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Administrative Procedure 8.686 Administrative Procedure 8.686



Title

Terminal Vacation Payout

Header

Administrative Procedure Chapter 8, Business and Finance
Administrative Procedure AP 8.686, Terminal Vacation Payout 
Effective Date:    July 2016
Prior Dates Amended: None
Responsible Office: Office of the Vice President for Budget and Finance/Chief Financial Officer
Governing Board and/or Executive Policy: EP 1.102, Authority to Manage and Control the Operations of the Campus
Review Date: August 2018

I. Purpose

To establish consistency in cost accounting for the University’s terminal vacation payouts and to describe the process of terminal vacation payout and fringe benefit rate.

II. Definitions

A.    Terminal vacation payout fringe benefit rate – A single fringe benefit rate calculated as a percentage of payroll for all employees who accrue vacation, regardless of funding source.  The rate is assessed as a portion of total fringe benefit costs. 

B.    Terminal vacation payout – A payment for an accrued vacation balance made to a UH employee who is leaving the University because of termination, resignation, retirement, or transfer.

C.    Terminal vacation payout pool – A pool account (system wide account - SW 4432920) to collect all vacation payout contributions resulting from the fringe benefit rate assessment and from which all terminal vacation payouts are made.

III. Administrative Procedure

A.    Assessment Methodology

    1.    Only  employees who accrue  vacation, regardless of funding source, are assessed the fringe benefit rate as a portion of total fringe benefit costs for contribution to the terminal vacation leave payout pool.

    2.    For non-imposed funds (general funds, S397, selected federal funds), each campus designates the imposed fund accounts to charge the vacation payout fringe benefit rate.

    3.    For all other funds (not non-imposed) the vacation payout fringe benefit rate is charged to the same account that the employee is paid on.

    4.    A single terminal vacation payout fringe benefit rate for the University is calculated, established, and monitored by Office of Research Services (ORS) on an annual basis.

    5.    Fringe benefit rate assessments collected in the University system wide account (SW 4432920) are used to make all terminal vacation payouts.

B.    Payouts made from the vacation payout pool

    1.    The payout pool is established to pay for the following situations:

        a.    Termination, resignation or retirement from a position at the University of Hawaii (UH) with an accrued vacation balance; or

        b.    Transfer from a position with vacation accrual to a non-vacation accruing position within the UH system; or

        c.    Transfer from a position in the UH system with vacation accrual to another State or County agency.

    2.    The designated preparer shall initiate the G2 Form, Application for Transfer of Vacation and Sick Leave Credit or Payment In Lieu of Vacation, obtain department head approval, and submit it to the Payroll Office for processing. 

C.    Processing of terminal vacation payout for an employee that transfers from or to a State or County agency.

    1.    For an employee that transfers from a State or County agency, the campus Fiscal Administrators (FAs) shall:

        a.    Work with OHR and/or employee to determine the source of funds used to pay the terminal vacation and notate on the check stub.

        b.    If the terminal vacation payout is financed by the general fund of the State, the designated System FA will make the deposit with the State Director of Finance.

        c.    Send the payout received to the designated System FA for deposit and recording.

    2.    For an employee that transfers to a State or County agency, the campus FA is
responsible for initiating the payout request (DV – Disbursing Voucher) in the Kuali Financial System and attaching the required documentation for the transfer.  The DV will be then reviewed and approved by the designated System FA.

D.    Managing the terminal vacation payout pool account

    1.    The designated System FA is responsible for managing the terminal vacation pool account.  Responsibilities include:

        a.    Reconciliation of direct payments to and from other State agencies against the pool account.

        b.    Notifying the ORS if the pool account has excessive surplus or deficit balances at yearend.  If the surplus or deficit is excessive, a recalculation of the assessment rate may be required.

    2.    ORS is responsible for negotiating the terminal vacation payout fringe benefit rate with the Department of Health and Human Services (DHHS) annually.  The rate should be reviewed and recalculated by ORS each fiscal year to submit to DHHS for approval.

IV. Delegation of Authority

There is no administrative specific delegation of authority.

V. Contact Information

    
General Accounting and Loan Collections at uhgalc@hawaii.edu
Website:  http://www.fmo.hawaii.edu/general accounting/index.html

VI. References

    A. Link to superseded Executive Policies in old format https://www.hawaii.edu/policy/archives/ep/
    B. Link to Administrative Procedures in old format https://www.hawaii.edu/policy/archives/apm/sysap.php

VII. Exhibits and Appendices

None

Approved

    Signed    
    Kalbert Young    
    June 14, 2016    
    Date    
    Vice President for Budget and Finance/Chief Financial Officer

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