Cost Projection Overview

What Are Cost Projections?
Employee salaries and benefits make up the majority of the state-operating budget. Agencies regularly monitor expenses and the resulting effect on the budget. Budgets are managed in Accounting System.

HR/Payroll changes throughout the fiscal year can dramatically impact an agency's budget. Some examples of HR/Payroll events that affect budget projections are:
- Across-the-board salary adjustments
- Adding new positions
- Employee changes: Leaves of Absence, retirements, and layoffs
- Changes to benefit rates
- Existing employees
- Vacant positions that have a date in the Intend to Fill field
- Future salary, benefit rate, and other changes affecting large number of positions
Vacant Positions

1. Vacant positions will not project unless the Intend to Fill Date on the Barg Unit/Cost Projection page is filled in. To stop projections on vacant and abolished positions, delete the Intend to Fill Date.

2. Projections for vacant positions appearing in a wrong or invalid expense budget can be corrected by updating the funding on the Position Funding page.

3. If the Intend to Fill Step is not entered on the Barg Unit/Cost Projection page, the program will assume the first step.

4. Vacant positions use the position pages and other vacant-related information listed above in order to calculate vacant position obligations.

Intend to Fill Date:	Indicates the date this position will be or was filled. This field determines whether a projection will calculate for a vacant position. If there is no Intend to Fill Date, there is no projection.
Intend to Fill Amount:	Required on vacant positions if the Intend to Fill Step field is blank. The intend to fill amount indicates the dollar amount of compensation the projection should use when calculating the salary for a vacant position that is off-step (for example, a managerial position.)
Comp Frequency:	The drop down box selection indicates the frequency that will be used in calculating the projection. Comp Frequency can be Annual, Biweekly, or Hourly.
Intend to Fill Step:	Required on vacant positions if the Intend to Fill Amt field is blank. Indicates the step the projection should use when calculating the salary for a vacant position that is on-step.
Seas/Temp Start Dt:	For seasonal and temporary positions only. Indicates the expected start month and day of a seasonal or temporary position for obligations. If you use this field, you must also fill in the Seas/Temp End Dt field.
Seas/Temp End Dt:	For seasonal and temporary positions only. Indicates the expected end month and day of a seasonal or temporary position for obligations. Projections will stop as of the month and day in this field. If you use this field, you must also fill in the Seas/Temp Start Dt field.
Vacant Position Insurance Indc:	Will project the vacant insurance rate obligation if checked. If unchecked, cost projections will not include insurance in the obligation.
Vacant Position Retirement Indc:	Will project the retirement obligation, using the vacant position rate, if checked. If unchecked, cost projections will not include retirement in the obligation.

Additional Position Information

Filled positions with an appointment status of Seasonal or Temporary in the Reg/Temp field, as indicated on the Description page, must have a Seas/Temp Start Dt and Seas/Temp End Dt , on the Barg Unit/Cost Projection page, to project correctly.

Vacant positions with an appointment status of Seasonal or Temporary in the Reg/Temp field, as indicated on the Description page, must have an Intend to Fill Date and a Seas/Temp Start Dt and Seas/Temp End Dt , on the Barg Unit/Cost Projection page, to project correctly.

All other vacant positions must have an Intend to Fill Date in order to project obligations. Seas/Temp Start Dt and Seas/Temp End Dt used on these positions do not affect cost projections. (Once a position is filled, the Intend to Fill Date does not affect cost projections until the position becomes vacant, unless the employee is on a leave of absence.)

Future effective-dated position funding transactions are taken into consideration in cost projections.

Projections do not stop based on Appointment End Date , which is located on the Leave/WOC page. Projections do stop based on the Not To Exceed Date , which is located on the Barg Unit/Cost Projection page.

Salary step increases will project only if the Eligible for Next Increase field is filled in on the Additional Employment Info page.
Reports, Timing and Cost Projection Information

REPORTS

There are two reports available for agency use:

The HR6760, Roster Staffing/Staffing Report, will display obligations only on valid chart strings for the current open fiscal year(s). (For future fiscal years, it will display obligations based upon the position funding at the time the obligation is calculated.)

The Salary Projections Sample Report is available in the SWIFT Date Warehouse in the Statewide Folders under Salary Projections in the OBIEE catalog. This report displays projection detail for actual fiscal year to date expenditures and remaining obligations by associated SWIFT chart strings. Users may save this report and modify it to meet their own agency needs.

