Payroll Retirement Handout - Santa Clara County Office of Education

Payroll Retirement Handout - Santa Clara County Office of Education
Payroll – Retirement
Reference Guide
District Business & Advisory Services
4/7/2014
Payroll – Retirement
2014
Contents
Introduction ............................................................................................................................................................................ 4
District Business and Advisory Services .................................................................................................................................. 5
Abbreviations .......................................................................................................................................................................... 6
Direct Deposit Recall ............................................................................................................................................................... 6
Direct Deposit Reject/Reissue................................................................................................................................................. 8
Stale Dated Warrants .............................................................................................................................................................. 9
Deceased Warrant Processing .............................................................................................................................................. 10
Understanding Deferred Pay ................................................................................................................................................ 11
Credential Holds .................................................................................................................................................................... 14
Workers Compensation ........................................................................................................................................................ 15
Payroll Cancellations ............................................................................................................................................................. 18
Taxes Additional Federal and State ...................................................................................................................................... 22
Garnishments ........................................................................................................................................................................ 23
Third Party Sick Pay ............................................................................................................................................................... 24
W2 Reporting Changes for the Calendar Year of 2014 ......................................................................................................... 26
CalSTRS .................................................................................................................................................................................. 29
CalSTRS 2% at 60 ................................................................................................................................................................... 30
CalSTRS 2% at 62 ................................................................................................................................................................... 30
CalPERS or CalSTRS................................................................................................................................................................ 31
STRS Mandatory Membership Qualification......................................................................................................................... 34
STRS Permissive Elective Membership ................................................................................................................................. 36
STRS Non-Member ................................................................................................................................................................ 37
STRS Membership Codes for W4 Screen .............................................................................................................................. 38
STRS St-Ded’s for W4 and PR Screen .................................................................................................................................... 39
STRS AC-P-C Codes for W4 and PR screens........................................................................................................................... 40
STRS Guide to AC-P-C Codes for Members ........................................................................................................................... 41
STRS Guide to AC-P-C for Community Colleges .................................................................................................................... 42
STRS Guide to AC-P-C Codes for Non-Members ................................................................................................................... 43
STRS Guide to AC-P-C Codes for Exchange/Sojourn ............................................................................................................. 44
STRS Guide to AC-P-C Codes for Retiree’s ............................................................................................................................ 45
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STRS Coding for Various Compensation Types ..................................................................................................................... 46
Creditable Compensation NOT reportable to CalSTRS ......................................................................................................... 50
Converting Hourly/Daily Rates to Annual FTE ...................................................................................................................... 51
QCC Retro Module ................................................................................................................................................................ 54
When to Issue an ARREARS................................................................................................................................................... 56
STRS Common Errors ............................................................................................................................................................ 57
SEW/REAP User Manual........................................................................................................................................................ 62
Inquiry and report feature: ................................................................................................................................................... 65
CalPERS.................................................................................................................................................................................. 66
CalPERS Membership Eligibility ............................................................................................................................................ 67
Mandatory Membership Eligibility – Time Base ................................................................................................................... 67
Definition of a CLASSIC Member ........................................................................................................................................... 66
Definition of a PEPRA Member (NEW).................................................................................................................................. 66
PERS Monitored Positions – Irregular Time Base ................................................................................................................. 67
Other Employer Responsibilities for CalPERS Members ....................................................................................................... 72
PERS Membership Codes for W4 Screen .............................................................................................................................. 73
PERS AC-P-C Codes for W4 and PR screen ............................................................................................................................ 74
PERS Guide on Statutory Deductions.................................................................................................................................... 75
PERS St-Ded’s for W4 & PR Screens ...................................................................................................................................... 76
PERS Guide on AC-P-C Code Combinations .......................................................................................................................... 77
Special Compensation Categories and Types for CalPERS .................................................................................................... 78
PERS Non-Reportable Earnings ............................................................................................................................................ 79
PERS COMMON ERRORS ....................................................................................................................................................... 80
When to Issue a RETRO ......................................................................................................................................................... 81
When to Issue ARREARS........................................................................................................................................................ 83
PERS PRE-PAYROLL QCC AUDIT ............................................................................................................................................. 87
Glossary of School Business Terms ....................................................................................................................................... 95
Resources District Business & Advisory Services .................................................................................................................. 99
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Introduction
The Santa Clara County Office of Education (County Office) serves as a coordinating and regional service
agency for local K-12 and community college school districts within the County of Santa Clara. An important
function of the County Office is to provide resources and best practices in the area of school district business,
including payroll and retirement reporting.
Santa Clara County contains 31 school districts grades K-12. The SCCOE serves students through special
schools, alternative schools, Head Start and State Preschool programs, migrant education, and Regional
Occupational Programs. The Office also provides curriculum support, staff development, and technology
training programs directly to teachers and staff in schools countywide.
We created this document as a resource for district payroll, personnel and retirement staff and hope that you
find it valuable. We invite you to offer comments and suggestions as to how we may better serve the Districts
in the future.
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District Business and Advisory Services
District Business and Advisory Services (DBAS) provides a full range of business services to all school districts
and related educational entities in the county.
DBAS provide services in the areas of payroll, finance, attendance accounting, record retention, legislation,
training, and the data processing systems associated with those areas.
SERVICES
Advisory Services
• Calculates revenue using Local Control Funding Formula (LCFF)
• Maintains district cash balances
• Maintains district property tax revenues
• Reports on deferred maintenance and advise districts on accounting and financial
reporting
• Acts as a business manager for small service districts (less than 900 ADA)
• Reviews district budgets, interim reports and audits
Attendance Regulation
• DBAS publishes school district calendars
• Advises and trains districts on attendance rules
• Collects and recommends certification of monthly attendance reports
Business Services
• Distributes district apportionments
• Reconciles bank and county controller accounts
• Maintains master chart of accounts
• Provides business training and workshops on District best practices
Payroll Audit
• Processes wage garnishments
• Monitors retirement reporting, wage and tax reporting
• Disseminates information on payroll regulations
• Audits W2 reporting
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Payroll – Retirement
Abbreviations
Common abbreviations used throughout this document:
•
DBAS- District Business & Advisory Services
•
DB Account – Defined Benefit Account (STRS)
•
DBS Account – Defined Benefit Supplemental (STRS)
•
EIC – Employer Information Circular (STRS)
•
EPMC – Employer Paid Member Contributions (PERS)
•
PERS – Public Employees Retirement System
•
REAP – Remote Employer Access Program (STRS)
•
Ret. Base – Pay Rate @ 100% FTE (QCC)
•
SCCOE- Santa Clara County Office of Education
•
SEW – Secure Employer Website (STRS)
•
SMF – STRS Match File
•
SR – Service Retirement (STRS)
•
St-Ded – Statutory Deductions (QCC)
•
STRS – State Teachers Retirement System
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Direct Deposit Recall
A Direct Deposit Recall is initiated by the district when there is an error with an employee’s pay or when the
employee was not entitled to any compensation.
•
Direct Deposit Recall Request Form is e-mailed to the Districts’ Accounting Specialist to start the
process. Once the form is received, the process begins immediately.
 Note: The recall form cannot be submitted to the bank prior to the pay date.
•
There is a waiting period of five (5) business days to confirm that the recall is successful.
•
Once confirmed the Accounting Specialist will contact the district payroll staff.
•
The warrant will be cancelled on the next Payroll Cancel Warrant Run, this process is done:
 One day before 10th of the Month
 One day before End of the Month Payroll Close
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Direct Deposit Reject/Reissue
A Direct Deposit Reject/Reissue is processed when the bank has rejected a Direct Deposit (DD) due to an
incorrect account number or an account that is closed.
•
It may take up to 5 business days to see any rejected items.
•
DBAS will issue an AP Warrant for the Net Amount for any DD’s that have been rejected; warrant will
be available the next day. Comments of the cancelled warrant will be posted to the employees’ WR
screen in QCC and backup will be emailed to your district payroll staff.
•
District payroll staff will be advised to change the banking information to a valid Direct Deposit account
or request to receive live warrants.
•
If changes are not made in QCC, the system WILL NOT correct itself and produce a live warrant on
payday the next month. Ensure that corrections in QCC are made when notified of the rejection to
ensure the employee will be paid in a timely manner the following pay day.
