACCT DEPT REF EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
LDACT SAL 12345678-0 15-SEP-2004 2,000.00 51525 Doe, John - ABCD
2,000.00 51525 Total: Doe, John - ABCD
2,000.00 51525 RBE NON EXEMPT
2,000.00 51502 SLRY WGS RBE
STAFF
As you can see, there is a subtotal based on the Dept-Ref field (Employee ID) in the
current month and the year-to-date actuals columns to facilitate review. In this example,
John is the only employee, but when there are more this is a very useful feature.
Vacation Accrual Charge
In addition, a charge for the vacation he earned is also recorded as an expense in
September. Vacation earned is calculated based on John’s salary and the appropriate
average rate for his employee type (for FY2005, the rates are 8.8%for Exempt and 7.4%
for Non-Exempt and Bargaining Unit). It is calculated as follows:
Salary $2,000.00
Vacation Rate X 7.4%
Vacation Accrual Charge $ 148.00
This will be included on the September Expenditure Detail Report as follows:
SOURCE ACCT REF DEPT EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
BRDN FY05 0.07400 SEP-2004 148.00 51561 OB
0.07400 148.00 51561 Total: OB
148.00 51561 VAC ACCRUAL NON
EXEMPT
148.00 51552 SLRY WGS NET
VACATION STAFF
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Appendix A
Note that the actual rate is displayed in the Dept Ref column, while the "burden schedule
name" (OB, for Operating Budget in this example) appears in the Description column. The
Exp-Item Date reflects the month, rather than on the last work day of a pay-period.
Effective for Fiscal Year 2005, the vacation accrual expenditure type is presented as part
of the “net vacation” category. John took no vacation during this pay period, so only his
accrual appears in this category. The total salary is reflected as salary paid, less vacation
used (none in this example) plus the vacation accrual. This treatment properly shows that
vacation is part of salary.
This will appear on the September Expenditure Detail Report as follows:
SOURCE ACCT REF DEPT EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
2148.00 SALARY
Fringe Benefits
Just as we build up a fund with which to pay John's vacation pay, we also need to build up
funding to pay for his fringe benefits while he is on vacation. Therefore, fringe benefits
(regular fringe and TGP – Tuition Grant Program) are applied to the subtotal of salary plus
the vacation accrual. They are calculated as follows:
Salary $2,000.00
Vacation Accrual Charge 148.00
Charges subject to Fringe 2,148.00 $2,148.00
Fringe Rate X 30.5% TGP Rate X 1.2%
Fringe Charge $ 655.14 TGP Charge $ 25.78
These transactions will appear on his PTA Expenditure Detail Report as follows:
SOURCE ACCT REF DEPT EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
BRDN FY05 0.30500 SEP-2004 655.14 51750 OB
0.30500 655.14 51750 Total: OB
655.14 51750 FRINGE BENEFITS
RBE
BRDN FY05 0.01200 SEP-2004 25.78 51770 OB
0.01200 25.78 51770 Total: OB
25.78 51770 FRINGE BENEFITS
TGP
680.92 FRINGE
The total for John’s salary, vacation accrual and fringe is $2,828.92.
January 31, 2005 – 5
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Appendix A
A Pay-Period Including Vacation Time
Salary
In our next example, John receives both Salary and time-off earnings. On October 7, John
was paid the salary he earned for the September 16 – 30 pay period. During the
September 30 pay-period, John's time records reflected the following:
Sick 1 day
Personal Time Off 1 day
Vacation 3 days
Hours worked 6 days
Kronos and PeopleSoft pass all of these "Earning Codes" to Oracle. The dollar am ount
allocated for each earning code for a full-time employee is calculated as:
(Annual salary/2080 hours) x (days x 8 hours)
When an employee’s salary includes more than one Earning Code the Account Reference on
the Expenditure Detail Report will indicate “Multiple”. The total amount charged to the
PTAEO for the pay period will be shown on the Expenditure Detail Report. Other detailed
Labor Reports show amounts related to each Earning Code individually, as well as displaying
the total for the PTAEO.
