NOTE:
Stanford University implemented new accounting systems in the Fall of 2003. Stanford and the Office of Naval Research (ONR) agreed to implement a financial vacation accrual at the same time, and to establish Vacation Accrual/Disability Sick Leave rates for exempt, nonexempt, and bargaining unit staff. These rates are updated annually and can be found at: http://ora.stanford.edu/rates/default.asp.

See Stanford Report article describing this change.

Like most employers, Stanford provides vacation to its regular staff employees. How to charge the salary paid while such employees are on vacation is the subject of this resource page.

The accrual rates enable Stanford to charge the appropriate funding source for the vacation earned by benefits-eligible staff as they are working. The rates will charge vacation as it is earned, rather than as it is taken. Application of the rates will build a central university fund to pay for vacation salary when staff either take vacation or leave the University.

NOTE: Faculty members do not accrue vacation leave or sick leave. Short absences for personal business, illness, jury duty, military duty, and similarly limited absences normally are with full salary. Under conditions specified in the Faculty Handbook, sabbatical leave may be granted by a school dean.

Our previous method for paying for vacation was to charge an account at the time the vacation salary was actually paid out (e.g., when vacation was taken, when an employee left the university) or when an employee transferred to another department. Although our new "charge-as-you-earn" method ensures that vacation costs earned after 9/1/03 are covered, we must still deal with the beginning vacation balance (vacation earned prior to 9/1/03 but not yet charged.)

Consistent with prior policy, this beginning vacation must be charged when an employee either transfers to a new department or terminates. At that time, the employee's original home department must provide the Controller's Office with appropriate account(s) (Project-Task-Award) to which to charge the beginning vacation balance. The department may choose to fund the balance early at its own discretion. The amount to be charged is the employee's 9/1/03 vacation hours at his/her CURRENT salary rate. The charge will be posted to unique Expenditure Types to record the beginning vacation balance, 51570 (the beginning balance for most staff) or 51571 (the beginning balance for those academic staff who earn vacation).

For the most part, the accounts to be charged should be appropriate, non-sponsored accounts. However, with the Principal Investigator's permission, and if the award terms permit rebudgeting, a sponsored project may be charged its relative proportion of the beginning balance. Sponsored projects may not be charged for any vacation balance that was earned when the employee was working on prior or other sponsored projects or charged to other accounts. Therefore, the calculation should be carefully documented.

The rate charged contains a small component to build up a Disability Sick Leave Fund. If a regular benefits eligible staff employee is out on short or long-term disability or worker's compensation, the portion of their salary covered by sick leave is charged to the Disability Sick Leave Fund, rather than to their department's accounts.

Any questions about the materials on this page may be directed to Thomas Wong Cost and Management Analysis, or Tana Hutchison, Associate Controller.

• Research Policy Handbook 3.1,
  FISCAL RESPONSIBILITIES OF PRINCIPAL INVESTIGATORS

  Contains guidance that vacation should only be charged to sponsored projects if it was earned while the individual worked on that project.

• Administrative Guide Memo 22.5,
  VACATIONS [pdf file]

  Defines Stanford's vacation policies, including those related to terminal vacation payments and the transfer of vacation when an employee transfers to another department.

• Administrative Guide Memo 35,
  PAYROLL [pdf file]

  Covers Payroll policies, including information on terminal vacation and the transfer of vacation when an employee transfers to another department. (See especially Sections 8 and 9.)

• Unfunded Beginning (9/1/03) Vacation Accrual Balance Template

  This downloadable Excel template calculates the value of the "unfunded" beginning (9/1/03) vacation balance that can be charged to a particular "account" (Project-Task-Award combination). The unfunded beginning vacation balance as of 9/1/03, must be "paid" when an employee terminates or transfers, or units can choose to fund it early. For restricted accounts (a grant or contract, or a restricted gift account), it is only appropriate to charge the vacation hours that were "earned" while the employee's work benefited that account.

• Vacation Accrual Balance Funding Form, last page of the Termination Form

  This downloadable Word form is used to document an individual's final pay for Payroll. This last page of the Termination Form provides the funding instructions for the 9/1/03 Vacation Accrual Balance for individuals who are terminating, transferring, or for whom the department is funding early.

• Vacation Accrual Example

  This downloadable Word document illustrates how the components of vacation accrual appear on Expenditure Detail Reports.

• Vacation Accrual Training

  This downloadable PowerPoint presentation was updated in February 2007. It is based on training originally presented in 2003 when the policy changed. This material explains the concept of Vacation Accrual and how we implemented it at Stanford.

• Vacation Accrual Appendix

  This downloadable Excel Spreadsheet contains three workbooks that are the appendices referred to in the Training sessions held during the Summer and Fall of 2003. This material introduces the concept of Vacation Accrual and how we are implementing it at Stanford. APPENDIX A (first tab) contains an example of "funding the bucket"; APPENDIX B (second tab) is a process flow model showing how vacation information passes between systems; APPENDIX C (third tab) provides examples of the affect of vacation or DSL on an expenditure statement.

• Vacation Accrual FAQ (Frequently Asked Questions)

  This downloadable Word file contains the answers to frequently-asked questions about vacation accrual at Stanford.

• Salary, Vacation and Fringe Expenditure Types and Categories

  This downloadable Excel Spreadsheet provides a list of all the Salary, Vacation and Fringe Expenditure Types and Categories. This contains the vacation and fringe rules for each of the codes, notations of whether the Expenditure Type can be used in iJournals and some notes about what is different for FY2005.

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