•
Once an employee’s Direct Deposit has rejected for 2 consecutive months, the net amount will be
returned to the District via Cash Transfer. It will be the district’s responsibility to reissue the net to
their employee.
•
Please be advised that for NEW Direct Deposits you should always “Pre-Note” to validate the accuracy
of the Bank Routing and Account Information.
•
DBAS will notify district payroll staff, if a pre-note is unsuccessful.
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Stale Dated Warrants
Warrants that are not presented for payment within a specific amount of time (180 Days) are considered stale
dated and will no longer be valid for redemption.
Effective 01/04/2011, Bank of America created a stale dated process for districts who process payroll or
accounts payable through the SCCOE disbursement accounts. This process states that all 180-day outstanding
warrants will be automatically cancelled by the bank, based on the 365-day calendar year. The counting will
start the next calendar day after the issue date of the warrant.
For example: A warrant that has the issue date 07/30/2013 will reach 180-days old on 01/26/2014. It
becomes stale dated and will be cancelled automatically on 01/26/2014.
The report for all stale dated cancellations can only be generated on a monthly basis. A cancelled stale dated
warrant will not appear under the bank’s inquiry search during the month. DBAS contacts the Bank of America
Service Center to verify the status of the warrant and whether it is cancelled at the bank due to it being stale
dated.
DBAS prepares a cash transfer (TF) to refund the net pay amount of all stale dated payroll warrants that are in
the stale dated cancellation report for that month. The Accounting Specialist will inform their districts and
provide the backup to support the cash transfer created.
Reference:
GC 50050 through 50057 for instructions on dealing with items that are payable to third parties but remain
unpaid. There are legal consequences for not complying with Government Code. You may want to consult
with your legal counsel and draft an official policy on dealing with such items.
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Deceased Warrant Processing
The district has a fiduciary responsibility to ensure that the final compensation of a deceased employee is
received by their beneficiary.
When the recipient of a payroll warrant perishes while the warrant is still negotiable:
•
The District needs to notify DBAS to hold the warrant and cancel payment of this warrant at the bank.
•
DBAS will transfer the net amount of the payroll warrant via cash transfer (TF) to the district upon
receiving confirmation from the bank for the cancelled check.
•
The District will issue a replacement warrant to the beneficiary to avoid any inconvenience to the
family
If a warrant is stale dated and the payee is deceased:
•
DBAS will issue the net warrant back to the District via cash transfer (TF) for the stale dated warrant.
•
The District will then issue a replacement warrant to the successor.
Reference:
Per California Probate Code section 13100 (used by all COEs) if 40 days have elapsed since the death of a
person, their successor may collect any item of property that is money due the decedent as long it is valued at
less than $100,000. This can be done without any letters of administration or probate of the will.
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Deferred Pay
Deferred Pay is available for employees’ who work 10 or 11 months in a fiscal year. The employee may elect to
split their net pay over 12 months; this does not affect their gross wages or taxable income. For normal
deferred pay deduction and repayment, the Pay Schedule field on the W4 screen defines when deferred pay
transactions occur. Pay Schedules contain 6 characters; the 4th character (R) is the one that calculates
Deferred Pay.
TSB begins the payroll extraction process after DBAS releases payroll for production. The payroll extraction
must be error free in order for it to be successfully processed. Often the process becomes hindered due to
errors on employee pay lines and the process cannot be completed. Manual intervention must be used to
correct these errors so that payroll can be completed and warrants produced.
Common Error - Negative Deferred Pay Amount
Please be aware that negative earnings adjustments affect deferred pay. The net pay comes out as a positive
number after the Statutory Deductions, Voluntary Deductions, and Deferred Pay is calculated.
In the event that a negative net pay occurs during the payroll production, DBAS staff will have to change the
Pay Schedule on the pay line that is causing this error. DBAS will notify districts payroll staff of this change.
Example: Change from E10R07 (Deferred Pay) to E10B07 (Benefits only)
W4 screen sample:
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Payroll – Retirement
DPO Value, Repayment, Deduction and Pay Schedule chart
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How Deferred Pay is calculated:
13
E10R07 NML Gross Pay Line
6,559.12
FIT
SIT
(448.45)
(82.39)
MEDI
(76.33)
RET
(524.73)
CLD1
(500.00)
DEN1
DIS
(36.18)
(52.56)
DUE
MED1
(100.06)
(683.52)
MIS1
(75.00)
TSA
Total Deductions
(342.00)
(2,921.22)
E10R07 NML Gross – All Deductions
3,637.90
For Deferred Pay Calculation take
NML Gross – All Deductions x 16.70%
607.68
Net Pay =
3,030.22
Payroll – Retirement
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Credential Holds
No order for a warrant, and no warrant drawn pursuant to Section 42647, shall be drawn in favor of any
person employed in a position requiring certification qualifications.
Reference:
California Education Code section 45034
The County Office of Education shall withhold all payroll warrants for certificated employees who provide
services in a Certificated Position without possessing valid documents with the following stipulations:
•
Teachers who are eligible to renew “Clear” may file the CL-224- Approval of Services Rendered without
a Valid Credential form with the Credentials Unit of the Santa Clara County Office of Education. The
Commission on Teacher Credential makes the decision to approve or disapprove these forms at its
regularly scheduled Commission Meeting. This process can take up to several months to complete.
Please be reminded that the payroll warrants shall be withheld until approval is received.
•
Please be aware that there is no process to approve the services rendered by those persons whom are
not eligible to renew a “Clear Credential”. It is the Districts’ responsibility to verify that all Certificated
employees have valid Certification prior to rendering services.
The SCCOE Credentials Department sends DBAS a list that includes employees that have either revoked or
expired credentials the day after payroll closes for the districts. The Accounting Specialists are required to
inactivate the employee’s certificated pay lines and notify district’s payroll staff once the report is received. It
is not legal to change the employee to a classified account string if they were working in a certificated
position.
The authorized manager at the district must certify in writing if the employee was working in a position that
did not require a credential. This must include a statement that names the position the employee held, the
dates that the employee worked in the position, and a copy of the job description. DBAS will make a
determination and remove the credential hold if applicable.
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Workers Compensation
Employees who are injured on the job are compensated for wages missed during the time they are not able to
work. The district is responsible for ensuring that the employee is paid accurately.
Generally, the district receives the checks directly from worker’s compensation carrier. In the event the
employee erroneously receives a worker’s compensation check, he/she must endorse the check over to the
district.
The district payroll person is responsible for adjusting the workers compensation line in the payroll system and
it is important to know that the amount of the worker’s compensation adjustment cannot exceed the
employee’s taxable gross wages.
The first step to correct worker’s compensation would be to inspect the employees Payroll History-PI screen
or the PD screen for payroll information needed to calculate the adjustment.
Payroll History - PI screen sample:
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Workers Comp Adjustment/Calculation: The district payroll person should adjust the worker’s compensation
line in payroll as follow:
Calculation:
Gross Pay – DEN1 - EYE1 – MED1 – Retirement – TSA = Workers Comp Adjustment
NML Gross Pay
3,559.12
DEN1
(36.18)
EYE1
MED1
(100.06)
(683.52
Retirement
(524.73)
TSA
(1,000.00)
Total Deductions
(2,344.49)
Gross – All Deductions = Taxable Gross
Your Workers Comp Adjustment is
1,214.63
1,214.63
You cannot adjust more than the Taxable Gross allowed based on the sample calculation above; doing so will
create a negative taxable gross.
IMPORTANT:
If at the end of the year the employee’s payroll history record shows a negative taxable gross the system will
not generate a W2 for this employee.
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Workers Compensation Adjustment Dock to NML Gross Pay Line:
Workers Compensation Adjustment Issue on NEW pay Line: Please make sure when creating a new pay line
you enter the same Ret. Base/Pay Rate, AC-P-C code and Pay Schedule as the one on the NML pay line.
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Payroll Cancellations
School districts submit Warrant Cancellation Request Form to DBAS for a warrant that needs to be cancelled in
the QCC system due to an incorrect pay or the employee was not entitled to any compensation.
All expenditures are reversed on the District’s general ledger during the Payroll Warrant Cancellation process.
Occasionally, there have been payments made out to different entities on employee’s behalf and DBAS needs
to recuperate those amounts.
