Approved by the: University Senate - April 3, 2008
Administration - May 13, 2008*
Board of Regents - no action required

* When the University separated its health plan from the state years ago, the University committed to offering health plan benefits to the same-sex domestic partners of University employees. The President is proud that the University is able to continue to offer equitable benefits to our employees through this program. However, given the budget challenges facing the University and the estimated $300,000 annual cost to implement this additional benefit, the University cannot approve the resolution to offset imputed income tax related to same-sex domestic partner benefits at this time.

Resolution to Offset Imputed Income Tax Related to Same-Sex Domestic Partner Benefits

MOTION:

The University Senate requests that the administration provide a mechanism to remedy the income differences between similarly-situated heterosexual and gay, lesbian, and bisexual employees caused by state and federal tax codes as they affect the provision of medical and dental benefits for spouses/partners.

COMMENT:

Heterosexual married University employees receive medical and dental benefits from the University on a tax-favored basis when they cover spouses. Gay, lesbian, and bisexual employees with registered same-sex domestic partners do not generally qualify for this tax-favored status when they cover their partners. As a result, gay, lesbian, or bisexual employees pay additional taxes based on the value of the University’s contribution to the cost of medical and dental coverage for their partners.

In order to ensure that and gay/lesbian/bisexual employees are treated equitably, the effect of this taxation should be taken into account, and their gross pay increased so that their net (after tax) income will be the same as similarly-situated heterosexual employees.

The Senate understands that the University is not responsible for the disparity created by the tax code, but believes that the institution should take appropriate steps to remedy the unequal treatment. The Senate thus asks the administration and the Regents to provide the financial equity currently denied by the tax codes and, in so doing, become a national model for non-discrimination.

Approved March 24, 2008 by the Faculty Affairs Committee and the Equity, Access, and Diversity Committee

FOR INFORMATION:

The Senate Committee on Equity, Access and Diversity (EAD) adopted a resolution concerning the effects of the tax code on gay, lesbian, and bisexual employees with a registered domestic partner (the text below). That resolution was referred to the Senate Committee on Faculty Affairs (SCFA), which crafted a different resolution (the one above, on the docket for action). EAD decided to endorse the SCFA resolution; the original EAD resolution is presented to the University Senate for information and background.

Resolution to Offset Imputed Income Tax Related to Same-Sex Domestic Partner Benefits

Our University's academic strength comes from breadth and depth of scholarship and diversity of schools of thought, modes of inquiry, academic disciplines, and social communities. We strive to support our community of diverse personnel, sometimes at great institutional cost.  We support a university day care center, though many of us do not have children, as the day-care center facilitates the full participation of working parents.  We support mechanisms for our international faculty and staff to receive the documentation needed to work equitably alongside members of our community who are U.S. Citizens.  By investing in these and other activities, we ensure that our university's status as a model public research institution will continue to grow.

One way in which our University has demonstrated its commitment to building a community is by providing medical and dental benefits to the committed, same-sex domestic partners of faculty and staff members, just as benefits are provided to husbands and wives of legally married faculty and staff. However, the mechanism by which this is accomplished has resulted in a substantially unequal taxation between heterosexual married employees and employees whose same-sex partners hold university benefits. Specifically, the university's contribution to the cost of the partner's benefits is treated as taxable income. This inequality occurs because federal and state laws deny committed same-sex partners the right to marry. The university's contribution to married spouses' benefits is not taxable; hence, heterosexual married employees do not accrue a tax burden. Because of this asymmetry, an employee whose same-sex partner receives benefits may get a substantially lower net salary than a married heterosexual employee whose base salary is identical. Moreover, the additional taxable income that the university provides may move an employee into a higher tax bracket, given the current state and federal progressive taxation practices. This affects faculty and staff at all income levels, and is particularly burdensome on those whose incomes are at the lower end of the distribution. The burden is so big that some staff and faculty may opt not to provide benefits for their partners, as the additional taxes would take away from income that they need to pay for more immediate necessities for themselves and their families.

The asymmetry between the tax burden on married heterosexual and committed same-sex domestic partners greatly undermines the university's mission of being a true equitable community. Indeed, we are compelled by our University's own non-discrimination policy, as this unequal taxation runs sharply contrary to the policy that we have adopted. A mechanism is needed to remediate this inequity. Four principles drive the specific mechanism that we recommend the university adopt. It should maintain the confidentiality of faculty and staff who receive these benefits; it should require the least special effort on the parts of the faculty and staff who receive this benefit; it should be able to be implemented by the University quickly; and it should be publicized by the University to anyone who works here or who might take a job here. The mechanism that we recommend is that additional money be added to individuals' gross income, using a formula that would assure that the net income that the individual receives is identical to what she or he would receive if the same-sex domestic partner benefits were not taxable. This policy of ‘grossing up’ is used widely in the private sector in cases where, for example, a company wishes to provide a performance bonus of a pre-specified amount to an employee. This would not change the individual’s base salary, and would be added on solely to offset the tax burden.

In addition to remediating the existing inequity, this proposal is an opportunity for the University of Minnesota to set a national trend in providing full access to employees in committed same-sex relationships. Currently, no other universities provide this type of mechanism. The innovative nature of this proposal will set our university apart from its peers, and will contribute to our common mission of advancing our status as a leading public research university. Moreover, it is our hope that this mechanism will provide additional momentum for proposed state and national legislation to eliminate this problem altogether by mandating that domestic partner benefits not be taxed. The University of Minnesota's leadership role in addressing this situation may thus help to eliminate the problem altogether, and to create a more just and equitable society outside of our University.

Approved by the Equity, Access, and Diversity Committee March 2008


Return to Senate Resolutions Page