John’s salary will appear on the September Expenditure Detail Report as follows:
SOURCE ACCT DEPT REF EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
LDACT Multiple 12345678-0 30-SEP-2004 2,000.00 51525 Doe, John - ABCD
2,000.00 51525 Total: Doe, John - ABCD
2,000.00 51525 RBE NON EXEMPT
2,000.00 51502 SLRY WGS RBE
STAFF
Vacation Used Expenditure Type
John's pay for his three days of vacation ($553.85) is actually paid by the central vacation
liability fund. This reserve is built up with the vacation accrual charges and is held
centrally. John's regular PTA receives a credit back for this portion of his salary. This
credit is recorded in the "Vacation Used" Expenditure Type.
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Appendix A
In September, the Vacation Used Expenditure Type will appear as follows on the
Expenditure Detail Report:
SOURCE ACCT DEPT REF EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
LDACT VCR 12345678-0 30-SEP-2004 (553.85) 51560 Doe, John - ABCD
(553.85) 51560 Total: Doe, John - ABCD
(553.85) 51560 RBE NON EXEMPT
VAC USED
The “VCR” in the Acct Ref column indicates that the entry is the Vacation Credit. Note
that if an iJournal is needed to transfer salary during a pay-period that included vacation,
the system will not automatically transfer the corresponding vacation credit. You must
include the vacation credit as part of your iJournal.
Vacation Accrual Charge
Once again, the charge for the vacation John earned is also recorded as an expense in
September. It is calculated as follows:
Salary $2,000.00
Vacation Credit (553.85)
Net Salary $1,446.15
Vacation Rate X 7.4%
Vacation Accrual Charge $ 107.02
This will be included on the September Expenditure Detail Report as follows:
SOURCE ACCT REF DEPT EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
BRDN FY05 0.07400 SEP-2004 107.02 51561 OB
107.02 51561 Total: OB
107.02 51561 VAC ACCRUAL NON
EXEMPT
For the pay-period, the vacation effect is as follows:
Vacation Used $(553.85)
Vacation Accrual 107.02
Net $(446.83)
January 31, 2005 – 7
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Appendix A
The total effect of vacation and the total salary will be included on the September
Expenditure Detail Report as follows:
SOURCE ACCT REF DEPT EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
(446.83) 51552 SLRY WGS NET
VACATION STAFF
1,553.17 SALARY
Fringe Benefits
Fringe benefits (regular fringe and TGP – Tuition Grant Program) are applied to the
subtotal of the net salary plus the vacation accrual. They are calculated as follows:
Net Salary $1,446.15
Vacation Accrual Charge 107.02
Charges subject to Fringe 1,553.17 $1,553.17
Fringe Rate X 30.5% TGP Rate X 1.2%
Fringe Charge $ 473.72 TGP Charge $ 18.64
These transactions will be included on his PTA Expenditure Detail Report as follows:
SOURCE ACCT REF DEPT EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
BRDN FY05 0.30500 SEP-2004 473.72 51750 OB
473.72 51750 FRINGE BENEFITS
RBE
BRDN FY05 0.01200 SEP-2004 18.64 51770 OB
18.64 51770 FRINGE BENEFITS
TGP
492.36 FRINGE
The total for John’s salary, vacation accrual and fringe is $2,045.53 for this pay-period,
as compared to the total charge of $2,828.92 when John used no vacation in the first pay -
period in September.