TIMING

Timing of Human Resources transactions can affect the projections for a position. If an HR change was entered and the obligations do not look as though they include the change, you can: 1.) Verify the effective date and action date of the transaction, or 2.) Wait another pay period - then verify that the transaction includes the HR change.

COST PROJECTION INFORMATION

Memos are distributed to HR and Payroll email list subscribers and are added to Minnesota Management & Budget Web Site each time there are changes to cost projections.
Sample Cost Projection Calculation

This position is not vacant; therefore, the program is calculating the projection using the current incumbent's job data. The position is in the MAPE salary authority and there are 12 pay periods remaining for the fiscal year 2010 obligations (11 pay periods with 80 hours each and 1 pay period with 48 hours). Also, the employee is not eligible for an anniversary increase during fiscal year 2010.

Fiscal Year 2010 Obligations:

Base Salary = Hourly rate * FTE * Head Count * % charged to position funding source * (the remaining pay periods of the fiscal year * 80 hours) + additions.

Base Salary = $30.00/hour * 1 * 1* 100% * (11.60 pay periods * 80 hours/pay period) + any lump-sums added to the program (this information is documented in memos)

= ($30.00 * 928 hours) = $27,840.00 + $0 lump-sum

= $27,840.00

FICA/Medicare = FICA/Medicare % * Base salary

FICA/Medicare = 7.65% * $27,840.00

= $2,129.76

Insurance = Total Life Insurance rate/pay period + Total Non-Life Insurance rate/pay period (Partial pay periods are prorated based upon the number of days out of 14. Pay Period Ending July 6, 2010, includes the last 8 days of fiscal year 2010.

Total LIFE + Non-Life Insurance /pay period = $4.31/pay period + $624.33/pay period

= $628.64/pay period

Therefore:

Insurance = ($628.64/pay period * 11 pay periods) + ($628.64 * 8 days/14 days)

= $6,915.04 + $359.22

= $7,274.26

Retirement = Base Salary * Retirement Rate

Retirement = $27,840.00 * 4.75%

= $1,322.40

Base Salary + Fringe Obligation:

FY10 Obligation = $27,840.00 + $2,129.76 + $7,274.26 + $1,322.40

= $38,556.42
How does Cost Projection Works?
SEMA4 data, required to perform cost projections, is found on both job and position pages. The Barg Unit/Cost Projection page contains several fields of information required to perform cost projections. SEMA4 performs calculations based on:
- Existing employees
- Vacant positions that have a date in the Intend to Fill field
- Future salary, benefit rate, and other changes affecting large number of positions
The obligation calculation consists of three parts:

1. The year-to-date actual amounts collected from payroll data.

2. The projected values made up of base salary, FICA, insurance, and retirement.

3. Future effective-dated transactions such as: retirement, progression pay increase, or leave of absence. Calculations are performed for each position regularly throughout the year.

To obtain accurate results, each agency needs to ensure that position and employee records are always up-to-date and accurate (including vacant positions).
Cost Projection Outputs
Cost projection information is distributed as follows:
- The results of the cost projection process are posted in a table, which is used to create the HR6760, Roster Staffing/Staffing Report.
- The results of the cost projection process are sent to the SWIFT Data Warehouse so that agencies may access the data. The tables that are updated in the SWIFT Data Warehouse are: Roster Staffing and Salary Projections. Agencies can use the information in these tables to conduct their own cost projection analysis. There is a Salary Projection Sample Report in the SWIFT Data Warehouse available for agency use.
Note: Report HR6760 and the Salary Projection Sample Report are updated according to the schedule announced by Statewide Payroll Services.
Cost Projection Setup

Cost projections use both position and job data entered by agency staff and business rules defined by Minnesota Management & Budget, Statewide Payroll Services staff, when calculating obligations. When cost projections run, the accuracy of the data depends on the accuracy of the information used in the calculation. The following information describes the cost projection updates added by Minnesota Management & Budget and the agency.
Cost Projection Information Entered By Minnesota Management & Budget

1. Cost projections use the total number of working hours in a state fiscal year to calculate the salary obligations. Minnesota Management & Budget calculates working hours by counting actual Monday through Friday workdays during the pay period. Working days are assumed to be 8-hour days. Generally there are 2,080, 2,088, or 2,096 hours in a state fiscal year. The working hours can be viewed on the Fiscal Year Pay Periods page.

