9 Pay Versus 12 Pay
Implementation
Effective FY2013, the base pay for all faculty
and staff members serving on less than 12
month contracts will be distributed over 12
months.
•
The switchover will occur the academic year 20122013.
•
Converting the gross monthly draw from a 9 month to
a 12 month pay schedule distributes salary equally in
each of 12 months of the payroll period.
Appointment
Required or Not?
• There is a grandfather clause provided for
those employees who may be eligible to retire
in the next three years.
– Discuss process for communicating election to be
grandfathered.
• Employees starting mid-year will be required
in their next full contract year.
• All other Union Eligible Faculty will be
required to go on 12 pay.
What is the difference between
Contract Dates and Payroll Dates
• A lot of confusion can occur between Pay
Dates and Contract Service Dates, especially
when dealing with 9–, 10-, or 11-month
service employees paid over 12 months.
• Service or contract date refers to the dates the
employee actually works or provides service
for the University.
• Pay Dates are the corresponding dates for
which the employee is paid for those services.
Compensation
Example of Salary Distribution
• Academic-year contract EXAMPLE
9 PAY 9 from September 2011 through May 2012 (example: $50,000.00 / 9 or
$5,555.56 for nine months). If contract amount or dates do not change.
9 PAY 12 from September 2012 through August 2013 (example: $50,000.00 / 12 or
$4,166.67 for twelve months) if contract amount or dates do not change.
Let us review an example with deductions NEXT.
CONTRACT PAID OVER 9 MO.
EXAMPLE -Allow for rounding
Description:
9 Pay Example
9 mo/Sept-Apr
May
Allow for rounding:
Annual Salary: $50,000
Total
Pay Summary:
Monthly Gross
Monthly Deductions
Monthly Net
5,555.55
x
9
Amount x 8
Total Annual Deductions
50,000.00
5,555.56
2,261.15
3,294.41
Deduction Summary:
Fed Income Tax - Married 0
Social Security (.042)
Medicare ( .0145)
Retirement
Dep. Health $300 spouse +2/ 42
Dental Enhanced EE +3
Vision EE +3
Disability
Medical Reimbursement
Life Insurance 2X age 45
Parking Sept - April only
Subtotal
Deductions Sept - April
Deductions May
Annual Total
9 month
Amount x 1
723.22
196.43
67.82
333.33
465.00
144.00
44.55
17.10
225.00
29.70
15.00
2,261.15
x8
5,555.56
1,531.36
4,024.20
50,000.00
19,620.56
30,379.44
884.14
233.33
80.56
333.33
6,669.90
1,804.77
623.12
2,999.97
3,720.00
1,152.00
356.40
136.80
1,800.00
237.60
120.00
19,620.56
1,531.36
x1
18,089.20
1,531.36
19,620.56
9 over 12 Pay Example
CONTRACT PAID OVER 12 MO.
EXAMPLE - Allow for rounding
Description
Allow for rounding:
Annual Salary $50,000
4166.67 Monthly Assigned Salary
5555.56-4166.67 = Deferred Amount
Accrued/Paid over 9 Months
Total
Off-Contract Payment
Pay Summary:
Monthly Gross
Monthly Deductions
Monthly Net
Deduction Summary:
Fed Income Tax - Married 0
Social Security (.042)
Medicare ( .0145)
Retirement
Dep. Health $300 spouse +2/ 42
Dental Enhanced EE +3
Vision EE +3
Disability
Medical Reimbursement
Life Insurance 2X age 45
Parking
Subtotal
Total Annual deductions
Contract Salary
Divided By 12 Pays
50,000
Divided by 12
4,166.67
Amount Deferred
Contract Period
Amount
5555.56-4166.67
1,388.89
x
9
12,500.01
4,166.67
Off Contract
Amount
4,166.67
4,166.67
x
9
37,500.03
x
3
12,500.01
Amount x 12
Total
Base Contract
50,000.04
4,166.67
1,589.18
2,577.49
50,000.00
19,070.16
30,929.88
509.96
150.40
51.92
250.00
310.00
96.00
29.70
11.40
150.00
19.80
10.00
1,589.18
6,119.52
1,804.80
623.04
3,000.00
3,720.00
1,152.00
356.40
136.80
1,800.00
237.60
120.00
19,070.16
19,070.16
How are Summer Appointments
Handled?
• The employee will receive any additional overloads,
summer appointments, and research appointments
when earned and in accordance with system/university
guidelines.
