Impact on Benefits

Will employees who are on START be subject to the Plan?
Employees participating in START will be excluded from the Plan if their reduction in time under START is the same or greater than the reduction required for their respective salary band under the Plan. For example, if an employee in START currently has a 10 percent reduction in time, and is required to take an 8 percent reduction under the Plan (corresponding to 21 furlough days), the employee will be excluded from the Plan. (7/21/09)

Employees whose START reduction is less than that required under the Plan will require individual handling (for example, an employee with a 5 percent START reduction who is required to take an 8 percent reduction under the furlough Plan). , It is strongly recommended that departments work with employees in this situation to either increase the time reduction under START so that it equals or exceeds the Plan, or cancel START so that only the Plan would apply. Otherwise, the employee's payroll record will have to be adjusted manually, possibly every pay period, to affect the appropriate accrual of furlough time and corresponding salary reduction. Reports will be available to campus HR offices to identify START participants whose time reduction under START is less than the required reduction under the Plan. (Revised 8/5/09)

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Will employees be permitted to choose START before/after the proposals are put into place?
The START program continues to be in effect through June 30, 2010. Employee participation is voluntary. In all cases, participation is dependent upon the approval of the department head. (7/21/09)

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What happens if my START program ends before the Plan period ends?
START participants whose START contract expires before the close of the furlough/salary reduction Plan will subsequently be placed on the Plan. This will require manual processing. (7/21/09)

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Are there advantages to being in START rather than the Plan in terms of vacation and sick leave accrual and benefit protections?
No. The provisions for vacation and sick leave accrual and benefits, including UCRP, are intended to be the same under both programs. (7/21/09)

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Will monthly health insurance premiums be adjusted for the rest of 2009 if the furlough/salary reduction drops employees into lower medical plan salary bands?
No. (7/21/09)

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Will employees be allowed to change medical plans mid-year following implementation of the Plan?
No. There will be an opportunity to change medical plans for 2010 during Open Enrollment in November. (7/21/09)

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How will mandatory DC Plan contributions be impacted by the Plan (including UCRP members and Safe Harbor)?
Mandatory contributions to the DC Plan are a percentage of pay received by the employee, and they will be reduced as pay is reduced under the Plan. (7/21/09)

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How will voluntary contributions to the 403(b), 457(b) and DC Plan After Tax plans be impacted by the Plan?
If the voluntary contributions are being taken as a percentage of pay, they will be reduced. Contributions that are being made at a flat rate (for example, $100 per month) will not change. Employees can change their contribution elections at any time, subject to payroll and processing deadlines. (7/21/09)

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How will the senior management supplemental benefit program contributions be impacted by the Plan?
These employer contributions are a percentage of pay received by the employee, and they will be reduced as pay is reduced under the Plan. (7/21/09)

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Will employees with 403(b) Plan loans be allowed to restructure their loan terms?
No. (7/21/09)

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Are CAP accounts being considered like the University did in 1992 and 1994?
No. (7/21/09)

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Will the employee contributions to UCRP scheduled to begin in April 2010 be calculated on the employee's regular salary or the reduced salary?
Both employer contributions and employee contributions to UCRP from April 15, 2010 through August 31, 2010 (or the end of the term of the Plan) will be based on the employee's reduced salary. (8/5/09)

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Will the reduction in salary have any impact on an employee's disability or life insurance benefits?
Disability benefit payments for both the Short-term Plan and the Supplemental Plan will be based on an employee's unreduced salary and premiums will continue to be based on an employee's unreduced salary. Basic life insurance coverage will continue at the unreduced salary rate until January 1, 2010, at which time coverage will be based on the salary rate in effect at that time. Supplemental life insurance premiums and coverage will continue at the unreduced salary rate. These provisions are consistent with the START program. (8/5/09)

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Will I be able to change my Dependent Care or Health FSA election due to the furlough/salary reduction?
It depends. Generally, employees may not change or cancel elections to the Health or DepCare Flexible Spending Accounts mid-year. However, if a qualifying "status change event" occurs, IRS rules indicate that changes to participation and/or to contribution amounts during the plan year may be made. The types of qualifying status change events under the Health FSA are different from those under the Dependent Care FSA. Additionally, the specifics of the status change event determine the type of changes allowed.