DBAS will review the PAY510 Cancellation Warrant Report for any voluntary deduction payments that were
made. Your Accounting Specialist will create a cash transfer to cover the payments made to:
•
Credit Unions: Vol-Ded’s in the 2XXX’s
•
Donations: Vol-Ded’s in the 3XXX’s
•
CTA Dues: Vol-Ded’s in the 4XXX’s
•
Garnishments: Vol-Ded’s in the 5XXX’s
•
TSA’s: Vol-Ded’s in the 9XXX’s
It will be the district’s responsibility to recover the paid amounts from their employee. The district will be
notified and asked for the appropriate account string to use for the transaction. The transfer along with the
backup will be emailed to the district payroll staff upon approval.
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Payroll Cancels and Re-issues
This next section will illustrate 4 scenarios requiring payroll cancels and reissues and how they should be
processed to correctly state the employee’s payroll history in QCC and ultimately their W-2.
Example #1: The warrant was issued in error to the employee and the employee was terminated on the day
of, or after the issuance of the erroneous check.
Warrant Issued
Cancelled in QCC
7,420.50
(7,420.50)
Fed Tax
394.60
(394.60)
State Tax
147.10
(147.10)
-
-
Medicare
104.68
(104.68)
TSA
250.00
(250.00)
Retirement
593.64
(593.64)
Vol-Ded
337.95
(337.95)
Vol-Ded Credit Union
600.00
(600.00)
Vol-Ded Garnishment
150.00
(150.00)
4,842.53
(4,842.53)
Gross
OASDI
Net Pay
Steps to follow:
1. Calculate the check amount to be collected from the employee:
Net Pay Amount
4,842.53
+ TSA
+ 250.00
+ Credit Union
+ 600.00
+ Garnishment
+ 150.00
= 5,842.53
2. The district must contact the employee and have them issue a check back to the district for 5,842.53.
3. The district will deposit the check and authorize DBAS to process a cash transfer to reimburse the
payroll revolving account.
4. The district will submit a Warrant Cancellation Request form and DBAS will cancel the payroll warrant
in QCC only. At this point, the money will automatically post to the district’s books and the employee’s
payroll history will be correctly stated in QCC.
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Example #2: The Employee is overpaid but still employed by the district.
Original Warrant
(CXL in QCC)
Reissued Warrant
(CXL @ BANK)
Difference
Warrant No.
92000001
92000002
-
92000001
Issue (Cancel) Date
01/31/14
02/04/14
-
(02/03/14)
Gross
7,420.50
5,000.00
2,420.50
(7,420.50)
Fed Tax
394.60
275.00
119.60
(394.60)
State Tax
147.10
110.00
37.10
(147.10)
Medicare
107.59
72.50
35.09
(107.59)
TSA
250.00
250.00
-
(250.00)
Retirement
593.64
400.00
193.64
(593.64)
Vol-Ded
337.95
-
337.95
(337.95)
Vol-Ded Credit Union
600.00
600.00
-
(600.00)
Vol-Ded Garnishment
150.00
150.00
-
(150.00)
4,839.62
3,142.50
1,697.12
(4,839.62)
Net Pay
Cancelled in QCC
Steps to follow:
1. Calculate the check amount to be collected from the employee:
Net Pay Amount
1,697.12
+ TSA
+ 0.00
+ Credit Union
+ 0.00
+ Garnishment
+ 0.00
= 1,697.12
2. The District will contact the employee and have them issue a check back to the District for the Net Pay
Amount of 1,697.12.
3. The district will deposit the check and submit a Warrant Cancellation Request form and DBAS will
cancel the original payroll warrant in QCC only.
4. The District will then reissue a warrant with the correct Net Pay Amount of 3,142.50. The reissue must
include the TSA (250.00), Credit Union (600.00), and Garnishment (150.00) amounts, since DBAS will
not be able to recover these amounts.
5. The district will submit another Warrant Cancellation Request form for the reissue warrant and DBAS
will cancel the reissue warrant at the bank only, so that the reissued warrant cannot be cashed and is
still reflected in QCC.
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Example #3: The employee is paid twice i.e., a duplicate payment.
Warrant Issued
Duplicate
Cancel Duplicate WR
Warrant No.
92000003
92000010
92000010
Issue (Cancel) Date
01/31/14
02/10/14
(02/21/14)
Gross
7,420.50
7,420.50
(7,420.50)
Fed Tax
394.60
394.60
(394.60)
State Tax
147.10
147.10
(147.10)
107.59
107.59
(107.59)
TSA
250.00
250.00
(250.00)
Retirement
593.64
593.64
(593.64)
Vol-Ded
337.95
337.95
(337.95)
Vol-Ded Credit Union
600.00
600.00
(600.00)
Vol-Ded Garnishment
150.00
150.00
(150.00)
4,839.62
4,839.62
(4,839.62)
OASDI
Medicare
SDI
Net Pay
Steps to follow:
1. Calculate the check amount to be collected from the employee:
Net Pay Amount
4,839.62
+ TSA
+ 250.00
+ Credit Union
+ 600.00
+ Garnishment
+ 150.00
= 5,839.62
2. The district must contact the employee and have them issue a check back to the district for 5,839.62.
3. The district will deposit the check and authorize DBAS to process a cash transfer to reimburse the
payroll revolving account.
4. The district will submit a Warrant Cancellation Request form and DBAS will cancel the duplicate
warrant in QCC only. At this point, the money will automatically post to the district’s books and the
employee’s payroll history will be correctly stated in QCC.
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Additional Taxes - Federal and State
When an employee chooses to have extra Federal and State taxes taken out of their NML gross pay, districts
must use the PD screen for this process:
•
Vol-Ded 8700 for Federal Taxes
•
Vol-Ded 8600 for State Taxes
PD Screen Sample: Excess Federal and State Taxes
IMPORTANT:
DO NOT use the additional taxes field on the W-4 screen as this causes errors in payroll posting.
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Garnishments
Garnishments are generally the end result of a failure to pay. As recourse, agencies are able to collect money
owed from employees including interest and penalties through court orders.
As a courtesy to the Districts, DBAS processes garnishment payments to garnishing agencies for employees at
Santa Clara County School Districts. Currently, we do not pass the fees for this service to the employees who
have active orders. The law allows for the collection of these fees.
DBAS receives garnishment orders, modifications, and withdrawals from various agencies. Each agency has
specific rules and regulations. Nonetheless, all garnishments must be processed during the first payroll after
ten days of our receipt.
•
If a withdrawal is not received before the district payroll close date, then the payment must be
remitted to the garnishing agency.
•
It is the employees’ responsibility to contact the garnishing agency to make payment arrangements or
to dispute an order.
•
If the district receives a garnishment, release or modifications of order please forward to DBAS.
Agency
Internal Revenue Service
Franchise Tax Board
Child Support Division
Child Support Division
Child Support Division
Student Loan Division
Court Ordered Debt
Sheriff’s Department
Vehicle Registration Division
Out of State Order
Bankruptcy
Vol-Ded Vendor Code
5515
5514
5513
5511
5516
5520
5517
5512
5521
5518
5519
Comments
Check sent directly to recipient
Within Santa Clara County
Outside of Santa Clara County
 5514, 5517, & 5521 - 25% of the disposable income & must have over $ 942.50 in STAT NET to withhold
 5512 - 25% of the disposable income & must have over $1,386.67 in STAT NET to withhold
 5511, 5513, 5516, 5518, & 5519 - Flat payment amount set by the Agency
 5515 - Employee Net take home is $845.83 based on a “single” filing status
 5520 - 15% of the disposable income & must have over $ 942.50 in STAT NET to withhold
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Third Party Sick Pay
What Is Third-Party Sick Pay?
Sick pay generally means any amount paid under a plan because of an employees' temporary absence from
work due to injury, sickness, or disability. These payments include both short and long-term benefits.
However, only the first 6 months of the benefits are taxable.
What is NOT Considered Third Party Sick Pay?
•
•
•
•
•
Disability retirement payments
Worker's Compensation Sick pay, which is made after the first six calendar months following the last
calendar month in which the employee performed services for the employer. This Third Party Sick
benefit is not subject to FICA and Medicare.
