November 1, 2006

TO: All Regular Employees

FROM: Les Mathews

SUBJECT: Flexible Benefits Plan

The flexible benefits plan established by the University is an important part of your overall benefits package. This plan permits the University to exclude, from both Federal Income and Social Security taxes, premiums paid by you for group medical insurance, dental insurance and amounts you contribute to a medical and/or dependent care reimbursement account.

The medical and dependent care reimbursement accounts are a component of the Flexible Benefits that provide an opportunity for additional tax savings if you choose to participate. By enrolling in one or both of the reimbursement accounts, you can designate a fixed dollar amount to be set aside annually for dependent care and/or medical expenses. Subsequently, as expenses are incurred, the University reimburses you through your payroll check for those expenses.

Last year an important change was made to the Flexible Benefits Plan. Employees who have a remaining balance at the end of 2006 may submit additional expenses for reimbursement, if those expenses are incurred within the first 2 ½ months of calendar 2007 (March 15, 2007). This enhancement should allow employees who overestimate expenses time to incur additional expenses and avoid forfeiture of unused balances. This change in the Plan will be carried forward for each successive year.

The attached material describes the University's Flexible Benefits Plan and includes the various forms for enrolling in the Medical and/or Dependent Care Reimbursement Accounts. Even if you participated in the Medical Reimbursement and/or Dependent Care Reimbursement account during 2006, you must re-enroll to participate during 2007.

IF YOU WISH TO PARTICIPATE IN THE MEDICAL REIMBURSEMENT AND/OR DEPENDENT CARE REIMBURSEMENT PROGRAM, YOU MUST ENROLL EACH CALENDAR YEAR.

DECEMBER 15, 2006 IS THE DUE DATE FOR COMPLETING MATERIALS RELATED TO THE FLEXIBLE BENEFITS PROGRAM.