2. Minnesota Management & Budget sets up salary authority rules on the Sal Auth Anniversary Rules page, which indicate how many months are between step increases and when midpoint (a.k.a. position rate step) changes the frequency to two years or more between step increases. These rules are used in conjunction with the Eligible For Next Increase field on the Additional Employment Info page. This page is only used on positions for which the Eligible For Next Increase field is filled in. The system uses the salary authority rules to determine when anniversary increases should obligate for future fiscal years.

3. The Salary Authority page contains the No Anniversary Increases From and the No Anniversary Increases To fields. Minnesota Management & Budget uses these fields to stop obligating salary step increases when needed.

4. Minnesota Management & Budget calculates an estimated Vacant Position Flat Insurance (per pay period) rate using an average employee plus dependent insurance rate. This insurance rate is applied to all vacant positions. If an agency does not want to obligate insurance for a vacant position, it can remove the check mark in the Vacant Position Insurance Indc box on the Barg Unit/Cost Projection page. Vacant position information can be viewed on the Vacant Position Parameters page.

5. Minnesota Management & Budget sets up a Vacant Position Retirement Percentage , which is used to project retirement costs for vacant positions. This amount is entered on the Barg Unit/Cost Projection page. Vacant position information can be viewed on the Vacant Position Parameters page. Currently, the MSRS retirement percentage is used for vacant positions. If an agency does not want to obligate retirement for a vacant position, it can remove the check mark in the Vacant Position Retirement Indc box on the Barg Unit/Cost Projection page.

6. Minnesota Management & Budget estimates insurance percentage increases and updates them on the Vacant Position Parameters page. This is a statewide average that affects all positions, including vacant positions. This amount is used in projections until the actual rate changes become effective.

7. An estimated percentage increase for future pay periods and retroactive amounts is entered by Minnesota Management & Budget, on the Salary Authority page, for on-step and off-step employees. This tentative amount is updated once additional contract/settlement information is received. After the new effective-dated row is added to the employee's job record in SEMA4, the current fiscal year estimate is set to zero. Future percentage increases are usually updated in the employee job record closer to the effective date; therefore, Minnesota Management & Budget continues to project the future percentage increases until no longer needed. The percentage amounts are effective-dated and pertain to each salary authority.

8. The Agency Cost Parms page gives agencies the ability to estimate additional wage and insurance increases specifically for their agency. Agencies must email all requests (additions, changes, and deletions) to Minnesota Management & Budget cost projection contact. Any additions, changes, or deletions will only be processed upon request by the agency. For example, if an agency requests a wage increase for a salary authority, the agency must request that it be removed after the wage increase goes into effect and before cost projections run. The requests must include: agency, salary authority, effective date, off-step salary amount, on-step salary amount, and insurance percent increase.
Employee And Position Information Entered By The Agency

POSITION DATA PAGES:

1. Seasonal and Temporary positions: Two fields on the Barg Unit/Cost Projection page can be used to control cost projections for seasonal and temporary employees. The fields, Seas/Temp Start Dt and Seas/Temp End Dt , are in the Cost Projection Use box. Agency staff must fill in these fields to project seasonal and temporary positions correctly. The program uses the month and day in each field to define the season for the seasonal and temporary positions.

2. Vacant positions: Vacant positions will project only if the Comp Frequency , Intend to Fill Date , and the Intend to Fill Amount or Intend to Fill Step are filled in on the Barg Unit/Cost Projection page. The Headcount Status field will indicate Open for vacant positions.

3. Filled positions: Filled positions will project based upon the job and position data for the employee. The Headcount Status field on the Barg Unit/Cost Projection page will indicate Filled for filled positions.

4. Inactive Filled positions: Inactivating a filled position will not stop the program from projecting obligations when there is an employee assigned to the position in job. Whether a position is Active or Inactive is indicated in the Status field on the Barg Unit/Cost Projection page.

5. Abolished positions: Abolished positions will project until the Intend to Fill Date is removed on the Barg Unit/Cost Projection page. This status would be indicated on the Position Status field on the Description page. Once the Intend to Fill Date is removed, the position will still appear on the Roster Staffing Report if actual expenses were paid during the fiscal year. Note: The Intend to Fill Date will NOT be automatically removed for abolished positions.