Payments in the nature of worker's compensation-Public Employees
Medical expense payment
Payments unrelated to absence from work
Reference:
IRS 2014 Publication 15-A for detail examples of Third party payments that are not sick pay by the Internal
Revenue Service.
Who is responsible to Report Payment?
Third Party as an Employer’s Agent
The third party that makes payments of sick pay as your agent is not considered the employer and generally
has no responsibility for employment taxes. This responsibility remains with the employer. These payments
should be paid directly to the employer and the employee should be paid through the employer’s payroll
system. Liability payments for employee and employer taxes are the responsibility of the employer:
e.g. if a third party provides administrative services only, the third party is your agent.
Third Party NOT as an Employer’s Agent
A third party that makes payments of sick pay other than as an agent of the employer (If the third party is paid
an insurance premium and is not reimbursed on a cost-fee-basis, the third party is not your agent) is liable for
federal income tax withholding (if requested by the employee) and the employee part of the social security
and Medicare taxes. The third party is also liable for the employer’s part of Social Security, Medicare, FUTA
and preparing the quarterly tax returns and the reporting of W2.
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Reference:
Section 931.5 of the California Unemployment Insurance Code (CUIC) provides that third-party sick payments
are “wages” for the purpose of reporting Unemployment Insurance (UI) and Employment Training Tax (ETT).
These payments are also reportable as Personal Income Tax (PIT) wages, which are wages subject to California
personal income tax. Even though PIT withholding on these wages is not mandatory, the wages are considered
taxable income to the recipient and must be reported on the recipient’s California income tax return. Without
exception, payments for third-party sick pay are not subject to State Disability Insurance (SDI).
IMPORTANT:
•
Districts must ensure that third party vendors that are making payments directly to the employees are
responsible for the tax remittance and reporting.
•
All third party sick leave requiring district burden tax payments need to be processed through the
payroll system.
•
Manual processing of third party sick leave totals will no longer be processed. By eliminating the need
for manual adjustments during calendar year end processing, payroll history records will retain data
integrity and employees should receive their W2 forms earlier in January.
25
Payroll – Retirement
2014
W2 Reporting Changes for the Calendar Year of 2014
Returned wage reports from the Social Security Administration (SSA)
Effective January 2014, the SSA will return Form W-2 electronic and paper wage reports under the following
conditions:
•
•
•
Medicare wages and tips are less than the sum of social security wages and social security tips
Social security tax is greater than zero; social security wages and social security tips are equal to zero
Medicare tax is greater than zero; Medicare wages and tips are equal to zero
If the above conditions occur in an electronic wage report, the SSA will notify the submitter by email or postal
mail to correct the report and resubmit it to the SSA. If the above conditions occur in a paper wage report, the
SSA will notify the employer by email or postal mail to correct the report and resubmit it to the SSA.
REMINDER
$2,500 limit on health flexible spending arrangement (FSA)
For plan years beginning after December 31, 2012, a cafeteria plan may not allow an employee to request
salary reduction contributions for a health FSA in excess of $ 2,500.
Additional Medicare Tax
Beginning January 1, 2013, an employer is required to withhold a 0.9% Additional Medicare Tax on any Federal
Insurance Contributions Act (FICA) wages compensation it pays to an employee in excess of $200,000 in a
calendar year. An employer is required to begin withholding Additional Medicare Tax in the pay period in
which it pays wages or compensation in excess of $200,000 to an employee and continue to withhold it until
the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no
employer share of Additional Medicare Tax. All wages and compensation that are subject to Medicare tax are
subject to Additional Medicare Tax withholdings if paid in excess of the $200,000 withholding threshold.
26
Payroll – Retirement
2014
Group-term life insurance
You must include in boxes 1, 3 and 5 the cost of group-term life insurance that is more than the cost of
$50,000 of coverage, reduced by the amount the employee paid toward the insurance. Use publication 15-B
to determine the cost of the insurance. Also, show the amount in box 12 with code C. For employees, you
must withhold social security and Medicare taxes, but not federal income tax. For coverage provided to
former employees, the former employees, the former employees must pay the employee part of social
security and Medicare taxes on the taxable cost of group-term life insurance over $ 50,000 on Form 1040. You
are not required to collect those taxes. However, you must report the uncollected social security tax with code
M and the uncollected Medicare tax with code N in box 12 of Form W-2. However, any uncollected Additional
Medicare Tax (on the cost of group-term life insurance, which, in combination with other wages, is in excess of
$200,000) is not reported with code N in box 12.
Health savings account (HSA)
You must report all employer contributions (including an employee’s contributions through a cafeteria plan) to
an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from
the income of the employee also must be reported in boxes 1, 3 and 5.
Reference:
IRS Publication: General Instructions for Forms W-2 and W-3
27
Payroll – Retirement
28
2014
Payroll – Retirement
29
2014
Payroll – Retirement
2014
CalSTRS
California State Teachers’ Retirement System provides retirement, disability and survivor benefits for
California's 852,316 pre-kindergarten through community college educators and their families. CalSTRS was
established by law in 1913 and is part of the California State and Consumer Services Agency.
CalSTRS 2% at 60: First hired to a position to perform activities subject to coverage by a DB Program on or
before December 31, 2012. An existing member is also someone who may have refunded, reinstated, retired,
started as a non-member or elected to have their creditable service covered by another retirement plan,
including Social Security.
Ed Code 22119.2
CalSTRS 2% at 62: First hired to a position to perform activities subject to coverage by the DB Program on or
after January 1, 2013.
Ed Code 22119.3
Creditable Compensation means compensation paid in cash by an employer to all persons in the same class of
employees for performing creditable service in that position; and includes:
•
•
•
•
Salary or wages paid in accordance with a publically available written contractual agreement, including,
but not limited to, a salary schedule or employment agreement.
Compensation paid in addition to salary or wages, provided it is paid to all persons in the same class of
employees in the same dollar amount or same percentage.
Compensation paid for employer-approved leave
Member contributions picked up by an employer, pursuant to Ed Code 22903 or 22904
Defined Benefit: DB Program is a traditional defined benefit plan that provides retirement, survivor and
disability benefits. Your Defined Benefit retirement benefit is based on a formula set by law using your age,
service credit, and final compensation.
Defined Benefit Supplemental Program: DBS Program is a hybrid cash balance plan for a Defined Benefit
member that provides additional savings for retirement. Funds come from compensation earned from service
in one school year in excess of one year service credit and limited –term salary increases. From January 1,
2001 through December 31, 2010, funds came from 25% of your monthly CalSTRS contributions.
30
Payroll – Retirement
2014
CalPERS or CalSTRS
Many times employees change from one job to another and the retirement system chosen may be in
question. Please refer to the CalPERS/CalSTRS decision tree below.
CalPERS/CalSTRS RETIREMENT SYSTEM ELECTION
4/7/2014
31
Payroll – Retirement
32
2014
Payroll – Retirement
2014
Employers are required to notify employees of their right to elect to stay with their retirement system within
10 days of hire date. Compare and know the difference of each system’s default.
•
If a CalSTRS member takes a job to perform QUALIFYING Classified service covered by CalPERS, the
employee has 60 days to submit Form ES 372 electing to have that service reported to CalSTRS.
Otherwise the service will be reported to CalPERS by default.
•
If a CalPERS member takes a job to perform QUALIFYING Certificated service covered by CalSTRS, the
employee has 60 days to submit Form ES 372 electing to have that service reported to CalPERS.
Otherwise the service will be reported to CalSTRS by default.
References:
Employer Directives 2001-07 and 2005-01
Employer Information Circular Volume 25; Issue 11 dated August 5, 2009 for a complete description of
Situation, Election, Right and Action (CalPERS/CalSTRS Decision Tree)
Publication: Join CalSTRS? Join CalPERS? From https://sew.calstrs.com From Home Page click on
Reference Items, Publications, click on Search and Open to download
Ed Codes 22508,22509,45134,88033
Please fax a copy of this form to STRS (916) 414-5476. Keep a copy for your record
IMPORTANT:
If a STRS Member takes a classified position that DOES NOT meet the criteria for mandatory membership, then
this option DOES NOT apply. Non-Member Classified earnings are NOT reportable i.e. AC-P-C 00-0-0.