For example, for the Health FSA, the only type of employment-related events which would qualify to make changes are those that affect eligibility for the plan. The University's specific furlough/salary reduction plan does not constitute a qualifying status change event since it does not impact eligibility for the plan.

For the Dependent Care FSA, there is also no qualifying status change event as a direct function of the furlough/reduction in pay since it does not impact eligibility for the plan. However, under a Dependent Care FSA, if you change work schedules (including changing from full-time to part-time status) and this results in changes to the hours of dependent care needed, a change to decrease the amount of the DepCare FSA is allowed. Similarly, if you change from one dependent care provider to another, you may change your election to increase or decrease the amount to match the new arrangement. Or, if you change to in-home dependent care, the election may also be changed (or cancelled if the new arrangement is for free care).

Also, remember that both the Health and DepCare FSA plans include a "grace period" — this means you can use 2009 contributions for expenses incurred during the grace period from January 1 — March 15, 2010. As always, there will be an opportunity to enroll for 2010 during Open Enrollment in November. (Revised 9/15/09)

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Am I covered by workers' compensation or any other relevant insurance if I'm injured on campus, in the course of work, on a furlough day?
If you work on a scheduled furlough day, you are no longer considered on furlough that day. The day would be considered a work day, subject to all relevant workers' compensation and insurance coverage. The furlough day would need to be rescheduled. (9/15/09)

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I am planning a 3-month pregnancy disability and family medical leave in March 2010 when my baby is born. How will this impact my furlough days? Can I use furlough days to extend my time on pay status? What will happen to the scheduled furlough day when my location closes on April 16, 2010 (while I am still on leave)?
In terms of "accrual" of furlough time, employees will accrue furlough time based on their hours on pay status. If an employee is on an unpaid leave of absence, he/she will not accrue furlough time during the unpaid leave.

In terms of the "use" of furlough time, broad general guidelines have been established that provide flexibility for employees and managers to schedule furlough days, including the following:

  • Employees are expected to use all of their furlough days during the Plan term.
  • Accrued furlough days may be saved up and used in blocks prior to the end of the furlough period with the supervisor's agreement.
  • Furlough time that is not used as expected during the Plan term will expire at the end of the Plan term and is not carried forward.

If an employee has accrued furlough time, she may use it at the beginning of her leave to extend her time on pay status. However, employees on unpaid leave should not be returned to pay status simply to use a furlough day during a mandated closure — they would continue on unpaid leave until they are released to return to work.

If an employee has not yet accrued sufficient furlough time to cover mandated closures, the employee may use furlough time before it has actually accrued with the supervisor's approval. However, use of furlough time not yet accrued to maintain pay status during a disability leave of absence is not appropriate. (10/9/09)

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How will vacation and sick leave accruals and other benefits be impacted by the furlough plan?
The plan will use pre-furlough salaries to calculate UCRP benefits and to maintain the pre-furlough accrual of UCRP service credit so that UCRP benefits are not negatively impacted. In addition, the accrual of vacation and sick leave will not be reduced and health and welfare benefits (medical, dental, vision, life and disability) will not be impacted by the furlough/salary reduction plan. Monthly costs of insurance premiums and calculations of life and disability benefits will continue to be based on your full-time, unreduced salary rate. These protections are consistent with those provided in the START program.

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Will furloughs or salary reductions affect the health of the UC Retirement Plan?
The potential impact of the furlough plan on the funding status of the UC retirement plan was analyzed by the plan actuary. With UCRP contributions scheduled to resume April 15, the actuary estimates that $10 million less in UCRP employer and member contributions would be made from April 15, 2010 through August 31, 2010 as a result of furloughs. Given the size of UCRP, this does not diminish UCRP’s overall financial health. As previously announced, President Yudof has appointed a task force to look at a variety of issues regarding retirement benefits including long-term funding needs.

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