Accounting Class

Anonymous said... time for an accounting class.

The "institution" only has one source of funding to pay severance, G&A, a overhead tax on direct funding. DOE did not allocate separate funding to pay the big severance checks, they authorized payments out of the G&A pot. So it costs overhead funds to pay everyone who won the SSP lottery.

The average direct-funded employee pays an overhead tax (G&A and all other overhead burdens, not including related payroll expense) which is a sizeable fraction of their salary. More than 50%. However, the average employee working on direct funding makes much more money than the average indirect-funded employee, so a similar number of indirect-funded employees must leave as direct-funded employees to be able to reduce overhead rates NEXT YEAR, not THIS YEAR.

THIS YEAR the picture is grim! There are what, 39 weeks left in this FY after January 10. Care to guess how they chose Jan. 10? Every indirect-funded SSP winner with 39 weeks of severance draws their entire salary for the rest of the FY on Jan 10. In one big check. Same for every direct-funded employee w/ 39 weeks - but the direct-funded employees also stop paying their overhead taxes on Jan. 10. Thus they stop contributing AND draw their remaining salary in one big check from the G&A pot. That's a bad thing. Very bad.

Now not all employees get 39 weeks but it doesn't matter, no matter what the average severance is, overhead rates must go up. One only needs to make the assumption that SSP lottery winners aren't predominately low service time, overhead-funded employees. If you believe they are, you qualify to be a LANS upper-level manager.

Maybe the overhead rates can drop next year, but this year they go up.

1/2/08 10:50 PM

Anyone at LLNL figured out how the RIF, VSEP and IVSEP will affect us with out 26 week severance package?