If a PERS Member takes a certificated position that DOES NOT meet the criteria for mandatory membership,
then this option DOES NOT apply. Non-Member Certificated earnings ARE reported to STRS. See section of
AC-P-C codes for STRS Non-Members. However, the employee DOES have the option to elect membership via
Permissive Election form ES350 for this certificated position.
33
Payroll – Retirement
2014
STRS Mandatory Membership Qualification
Mandatory Membership (Transaction Code 11), Under Pending Ret W4 Screen & REAP
The following are circumstances in which an employee qualifies for mandatory membership:
•
FTE 100% (Account Code 57) Membership Date is the first day of employment.
Ed Code 22501
•
FTE 50% K-12 (Account Code 57) Membership Date is the following day of the pay period upon
completing 50% of the contract.
Ed Code 22502
•
Substitute Teacher (Account Code 54) Reached 100 days or 600 hours within a fiscal year & within 1
district. Membership date is the first day of the following pay period in which they reached 100 days or
600 hours.
Ed Code 22503
•
Part-Time or Adult Ed (Account Code 55) Reached 60 hours or 10 days within 1 pay period & within 1
district. Membership date is the first day of the following pay period in which they reached the 60
hours or 10 days.
Ed Code 22504 (a)
•
However, full-time or part-time employees at a Community College (Account Code 57/58), whose
employment is considered temporary (no matter how many days/hours are worked) becomes a
member on the first day of the pay period following their positions becoming permanent.
Ed Code 22502, 22504 (b) (d) & 26400 (f)
34
Procedure:
Payroll – Retirement
2014
•
Verify current status at https://sew.calstrs.com
•
From the Home page click on REAP, enter Tax ID = SSN, then click Search
•
If status is “Person not found” click on Mass Update, enter Tax ID = SSN, then click search. Add
Membership using Transaction Code 11 from the drop down menu; please complete all boxes with the
exception of LAUSD Number. Use employees data from MA screen in QCC
•
If status is “Non-Member” click on the Update tab, select Transaction Code 11 from the drop down
menu, enter Effective Date
•
Ensure that the MEMBERSHIP DATE coincides with the date that creditable service commenced
•
Log into QCC and open the W4 screen
•
Set up employee as a “Member” using the appropriate St-Ded and AC-P-C codes (please refer to that
section of the binder for a list of valid codes)
•
Set up the employees’ pay line in the PR screen using the same set up as the W4 screen for NML pay
•
If DB Status is “Member” at CalSTRS, then the person is already in membership status and therefore, no
action is required
35
Payroll – Retirement
2014
STRS Permissive Elective Membership
Permissive Membership (Transaction Code 81), under Pending Ret W4 Screen & REAP
Form ES 350 or Permissive Election Form as we normally refer to it.
An employee, whom performs creditable service and is excluded from mandatory membership, may elect
membership at any time - even if the employee has declined membership in the past. Part-time employees
with less than 50% FTE, Substitute and Adult Ed Teachers should receive this form on the date of hire.
Ed Codes: 22515 & 22455.5
Procedure:
•
Verify current status at https://sew.calstrs.com
•
From Home page click on REAP, enter Tax ID = SSN then click Search
•
If “Electing” membership and status is “Person not found” click on Mass Update, enter Tax ID = SSN,
then click search. Add Membership using Transaction Code 81 from the drop down menu; please
complete all boxes with the exception of LAUSD Number. Use employees date from MA screen QCC
•
If “Electing” membership and status is “Non-Member” click on the Update tab, select Transaction Code
81 from the drop down menu, enter Effective Date
•
Ensure that the MEMBERSHIP DATE coincides with the date that creditable service commenced
•
Fax this form to STRS (916) 414-5476 & keep a copy for your records, do not forward to COE
•
Then log into QCC and open the W4 screen
•
Set up employee as a “Member” using the appropriate St-Ded and AC-P-C codes (please refer to that
section of the binder for a list of valid codes)
•
Set up employees’ pay line in the PR screen using the same set up as the W4 screen for NML pay
•
If Electing membership and DB Status is already “Member” at CalSTRS, then just please keep a copy of
the form for your records do not forward to the COE or STRS.
36
Payroll – Retirement
2014
STRS Non-Member
Non-Member (Transaction Code 02) Under Pending Ret W4 Screen & REAP
An employee who performs creditable service and does not qualify for Mandatory Membership and does not
Elect Membership MUST still be reported to CalSTRS as Non-Member status.
Procedure:
•
Verify current status at https://sew.calstrs.com
•
From Home page click on REAP, enter Tax ID = SSN then click Search
•
If “Declining” membership and status is “Person not found” click on Mass Update, enter Tax ID = SSN,
then click search. Add Non-Member using Transaction Code 02 from the drop down menu; please
complete all boxes with the exception of LAUSD Number. Use employees data from MA screen QCC
•
Ensure that the NON-MEMBER DATE coincides with the date that creditable service commenced
•
Keep the form for your records; do not forward to COE or to STRS
•
Then log into QCC and open the W4 screen
•
Set up employee as a “Non-Member” using the appropriate St-Ded and AC-P-C codes (please refer to
that section of the binder for a list of valid codes)
•
Set up employee in PR screen as well using the same set up as the W4 screen
•
If declining membership and DB Status is already “Non-Member” or “Refund”, please keep this form for
your records. Do not forward it to the COE or STRS.
Other Transaction Codes under Pending Ret W4 Screen & REAP:
•
Name Change, as it appears on the SSN card: Transaction Code 50 on REAP
•
DOB or Gender Change: Transaction Code 51 on REAP
37
Payroll – Retirement
STRS Membership Codes for W4 Screen
Primary RS: District Determines depending on eligibility
•
•
•
01 = STRS Member
03 = STRS Retiree
05 = STRS Non-Member
SMF Status: STRS Match File, This field gets updated automatically on a Daily Basis
•
•
•
•
•
01 = Member
02 = Non-Member
07 = Refunded = Non-Member
21 = Retired (SR)
42 – Disabled Retired (DR)
Pending Ret: Pending Retirement, Transaction Codes in REAP
•
•
•
•
•
•
11 = Mandatory Member
81 = Permissive Election ES350
02 = Non-Member
50 = Name Change
51 = DOB or Gender Change
61 = Retired
STRS Contribution Rate
•
•
•
•
Employee 8% for Classic and PEPRA,
However member rate for CalSTRS 2% at 62 may change in the future
Employer 8.25%
RWP Employer rate changes every fiscal year
Reference:
Ed Codes 22901, 22950, 22951
Government Code 7522.30
38
2014
Payroll – Retirement
2014
STRS St-Ded’s for W4 and PR Screen
TFNSR – STRS Non-Member RS: 05
T: State & Federal
F: Social Security & Medicare
N: No SDI
SR: STRS Report Only, No Contributions
TMNS – STRS Member RS: 01
T: State & Federal
M: Medicare
N: No SDI
S: STRS Contributions
TMNSR – STRS Retiree RS: 03
T: State & Federal
M: Medicare
N: No SDI
SR: STRS Report Only, No Contributions
TMNN or TFNN – Non Reportable
Used for Specific Circumstances:
 Vacation Pay Off
 Retirement Incentives Paid AFTER
Retirement
 Classified Position that does NOT Qualify for
Retirement
TMNSRW – STRS Member RS: 01
T: State & Federal
M: Medicare
N: No SDI
SRW: STRS Contributions are based on
Ret. Base instead of Earnings
Employer Rate changes every fiscal year.
Districts that offer Alternative Retirement Plans for Non-members please use: PAR, ING or APP as your 4th thru
6th character option for St-Ded. These Plans require 8XXX Vol-Ded’s.