6. On Hold positions: Putting the position on hold will not stop the obligations from projecting. This status would be indicated on the Position Status field on the Description page.

7. Leave of Absence positions: Leave of Absence positions will project until the Intend to Fill Date is removed on the Barg Unit/Cost Projection page. If a position has an Intend to Fill Date and the employee is on a leave of absence, the projection will include a vacant position.

8. Position End Date: Projections will stop as of the date in the Not To Exceed Date field on the Barg Unit/Cost Projection page.
Other Information

1. Actual salary expenditures and obligated salary expenditures are included on the Roster Staffing/Staffing Report, HR6760. The actual amounts are calculated from the processed labor distribution and are updated at the Fin DeptID level from which they were paid. The obligations include current and future effective-dated position funding transactions. (Note: Actuals do not include 'Z' transaction type labor distribution rows.)

2. There are no projections for continuing appropriations that have a fiscal year for more than 2 years prior to the current fiscal year. Fiscal years are designated in the Accounting System and are reflected on the Position Funding page.

3. Base projections include effective-dated transactions entered into SEMA4, including:

1. New hires and rehires

2. Unpaid and paid leaves of absence and returns from leave

3. Data changes

4. Promotions, demotions and transfers

5. Mobility and job movements

6. Pay rate increases

7. Retirements and separations (severance and vacation payoffs)

8. Layoffs, seasonal layoffs, and recalls from layoffs

9. Anticipated anniversary increases, based on the Eligible for Next Increase date on the Additional Employment Info page and the step amounts on the Salary Step Components page.

10. Across-the-board salary increases once the new effective-dated rows are added to SEMA4.

11. Payroll employer-paid retirement

12. Payroll employer-paid FICA and Medicare (calculated up to the maximum OASDI tax liability for the calendar year)

13. Payroll employer-paid insurance costs, including administrative fees.

14. Position changes

15. Position funding changes
Obligation Calculator
Base Salary:
- Hourly rate * FTE * Head count * % Charged to position funding source * the # of working hours in the remaining pay periods of the fiscal year (or the # of working hours in the remaining pay periods until the Seas/Temp End Dt for seasonal or temporary employees). Note: the pay period will be prorated when the end date falls within a pay period.
FICA/Medicare:
- FICA/Medicare % * Base salary
- Currently there are three FICA statuses with corresponding rates. Employees are designated as: Subject to FICA and Medicare (7.65%), Medicare only (1.45%) or Exempt.
- The actuals total may include FICA-exempt items, such as pre-tax insurance, which may have decreased the FICA gross. Obligations are calculated on the gross salary with no decrease for pre-tax items.
- For vacant positions the full FICA and Medicare amount will be used (7.65%).
- Once a position reaches the FICA maximum, the projections will only include the Medicare obligation in the projection.
Insurance:
- The insurance calculation is based on two parts, Life and Non-Life.
- LIFE: The calculation uses the employer's coverage rate for each life deduction amount per pay period for each employee, and then the program adds the sum of the amounts for each pay period.
- NON-LIFE: The program uses the employer's cost for each employee's current deduction amounts per pay period and adds the sum of the amounts for each pay period.
- Vacant positions use an estimated insurance amount (see detailed information above).
- Insurance projects for the first and second payday in each month.
Retirement:
- Sums all non-taxable retirement deduction codes for each position to come up with one percentage value per pay period that is multiplied by the pay period salary amount.
- For vacant positions the program looks for a percentage on the record of the last incumbent. If there has been no incumbent, the default percentage is used. The default vacant position retirement rate can be found on the Vacant Position Parameters page.
- Partial pay periods are prorated based upon the number of days out of 14 in the pay period.
Items Not Projected
The following items are not projected because the data needed is not known at the time the calculation is done:
- Deferred Compensation Match
- Achievement Awards
- Overtime
- Premium Pay
- On-Call Pay
Contract-negotiated bargaining unit range changes and payments that are not included in the employee's job record, on position data, or on the salary grid-table.

Also, agencies should always refer to the applicable collective bargaining agreements and plans to determine if extenuating circumstances apply to select job classes or positions. Contract language sometimes allows for variations in salary adjustments that will be effective only for certain employees or positions. These variations are not reflected in cost projections.

Current Job Openings at MMB

Minnesota Careers

Cost Projection Overview

REPORTS

TIMING

COST PROJECTION INFORMATION

POSITION DATA PAGES: