Terminal Leave: Fringe Cost and Payments

University HR policy (https://kb.wisc.edu/ohr/policies/page.php?id=53409) allows employees to bank unused annual leave. The banked leave does not expire and may accumulate from year to year. At the time an employee retires or terminates employment, he or she may elect to receive a lump sum payment of the ALRA or sabbatical account balance.

As of July 1, 2016, UW-Madison changed how it accounts for and makes lump sum terminal leave payments.

OLD: Prior to July 1, 2016 UW-Madison treated lump sum payments on a cash basis. Payments were made from the funding in place at the time the employee retired or terminated employment.

CURRENT: Effective July 1, 2016 UW-Madison charges a terminal leave rate (https://www.rsp.wisc.edu/chap4/rn/rn16-2t.html) as part of the fringe benefit rate (https://www.rsp.wisc.edu/chap4/rn/rn16-2.html). The funds associated with this charge are housed in a central pool. The terminal leave pool account is used to make any lump sum terminal leave payments.

  • The terminal leave pool account will cover lump sum payouts only. Contact your unit’s Human Resources representative for assistance, if needed.
  • Per UWMSN Vacation Policy, employees may choose to extend their termination date and/or receive a lump sum payment. Reference Section VI.a.: https://kb.wisc.edu/ohr/policies/page.php?id=53409
  • There will be a different rate for Faculty/Academic Staff and University Staff. The FY2018 rates for extramurally sponsored programs will be:
    • Faculty/Academic Staff: 0.2%
    • University Staff: 0.3%
    The FY2018 rates for all funds excluding extramural funds will be:
    • Faculty/Academic Staff: 0.36%
    • University Staff: 0.32%
    The rates will be adjusted on an annual basis.
  • Terminal leave rates will be charged on all funding strings associated with salary payments with the exclusion of the standalone GPR and related PR funds:
    • Wisconsin State Laboratory of Hygiene (WSLH) - Funds 117, 127, 130
    • Wisconsin Veterinary Diagnostic Lab (WVDL) - Funds 126, 165, 166, 199

The updated methodology for terminal leave lump sum payments is one of two acceptable accounting methods described in the Uniform Guidance, 2 CFR §200.431(b)(3). Note that this change was made across UW System campuses.

Additional information about this change is available in the following documents:

Terminal Leave presentation to College/School Research Administrators, presented by Dan Langer, Accounting Services, May 10, 2016

Funding Lump Sum ALRA and Sabbatical Terminal Leave presentation, prepared by UW Service Center