39
Payroll – Retirement
STRS AC-P-C Codes for W4 and PR screens
AC = Assignment Code
•
•
•
•
•
•
•
•
•
•
•
•
•
•
36 = Reduced Workload Program, Board & STRS Approval Required (RWP)
44 = Substitute Year Round School ONLY
45 = Part-Time, Hourly/Daily Rate or Adult Ed Year Round School ONLY
46 = Sabbatical Year Round School ONLY
47 = Full or Part-Time Contract Year Round School ONLY
54 = Substitute
55 = Part-Time Hourly/Daily or Adult Ed
56 = Sabbatical
57 = Full or Part Time Contract
58 = Hourly/Part-Time Community College ONLY
61 = Retired Teacher
62 = Exchange/Sojourn Teacher Must have a contract with foreign Country’s COE
71 = Defined Benefit Supplemental (DBS)
72 = Defined Benefit Supplemental (DBS) for New Members under Pension Reform
P = Pay Code
•
•
•
•
•
•
0 = Annual Member or Special Compensation
1 = Twelve Month Contract
2 = Eleven Month Contract
3 = Ten Month Contract
4 = Hourly Rate Non-Member or Retiree
8 = Daily Rate Non-Member or Retiree
C = Contribution Code
•
•
•
•
•
0 = No Contributions: Non-Member or Retiree
1 = Current: Member Contributions
3 = Arrears: Prior Period EARNINGS Adjustment, DOES Generate Service Credit
5 = Retro: Ret. Base/Pay Rate Change, Does NOT Generate Service Credit
6 = Special Compensation (SPC): Member, Non-member or Retiree
40
2014
2014
Payroll – Retirement
STRS Guide to AC-P-C Codes for Members
Members “Year Round School” RS: 01 & St-Ded: TMNS
10 Month Contract
11 Month Contract
12 Month Contract
SPC/DB Classic
Substitutes
Part-Time/Adult Ed
SPC/DBS Classic
SPC/DBS New Member
CURRENT
47-3-1
47-2-1
47-1-1
47-0-6
44-0-1
45-0-1
71-0-6
72-0-6
ARREARS
47-3-3
47-2-3
47-1-3
47-0-6
44-0-3
45-0-3
71-0-6
72-0-6
RETRO
47-3-5
47-2-5
47-1-5
47-0-6
44-0-5
45-0-5
71-0-6
72-0-6
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Annual
Annual
Rate = Ret. Base Always
Rate = Ret. Base Always
RETRO
57-3-5
57-2-5
57-1-5
57-0-6
54-0-5
55-0-5
71-0-6
72-0-6
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Annual
Annual
Rate = Ret. Base Always
Rate = Ret. Base Always
Members “Conventional School” RS: 01 & St-Ded: TMNS
10 Month Contract
11 Month Contract
12 Month Contract
SPC/DB Classic
Substitutes
Part-Time/Adult Ed
SPC/DBS Classic
SPC/DBS New Member
CURRENT
57-3-1
57-2-1
57-1-1
57-0-6
54-0-1
55-0-1
71-0-6
72-0-6
ARREARS
57-3-3
57-2-3
57-1-3
57-0-6
54-0-3
55-0-3
71-0-6
72-0-6
Members on “Reduced Workload Program” RS: 01 & St-Ded: TMNSRW
10 Month Contract
11 Month Contract
12 Month Contract
SPC/DB Classic
CURRENT
36-3-1
36-2-1
36-1-1
36-0-6
ARREARS
36-3-3
36-2-3
36-1-3
36-0-6
RETRO
36-0-5
36-0-5
36-0-5
36-0-6
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base
Please note: RWP requires Board and STRS approval.
Reference: EIC Vol. 26 Issue 3 and Vol.27 Issue 3, Employer Direct 2013-03, Ed Code 22713
41
2014
Payroll – Retirement
STRS Guide to AC-P-C Codes for Community Colleges
Members “Community College” RS: 01 & St-Ded: TMNS
CURRENT
ARREARS
10 Month Contract
57-3-1
57-3-3
11 Month Contract
57-2-1
57-2-3
12 Month Contract
57-1-1
57-1-3
SPC/DB Classic
57-0-6
57-0-6
Substitutes
54-0-1
54-0-3
Part-Time Faculty
58-0-1
58-0-3
SPC/DBS Classic
71-0-6
71-0-6
SPC/DBS New Member
72-0-6
72-0-6
RETRO
57-3-5
57-2-5
57-1-5
57-0-6
54-0-5
58-0-5
71-0-6
72-0-6
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Annual
Annual
Rate = Ret. Base Always
Rate = Ret. Base Always
Community College ONLY - please remember to use Classification Codes and Base Hours for Part-Time Faculty
Members, reference EIC09-1 Volume 25 Issue 8: Reporting Requirements for Community Colleges.
Classification Code
01 – Lab Instructor
02 – Lecturer /General Instructor
03 – Adult Education Instructor
04 – Librarian
05 – Counselor
Base Hours (minimum)
525
525
875
1050
1050
Reference:
EIC10-1 Vol. 25 Issue 12: Community College Reporting to the Defined Benefit Program for Part-time Faculty &
Employer Directive 2009-03 Community College Reporting Assignment Codes.
Non-Members “Community College” RS: 05
CURRENT
10 Month Contract
57-3-0
11 Month Contract
57-2-0
12 Month Contract
57-1-0
SPC
57-0-6
Substitutes
54-4-0
Substitutes
54-8-0
Part-Time Faculty
58-4-0
Part-Time Faculty
58-8-0
ARREARS
57-3-3
57-2-3
57-1-3
57-0-6
54-4-3
54-8-3
58-4-3
58-8-3
RETRO
57-3-5
57-2-5
57-1-5
57-0-6
54-4-5
54-8-5
58-4-5
58-8-5
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Hourly
Daily
Hourly
Daily
Districts that offer Alternative Retirement Plans for Non-Members please use: PAR, ING or APP as your 4th thru
6th character option for St-Ded. These Plans require 8XXX Vol-Ded.
42
Payroll – Retirement
2014
STRS Guide to AC-P-C Codes for Non-Members
Non-Members “Year Round School” RS: 05 & St-Ded: TFNSR
10 Month Contract
11 Month Contract
12 Month Contract
SPC
Substitute
Substitute
Part-Time/Adult Ed
Part-Time/Adult Ed
CURRENT
47-3-0
47-2-0
47-1-0
47-0-6
44-4-0
44-8-0
45-4-0
45-8-0
ARREARS
47-3-3
47-2-3
47-1-3
47-0-6
44-4-3
44-8-3
45-4-3
45-8-3
RETRO
47-3-5
47-2-5
47-1-5
47-0-6
44-4-5
44-8-5
45-4-5
45-8-5
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Hourly
Daily
Hourly
Daily
Non-Members “Conventional School” RS: 05 & St-Ded: TFNSR
10 Month Contract
11 Month Contract
12 Month Contract
SPC
Substitute
Substitute
Part-Time/Adult Ed
Part-Time/Adult Ed
CURRENT
57-3-0
57-2-0
57-1-0
57-0-6
54-4-0
54-8-0
55-4-0
55-8-0
ARREARS
57-3-3
57-2-3
57-1-3
57-0-6
54-4-3
54-8-3
55-4-3
55-8-3
RETRO
57-3-5
57-2-5
57-1-5
57-0-6
54-4-5
54-8-5
55-4-5
55-8-5
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Hourly
Daily
Hourly
Daily
Districts that offer Alternative Retirement Plans for Non-Members please use: PAR, ING or APP as your 4th thru
6th character option for St-Ded. These Plans require 8XXX Vol-Ded.
43
2014
Payroll – Retirement
STRS Guide to AC-P-C Codes for Exchange/Sojourn
Non-Members Exchange/Sojourn RS: 05
10 Month Contract
11 Month Contract
12 Month Contract
SPC
Substitute
Substitute
Part-Time/Adult Ed
Part-Time/Adult Ed
CURRENT
62-3-0
62-2-0
62-1-0
62-0-6
62-4-0
62-8-0
62-4-0
62-8-0
ARREARS
62-3-3
62-2-3
62-1-3
62-0-6
62-4-3
62-8-3
62-4-3
62-8-3
RETRO
62-3-5
62-2-5
62-1-5
62-0-6
62-4-5
62-8-5
62-4-5
62-8-5
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Hourly
Daily
Hourly
Daily
Reference:
Ed Code 22601 and CalSTRS Employer Information Circular Volume 23; Issue 13
44
Payroll – Retirement
2014
STRS Guide to AC-P-C Codes for Retiree’s
Retired RS: 03 & St-Ded: TMNSR
10 Month Contract
11 Month Contract
12 Month Contract
SPC
Substitutes
Substitutes
Part-Time/Adult Ed
Part-Time/Adult Ed
CURRENT
61-3-0
61-2-0
61-1-0
61-0-6
61-4-0
61-8-0
61-4-0
61-8-0
ARREARS
61-3-3
61-2-3
61-1-3
61-0-6
61-4-3
61-8-3
61-4-3
61-8-3
RETRO
61-3-5
61-2-5
61-1-5
61-0-6
61-4-5
61-8-5
61-4-5
61-8-5
Ret. Base/Pay Rate
Monthly
Monthly
Monthly
Rate = Ret. Base Always
Hourly
Daily
Hourly
Daily
Notification and Reporting of Post-Retirement Earnings by Employer:
Section 22461 requires employers to notify retired CalSTRS members of the earnings limit and report earnings
to CalSTRS each month. All post retirement earnings must be reported with Member Code 2 and Assignment
Code 61.
