Compensated absence is a general term describing costs of time not worked in accordance with institutional policy for which employees are paid. Included within the scope of this policy are the following different categories:
- Compensated absences where there is no expectation on the University's part that work is to be performed by the employee while absent.
- Compensated absences in the form of continuing employment whereby the employee has an obligation of work to be performed for the University during leave or for which the University will benefit.
- Payments made as part of an agreement of termination of employment.
Throughout the fiscal year, the costs of compensated absences are generally accounted for on the cash basis of accounting. This means that the expense is reflected in the University's accounts when payment for the absences is made to an employee. Exceptions to the cash basis of accounting are acceptable for units demonstrating the need to accrue for vacation and/or other compensated absences. For year-end financial reporting, the University reports its revenue and expenses using the accrual basis of accounting. Revenues that have been earned (but not necessarily received) and expenses that have been incurred (but not necessarily paid) must be included in the University's fiscal year activity. To comply with the accrual basis of accounting, costs incurred for compensated absences and for which the University has a liability at year-end, must be included on financial statements, as part of the current fiscal year's expenses.
Special Situations
Campus/college/unit closings and mergers, and contracts and grants loss of funding.
Compensated absence policies are designed to account for activities of continuing University operations. Material compensated absence costs incurred due to organizational changes or loss of resources will require review on an individual case basis.
Federal regulations (OMB Circular A-21) dictate that costs of compensated absences be charged consistently across all funding sources throughout the University and to federally sponsored accounts to the extent the costs are allocable to federal projects and allowable by the sponsor. In addition, governmental and financial accounting standards require that employers accrue a liability for certain future paid absences of employees. This University policy was adopted to insure compliance with federal regulations and to provide guidance to departmental and collegiate units when determining the need to maintain balances for future benefit payouts.
To ensure compliance, the following procedures are included:
In support of this policy, the following forms and charts are included:
Types of Accounting
- Accrual Basis
- Accounting for revenues and expenses as they are earned and incurred, respectively, regardless of when they are received or paid.
Cash Basis - Accounting for revenues and expenses as they are received and paid, respectively.
Types of Compensated Absences
- Administrative Transitional Leave
- Leave given to encourage major central academic administrative or collegiate officers to prepare for assumption or resumption of faculty or professional roles within the University at the conclusion of a significant period of administrative service.
- Agricultural (Minnesota Extension Study Leave)
- Short-term leave given to county and area extension agents for course work on a full-pay basis.
- Disability Leave
- Payment to academic employees who are on sick or disability leave for more than three months and who have at least two years' service.
- Holidays
- Specific days throughout the fiscal year designated as days off with pay to allow employees to enjoy national or religious holidays. The University designates eleven days each fiscal year as major or floating holidays.
- Layoff / Nonrenewal Program
- The formal severance / termination agreement that is currently available for civil service, bargaining unit and professional and administrative staff.
- Miscellaneous Paid Leaves
- Various paid leaves of absence granted to employees, including court/jury duty; attendance at scientific or professional meetings; military service; bone marrow donation.
- Negotiated Buyout Agreement
- Mutual agreement between employee and employing department for payment and/or future benefits to employee in return for termination of employment.
These agreements are not part of a formal termination agreement offered by the Office of Human Resources.
- Parental Leave
- A leave of absence granted to female (maternity) and male (paternity) employees who are biological or adoptive parents, when requested in conjunction with the birth or adoption of their child.
- Phased Retirement Plan for Faculty
- Voluntary option for tenured faculty members and academic professionals with continuous appointments for the purpose of facilitating change within units.
- Professional Development and Educational Leave
- Paid time to allow academic professional, administrative and civil service employees the opportunities to develop and enhance performance and contributions to their unit and its mission.
- Sabbatical
- Leave given to encourage special studies, investigation, and research on the part of members of the faculty and thereby to increase their scholarship and capacity for service to students and the University.
- Severance / Termination Payment
- Payments to an employee upon termination from the University. Defined in a formal severance / termination agreement that has been established by the Office of Human Resources.