January 31, 2005 – 8
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Appendix A
Expenditure Detail Report – Pulling it Together for a Month
The following example shows how John's salary for the entire month of September
appears on his PTA Expenditure Detail Report. Burden calculations for the month are
presented at a summary level. We have inserted references and formulas in the
"Department Reference" and "Expenditure Item Date" columns to aid in understanding the
calculations:
SOURCE ACCT DEPT REF EXP-ITEM SEP-2004 CODE DESCRIPTION
REF DATE ACTUALS
LDACT SAL 12345678-0 15-SEP-2004 2,000.00 51525 Doe, John - ABCD
LDACT Multiple 12345678-0 30-SEP-2004 2,000.00 51525 Doe, John - ABCD
12345678-0 4,000.00 51525 Total: Doe, John - ABCD
A1 (A = Salary 4,000.00 51525 RBE NON EXEMPT
from Labor
Distribution) 1
LDACT VCR 12345678-0 30-SEP-2004 (553.85) 51560 Doe, John - ABCD
12345678-0 (553.85) 51560 Total: Doe, John - ABCD
B (B= Vacation (553.85) 51560 RBE NON EXEMPT
Credit from VAC USED
Labor Distrib)
BRDN FY05 0.07400 SEP-2004 255.02 51561 OB
0.07400 255.02 51561 Total: OB
C [C=rate x 255.02 51561 VAC ACCRUAL
(A+B)] NONEXEMPT STAFF
D (D = B+C) (298.83) 51552 SLRY WGS NET
VACATION STAFF
E (E= A+D) 3,701.17 SALARY
BRDN FY05 0.30500 SEP-2004 1,128.86 51750 OB
0.30500 1,128.86 51750 TOTAL: OB
F (F = rate x E) 1,128.86 51750 FRINGE BENEFITS
RBE
BRDN FY05 0.01200 SEP-2004 44.42 51770 OB
0.01200 44.42 51770 TOTAL: OB
G (G = rate x E) 44.42 51770 FRINGE BENEFITS
TGP
H (H = F + G) 1,173.28 FRINGE
I (I = E + H) 4,874.45 TOTAL SALARIES AND
FRINGE
1
References and formulas presented to aid in understanding calculations
January 31, 2005 – 9
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Appendix A
Multiple PTA Allocation
Let’s consider what would happen if there was another employee, Jane Smith, who was paid
from more than one PTA, i.e., she had more than one Labor Schedule line for the pay
period. PTA 1010101-1-AAAAA is the same PTA to which John’s salary is charged, and 20%
of Jane’s salary is charged there beginning October 1. Assume Jane recorded three
vacation days in Kronos during the second pay period in October. The value of these
vacation days is $692.31 ($60,000/2080 * 24).
Jane has the following Labor Schedule:
Project Task Award Exp Type Org %
1010101 1 AAAAA 51525 ZZZZ 20
1010102 1 BBBBB 51525 ZZZZ 60
1010103 1 CCCCC 51525 ZZZZ 20
Jane’s total earnings are distributed as follows:
Earning Amount Project Task Award Exp Type Note
Code
Multiple 500.00 1010101 1 AAAAA 51525 #1
Multiple 1,500.00 1010102 1 BBBBB 51525 #2
Multiple 500.00 1010103 1 CCCCC 51525 #1
Total $2,500.00
#1 20% of Jane’s total earnings.
#2 60% of Jane’s total earnings
Jane’s Vacation Used Credit is distributed as follows:
Earning Amount Project Task Award Exp Type Note
Code
VCR (138.46) 1010101 1 AAAAA 51560 #1
VCR (415.39) 1010102 1 BBBBB 51560 #2
VCR (138.46) 1010103 1 CCCCC 51560 #1
Total $(692.31)
#1 20% of Jane’s vacation credit.
#2 60% of Jane’s vacation credit.
The vacation accrual charge and fringe benefits are calculated by the same methods used
in our earlier example.
January 31, 2005 – 10
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Appendix A
Paying for the Beginning Vacation Accrual Balance
The beginning vacation accrual balance “bucket” for each person is their earned but unused
vacation hours as of 9/1/03, multiplied times their salary at the date the bucket is filled.
In addition, the fringe benefit rate in effect at the date the bucket is filled is charged
against this amount. The vacation "bucket" has to have money to pay benefits as well as to
pay for salary.
John’s last day with Stanford is October 15. At that time he is paid his final pay, including
the vacation he has earned but not used. John has $500 of remaining vacation for which he
is being paid. This $500 is included in his salary, but since it is paid from the central
vacation liability fund his regular PTA will receive a vacation credit for it. If the
termination is as of the end of a pay-period and the individual is paid their last pay through
the regular payroll, as in this example, the vacation payout will be added to the regular
salary and the total will appear on the Expenditure Report with the "multiple" reference.