• Summer Session Payments are paid as follows:
– 4 Week Session – One payment at the conclusion of the
session.
– 8 Week Session – Two equal payments over the entire
session.
– 12 Week Session – Three equal payments over the entire
session.
– 16 Week Session – Four equal payments over the entire
session.
Effort Certification?
• The payroll system has created an earnings code
that will take the regular payment and provide for
an account of that regular payment to be saved.
• Therefore, the regular payment is accounted for
during the effort certification period.
• The fact that the payment is saved to an account
does not change the fact of the work completed.
• The payroll system has the technology to handle
both the effort certification as required under
federal law and payroll payments paid over 12
payrolls.
Leave
Does this impact Leave?
• Employees will still accrue their leave during
their contract period.
• Employees will use the leave request system
to request eligible leave.
• The payroll system will deduct leave during
the pay period that leave was requested and
used.
Benefits
Health and Flex Deductions
• These deductions will be paid equally over 12
payrolls.
• There will be a period of 4 months that
employees may have benefits deducted to
make up for June–August deductions for the
transition year.
• The plan year begins July and the 12 pay
begins in September.
Supplemental Retirement
• 457
– Contact June Larson (605-224-2230)
• 403(b)
– These deductions are set up to be paid over 8 pays
– They will automatically change to 12 pays
– You may want to review the deduction amount
– http://myretirement.sdbor.edu
AFLAC
• These deductions are set up to be paid over 8
pays
• They will automatically change to 12 pays
• The Payroll Center/HR will work with the
AFLAC representative to migrate these
Federal Income Tax
• You may want to review your FIT to determine
if you want additional changes.
• You can make changes through SNAP directly
without having to go to HR.
SDRS
• Faculty members regardless of base pay periods receive credit for
all quarters even if not currently on summer appointment.
Therefore, the payment of the payroll over 12 payrolls will have no
effect on the quarters and credit received.
• If employee terminates at the end of the 12 pays (August 21), they
would be eligible for an extra quarter of service due to payment
crossing over to the next quarter.
• If faculty member terminated in May, then they would not receive
that extra quarter.
• Please contact your local SDRS representative or contact the Pierre
SDRS office at www.sdrs.sd.gov.
SDRS Calculations – ESTIMATE ONLY
•
If a faculty member was paid over 9 months at $5,555.55 and then had a summer
appointment that paid them over two months in the summer at $5,555.55 for each
month, their quarters will still receive credit as if they did not work over the summer
appointment. The total salary for the 12 months would be $61,111.10. This is because
a payment was made in each quarter.
•
If a faculty member was paid over 12 months at $4,166.67 and then had a summer
appointment of two months at $5,555.55 for each month, their quarters will still
receive credit as if they did not work over the summer appointment. The total salary
for the 12 months would be $61,111.10. This is because a payment was made in each
quarter.
•
If the final year is 105% greater than the previous year, this is when a faculty member
may be capped. Therefore, as identified in both examples, the salaries are not different
in total. SDRS reviews the highest 12 consecutive quarters to help mitigate penalty if a
payroll change is made such as above.
•
Please contact your local SDRS representative or contact the Pierre SDRS office at
www.sdrs.sd.gov.
Separations
Grandfather Status
• Employees that are eligible to retire are able to
request to be grandfathered in. This
grandfathering clause was to hold employees
harmless from the implementation of the payroll
to 12 months.
• The period of time grandfathering exists is a
three-year period starting with AY12-13.
• It is important for you to communicate with SDRS
to determine what is the best choice for your
circumstance.
How Do I Elect Grandfather Status?
• Employees who believe they would elect to be
grandfathered in must communicate that with
the Human Resources Office at the University.
• They will be required to provide the benefit
statement from SDRS (or website).
What Happens If I Elect Grandfathering
Status and I do not Retire?
• The grandfathering is for a period of three years
only.
• If the faculty member does not retire, they will
have elected to be moved to payroll over 12
months.
• This could impact your retirement and you should
have clear communication with the South Dakota
Retirement System to fully understand the impact
of this type of decision.
Once on 12 Pay, What are my
Termination Options?
• You can either remain on payroll and receive
benefits through the end of the payroll period
(i.e., August 21) and receive an extra quarter
of retirement service, OR
• BOR Policy 4:36 allows for employees to
voluntarily terminate and receive payment of
the remaining contract.
– Employment status will be ended
– Benefits will cease at that point
Questions
• Discussion/Questions
• Thank you for your time
– We would like to assist as much as we can in
understanding this change/transition.