45
Payroll – Retirement
2014
STRS Coding for Various Compensation Types
STRS Stipend for Special Comp WITH Release Time:
WITH Release Time is when the teacher is excused from their normal assignment to perform additional duties
(during normal school hours).
These stipends do not generate service credit; however they do remain in the DB account and are factored
into the members’ final compensation at the time of retirement.
AC-P-C code for these Stipends include:
For Members 2% at 60 Report as 57-0-6, this will post directly to DB
•
•
Department Chair
Yearbook editor
PR Screen Pay Line Sample: Rate = Ret. Base
IMPORTANT:
When a member’s CC6 lines total exceeds $15,000.00 the system will flag with edit code MO B109. These lines
will need to be approved by the employer. STRS will request documentation to support validity of CC6.
46
Payroll – Retirement
2014
STRS Stipends for Additional Duties WITHOUT Release Time:
WITHOUT Release Time is when the teacher performs duties outside of their normal work hours (before or
after school).
Additional Duties do generate service credit; anything in excess of a 1.000 service credit gets automatically
transferred to the DBS account at the end of the fiscal year.
AC-P-C code 55-0-1 Additional Duties include but are not limited to:
•
•
•
•
•
•
•
•
•
•
Teaching an extra period
Coaching/Activity
Attending Trainings
Summer school
Noon duty supervision by certificated staff
Preparing for a class or workshop
Professional Development
Science fair coordinator
Camps/clinics
Music/band director
Non Time-Based stipends are NOT based on hours or days. These are lump-sum payments:
•
•
Pay Rate for same employer – use annualized contract
Pay Rate for different employer – use annualized median salary
Time-Based stipends are based on certain numbers of days or hours required to do an additional assignment.
•
Pay Rate = annualized contract or annualized hourly/daily rate
PR Screen Pay Line Sample: Ret. Base is annual
47
STRS Stipends:
Payroll – Retirement
2014
Please keep in mind that reporting these stipends and/or bonuses incorrectly has a significant impact on the
member’s final compensation. As a result, a retired member will be overpaid in service retirement benefit
from the retirement date to the date the corrections are made by the employer.
IMPORTANT:
This is one of the most common Employer Audit Findings by STRS.
AC-P-C codes for Stipends include:
For Members 2% at 60 Report as 71-0-6, this will post directly to DBS
•
•
•
•
•
•
Retirement Incentives
Retention Bonus
Recruitment/Signing Bonus (Paid after service is performed)
Off the Salary Schedule Payment
Twenty years of service
Bilingual certification
PR Screen Pay Line Sample: Rate = Ret. Base
48
Payroll – Retirement
2014
STRS Bonus:
Relates to performance of creditable service and must be available to all in the same class of employees.
STRS Allowances:
Employee is not required to provide documentation and has total discretion over expenditure of allowance.
These Bonus and Allowances remain in the members DB account and are factored into the member’s final
compensation.
AC-P-C codes for Bonuses, Allowances include:
For Members 2% at 60 Report as 57-0-6, this will post directly to DB
•
•
•
•
•
•
•
•
Car allowance (TRV)
Cell Phone Allowance
Parcel Tax
Teacher-In-Charge
Class Size Overload K-12
Lottery bonus distribution
Governor’s Performance Award bonus paid to certificated teacher
Credential Bonus
PR Screen Pay Line Sample: Rate = Ret. Base
IMPORTANT:
When a member’s CC6 lines total exceeds $15,000.00 the system will flag with edit code MO B109. These lines
will need to be approved by the employer. STRS will request documentation to support validity of CC6.
CalSTRS is currently working on a new Employers’ Creditable Compensation Guide with more details on
compensation scenarios and how to report.
49
Payroll – Retirement
2014
Creditable Compensation NOT reportable to CalSTRS
For Both 2% at 60 and 2% at 62:
•
Compensation not paid in cash to all persons in the same class and compensation paid for service that
is not creditable.
•
Compensation that is paid in addition to salary or wages, if it is not paid to all persons in the same class
and in the same dollar amount or percentage.
•
Compensation paid in exchange for the relinquishment of unused accumulated leave.
•
Payments made by an employer, include but not limited to, for participation in a deferred
compensation plan; to purchase an annuity contract, tax-deferred retirement plan or insurance
program; and contributions to a plan that meets the requirements of Section 125, 401(a), 401(k),
403(b), or 457(f) of Title 26 of the United States Code.
•
Fringe Benefits, expenses paid or reimbursed by an employer.
•
Severance pay, including lump-sum and installment payments, or money paid in excess of salary or
wages to a member as compensatory damages or as a compromise settlement.
•
Any other payments determined to not be “creditable compensation”.
Additional exclusions for 2% at 62:
•
Compensation not paid each pay period in which creditable is performed for that position.
•
Payments determined to have been made to enhance a member’s contribution benefit.
•
Cash in-lieu of receiving a benefit. One-time or ad hoc payments.
•
An employer-provided allowance, reimbursement or payment, including, but not limited to, one made
for housing, vehicle, uniform or a bonus.
Reference: Employer Directive 2014-01 Release on March 14, 2014
50
2014
Payroll – Retirement
Converting Hourly/Daily Rates to Annual FTE
Once a Non-Member mandatorily qualifies or permissively elects then you must report the Ret. Base/Pay Rate
as Full Time Equivalent (FTE)
Ed Code: 22138.6, 22503, 22504
When to Annualize Ret. Base/Pay Rate
•
•
•
STRS Members working in substitute daily or hourly positions
STRS Members working in part-time daily or hourly positions
STRS Members working in adult education hourly positions
Converting Daily Rate to Annual:
Daily
Pay Rate
125.00
X
X
# of
Base Days
185
Annual
= Pay Rate
= $23,125.00
Pay
Code
0
This formula applies to AC-P-C codes:
• 54-0-1 Subs
• 55-0-1 Part-Time or Adult ED
• 58-0-1 Community College
 Please use the number of days or hours that pertain to your district and the employee’s
assignment.
 Please use the appropriate Pay Type that best applies to the rate and assignment.
PR Screen Pay Line Sample: Ret. Base is annualized
51
2014
Payroll – Retirement
Converting Hourly Rate to Annual:
Hourly
Pay Rate
20.00
X
X
# of
Base Hours
7
X
X
# of
Base Days
185
=
=
Annual
Pay Rate
$25,900.00
Pay
Code
0
This formula applies to AC-P-C Codes:
• 54-0-1 Subs
• 55-0-1 Part-Time or Adult ED
• 58-0-1 Community College
 Please use the number of days or hours that pertain to your district and the employee’s
assignment.
 Please use the appropriate Pay Type that corresponds to the rate.
 Prior to annualizing hourly rates for Adult Ed, please verify whether the employee is working a 10,
11 or 12 month assignment/position and then annualize accordingly.
 Please use the appropriate Pay Type that best applies to the rate and assignment.
PR Screen Pay Line Sample: Ret. Base is annualized
52
2014
Payroll – Retirement
When to Issue a RETRO
When an employees’ Ret. Base/Pay Rate changes due to:
•
•
An approved and ratified collective bargaining agreement between School District Boards and
Collective Bargaining Units
A change in Step and Column
Example: A 10 month employee is receiving a 5% pay increase in January 2014 that Retro’s from September
2013 to December 2013
New Rate - Old Rate = RET Amount X # of Months = RET Amount to be issued
5,730.00 - 5,491.25 = 238.75
X 4 months
= 955.00 Retro Amount
AC-P-C code 57-3-5 with the NEW Ret. Base/Pay Rate
IMPORTANT:
• Date should always cover the pay period for which the retro is being issued.