If the employee is paid on another day there may be two lines on the Expenditure Report,
one with an Expenditure Item Date of the check and the reference of "SOV" for Salary on
Vacation, and one for the regular salary with the "SAL" reference, dated as of the end of
the pay period.
At this point in time the beginning vacation accrual balance for John needs to be paid by
John’s department. John had 100 hours earned at 9/1/03. The amount to be funded for
these 100 hours is $2,307.69 ($48,000/2080 * 100). This amount exceeds the final
vacation pay that John receives, indicating that his PTA has borrowed from the central
vacation liability fund when John took vacation after 9/1/03. His PTA received a credit for
his salary when he was on vacation, even though it had not yet paid for it. The Termination
Form contains a section where the department indicates which PTA(s) to charge for the
beginning vacation accrual balance. John’s department is charging his beginning vacation
accrual balance to his regular PTA, 1010101-1-AAAAA. It will be charged to Expenditure
Type 51570, VAC BEGINNING BAL, and it will be charged fringe benefits. The
Controller’s Office Labor Distribution Coordinator creates the entry to record the
beginning vacation accrual balance based on the information on the Termination Form.
January 31, 2005 – 11
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Appendix A
Expenditure Detail Report – A Month with More Activity
The following example shows what October’s report would look like.
SOURCE ACCT DEPT REF EXP-ITEM OCT-2004 COD DESCRIPTION
REF DATE ACTUALS E
LDACT Multiple 12345678-0 15-OCT-2004 2,500.00 51525 Doe, John - ABCD
12345678-0 2,500.00 51525 Total: Doe, John - ABCD
LDACT SAL 22345678-0 15-OCT-2004 500.00 51525 Smith, Jane - ABCD
LDACT Multiple 22345678-0 29-OCT-2004 500.00 51525 Smith, Jane - ABCD
22345678-0 1,000.00 51525 Total: Smith, Jane - ABCD
A1 (A = Salary 3,500.00 51525 RBE NON EXEMPT
from Labor
Distribution) 1
LDACT VCR 12345678-0 15-OCT-2004 (500.00) 51560 Doe, John - ABCD
12345678-0 (500.00) 51560 Total: Doe, John - ABCD
LDACT VCR 22345678-0 29-OCT-2004 (138.46) 51560 Smith, Jane - ABCD
22345678-0 (138.46) 51560 Total: Smith, Jane - ABCD
B (B= Vacation (638.46) 51560 RBE NON EXEMPT VAC
Credit from USED
Labor Distrib)
BRDN FY05 0.07400 SEP-2004 211.75 51561 OB
0.07400 211.75 51561 Total: OB
C [C=rate x 211.75 51561 VAC ACCRUAL
(A+B)] NONEXEMPT STAFF
IJRNL ij0100100 12345678 31-OCT-2004 2,307.69 51570 Doe, John
12345678 2,307.69 51570 Total: Doe, John
D (D = Term 2,307.69 51570 VAC BEGINNING BAL
Form)
E (E = B+C+D) 1,880.98 51552 SLRY WGS NET
VACATION STAFF
F (F= A+E) 5,380.98 SALARY
BRDN FY05 0.30500 OCT-2004 1,641.20 51750 OB
0.30500 1,641.20 51750 TOTAL: OB
G (G = rate x F) 1,641.20 51750 FRINGE BENEFITS RBE
BRDN FY05 0.01200 OCT-2004 64.57 51770 OB
0.01200 64.57 51770 TOTAL: OB
H (H = rate x F) 64.57 51770 FRINGE BENEFITS TGP
I (I = G + H) 1,705.77 FRINGE
J J = F +IH) 7,086.75 TOTAL SALARIES AND
FRINGE
1
References and formulas presented to aid in understanding calculations
January 31, 2005 – 12
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