- Sick Leave
- Compensated absence from work due to illness of the employee or family member.
- Single-quarter Leave
- Short-term leaves for tenured and probationary faculty members designed to forward special studies, research, scholarly writing, and self-improvement programs that will enrich and strengthen individual knowledge and understanding of scholarship and/or university teaching.
- Time-off in lieu of compensation
- Compensation for overtime worked at the request of the supervisor that is "paid" in compensatory time off at a later date, rather than as a cash payment. Computed at the rate of time and one-half.
- Vacation
- Time off for rest, relaxation, or renewal of the employee. Earned based on a combination of payroll classification and / or length of service.
Types of External Regulations
- Financial Accounting Standards Board (FASB)
- Independent, non-government group which is authorized by the accounting profession to establish generally accepted accounting principles in the U.S.
- Governmental Accounting Standards Board GASB
- Independent group which is authorized by the accounting profession to establish generally accepted accounting standards that apply to financial reports of all state and local governmental entities, and certain colleges and universities.
- OMB Circular A-21
- Published by the Office of Management and Budget, this circular establishes principles for providing consistency in estimating, accumulating and reporting costs applicable to grants, contracts and other agreements between the federal government and educational institutions.
Other
- Vacation Donation Program
- Permits a civil service or bargaining unit employee to donate paid vacation leave to another chosen or recommended civil service or bargaining unit employee.
- P & A
- Professional and Administrative - term encompassing several payroll classifications whose employees receive benefits similar to the faculty.
- Accounting Services
- Estimate year-end vacation accrual liability and adjust general ledger accounts accordingly. Approve use of accounting basis other than cash basis to account for compensated absences.
- Maintain list of units granted exception to this policy.
- Board of Regents
- Approve sabbatical leaves (along with the Provost of the applicable unit and the Senior VP for Academic Affairs). Approve Academic Employee Leave Policies. Approve Minnesota Extension Study Leave (along with the President and after approval by the Provost for Professional Studies).
- Budget & Finance, Office of Dean
- Calculate the annual fringe benefit rate. Recommend approval of requested sabbatical and single-quarter leaves. Grant approval of discretionary and nondiscretionary leaves of absence for department head/director.
- Department Head / Supervisor
- Grant discretionary leaves of absence to employees, including, vacation, sick leave, and professional development / education. Grant non-discretionary leaves of absence including parental leaves, jury duty, military duty, and official court appearances (when job-related).
- Approve written plan for Administrative Transitional Leaves (along with President).
- Director of Minnesota Extension Service
- Approve Minnesota Extension Study Leave after recommendation to approve from the faculty committee.
- Human Resources, Office of
- Establish benefit policies. Develop and administer termination/ severance/ layoff agreements.
- President
- Approve the written plan for Administrative Transitional Leaves.
- Approve Minnesota Extension Study Leave (along with the Board of Regents, and after approval by the Provost for Professional Studies).
- Provost, Vice President, Chancellor
- Approve sabbatical leaves (along with the Senior VP for Academic Affairs and the Board of Regents). Make final recommendations for single-quarter leave applications.
- Provost, Professional Studies
- Approve Minnesota Extension Study Leave (after
approval by the Director of Minnesota Extension Service).
- Senior VP for Academic Affairs
- Approve sabbatical leaves (along with the Provost of the applicable unit, and the Board of Regents).
- Grant permission to the responsible Vice President, Chancellor, Vice Provost, and /or Dean to offer the phased retirement option to tenured faculty members and academic professionals with continuous appointment.
There are no appendices for this policy.
- Amended:
- February 2003 - Updated Related Information Section with link to current Cost Sharing Policy (2.1.5) rather than superceded Guidelines for Cost Sharing.
- Effective:
- July 1996
-
To obtain a copy of a historical policy,
e-mail the U Policy Librarian at policy@umn.edu or call 612-624-4372.
Help
Policy Feedback
Print Policy