• Please keep in mind your late/change/term contracts and add the date accordingly.
• Confirm that Pay Schedule corresponds to Pay Code. e.g. E10B07 with Pay Code 3 for 10 month contract
PR Screen Pay Line Sample: Ret. Base includes increase and it’s at 100% FTE
Calculation Sample:
Pay
Rate
NEW
OLD
5,730.00
5,491.25
5,730.00
5,491.25
5,730.00
5,491.25
5,730.00
5,491.25
53
EARNINGS
5,491.25
5,491.25
5,491.25
5,491.25
Total Retro
FTE
.100
.100
.100
.100
Amount
RETRO
238.75
238.75
238.75
238.75
955.00
Service Period
SEPT
OCT
NOV
DEC
2014
Payroll – Retirement
QCC Retro Module
QCC has the ability to create Retro Pay Lines through the Retro Module. Districts need to carefully define the
criteria required in order to load RET pay lines as accurately as possible. The criteria should be run separately
by group of employees.
For Example:
12 month
11 month
10 month
Bargaining Unit:
01
01
01
Employee Type:
01
01
01
Pay Code:
01
01
01
Pay Type:
NML
NML
NML
EOMREG
E11XXX
E10XXX
Pay Schedules:
Define:
Bargaining Unit:
Group of employees receiving retro
Employee Type:
01 Certificated, 02 Classified
Pay Code:
01 = 12 month, 02 = 11 month, 03 = 10 month
Pay Type:
NML for Normal Pay
Pay Schedule:
Deferred Pay (R) and Benefits (B), 06 off June-July and 07 off July-August
Once the criteria has been defined, run a PRT300 (Retroactive Payroll Analysis Report) and verify all data to
ensure the desired outcome is met.
If District decides to use the Retro module, they will need to contact the TSB Department and create a Service
Request to set-up the retro pay lines. Contact DBAS to assist with criteria.
Running your RET pay line through this process ensures minimal errors on your Retro lines.
54
Payroll – Retirement
55
2014
Payroll – Retirement
2014
When to Issue an ARREARS
When an employee is receiving an earnings adjustment previous to current month payroll:
•
•
It does generate service credit and there is no change in Ret. Base/Pay Rate
Should always be reported with a contribution code 3
Example: Processing February 2014 EOM payroll and an employee’s start date is January 24, 2014. Payroll was
scheduled to close the same day. This employee is working as an 11 month 100% FTE with a Ret Base of:
8,723.45. The Arrears amount owed to the employee for the month of January 2014 is 2,273.85. This is a late
start contract adjustment.
AC-P-C code: 57-2-3 Ret Base does NOT change
IMPORTANT:
• Date should always cover the pay period for which the arrears are being issued.
• Please keep in mind your late/change/term contract and add the date accordingly.
• Confirm that Pay Schedule corresponds to Pay Code. e.g. E11B07 with Pay Code 2 for 11 month contract
PR Screen Pay Line Sample: Ret. Base should always reflect 100% FTE
IMPORTANT:
California Education Code section 45048 (c) states that if salary payment is not made timely as required by this
section, the amount of the salary payment due shall be increased by the amount of interest on the unpaid
amount for each day of delay. Please refer to all section of Ed Code 45048 for all explanations.
56
Payroll – Retirement
2014
STRS Common Errors
•
Not using the same Ret. Base/Pay Rate as the original pay line when making negative adjustments to
prior period earnings
•
When doing negative earnings adjustment, the negative amount should not exceed what was originally
issued
•
Incorrect Date range on Retro or Arrears pay lines or leaving the date range blank
•
Using Retro code 5 for Arrears payment code 3 or vice-versa
•
Using incorrect Ret. Base/Pay Rate on retro and combining different Pay Rates into one retro pay line
•
Using the earnings as the Ret. Base/Pay Rate on positions that are not 100% FTE. Ret Base must always
be at 100% FTE
•
Not using the same Ret. Base/Pay Rate and Rate/Earnings for special compensation
•
The Ret. Base/Pay Rate and Pay Code not corresponding, they should always relate:
 12 Month Contract Rate = PC 1
 11 Month Contract Rate = PC 2
 10 Month Contract Rate = PC 3
•
Hourly Rate = PC 4
Annual Rate = PC 0
Daily Rate = PC 8
The Pay Type and Contribution Code not corresponding, they should always relate:
 ARR = CC 3
57
RET = CC 5
Payroll – Retirement
2014
Common Error: Retro reported to PERS instead of STRS, this error ocurred because this is a classified
employee that elected to remain as a STRS member.
Error Resolution
Step 1: Back out pay line that was reported to PERS in error, using the same setup as originally reported
Step 2: Report it to STRS
Step 3: Refund OASDI & SDI taken from St-Ded of TFSPT, STRS members do not pay OASDI or SDI
58
2014
Payroll – Retirement
CTD Totals From Payroll History
Before
Correction
After
Correction
59
Payroll – Retirement
2014
Common Error: Not reporting a change of contract properly, Term and Late Start Contracts should be paid on
separate pay lines with corresponding AC-P-C codes, Ret. Base/Pay Rate & Pay Schedule.
PR Screen Pay Line: Terminated 10 month Contract for Teacher Position
PR Screen Pay Line: Late Start 12 month Contract for Vice Principal Position
60
Payroll – Retirement
2014
Sample of Change of Contract
Reference:
Employer Directive 2013-04 CalSTRS No Longer Performs Change of Base Calculations.
Upon review of Ed Code sections 22701, “Computation of service to be credited”, 22115, “Compensation
earnable”, and 22138.5, “Full-time minimum standards”, CalSTRS does not have the authority to grant service
credit for which service has not been performed, not compensation paid. Therefore, CalSTRS has discontinued
processing change of base request.
61
Payroll – Retirement
SEW/REAP User Manual
https://sew.calstrs.com
From Home page click on REAP
62
2014
Payroll – Retirement
2014
Enter Tax ID = SSN, then click Search
If DB Status is “Member”, then no action is required
If DB status is “Non-Member” or “Refund” click on the Update tab, from the drop down menu select
Transaction Code 11 for Mandatory Member and for Permissive Election select Transaction Code 81 and enter
Effective Date
63
Payroll – Retirement
2014
If Person not found, enter Tax ID, click on Mass Update
Enter Tax ID again, you can add multiple employees at a time
Add employees data from QCC MA screen, select Transaction Code 11 for Mandatory Membership, 81 for
Permissive Election or 02 for Non-Member, then click on Submit to save
64
Payroll – Retirement
2014
Inquiry and report feature
•
•
New member account established & Change in Status
This report will provide a list of employees with the most updated status at one glance rather than
one-by-one inquiry
65
Payroll – Retirement
2014
CalPERS
The California Public Employees' Retirement System is an agency in the California executive branch that
"manages pension and health benefits for more than 1.6 million California public employees, retirees, and
their families".
Compensation means the compensation paid out of funds controlled by the employer in payment for the
member’s services performed during normal working. Pay rate and special compensation must be in written
schedules, ordinance, or similar documents that are available for public review.
Reference:
California Government Code (G.C.) sections 20630 through 20636 of Public Employees’ Retirement Law (PERL)
define compensation earnable, pay rate, and special compensation.
CLASSIC Member - 2% @ 55, Contribution Rate 7%:
•
•
•
•
All existing CalPERS members as of December 31, 2012
A member that has a break in service of more than six months but returns to service with the same
employer
All Schools are considered same employer
Will continue to be eligible for 1 year final compensation for retirement calculation
PEPRA New Member 01/01/2013 - 2% @ 62, Contribution Rate 6%:
•
•
•
•
A new hire who has no prior membership in any California public retirement system prior to
January 1, 2013
A member who first established CalPERS membership prior to January 1, 2013, and who is rehired by
different CalPERS employer after a break in service of greater that six months
All Schools are considered same employer
Requires a 3 years average for final compensation for retirement calculation
Reference:
Government Code 7522.04
66
Payroll – Retirement
2014
CalPERS Membership Eligibility
Mandatory Membership Eligibility – Time Base:
•
•
•
•
Permanent Full-time (40 hours per week)
Full-time for a temporary appointment of six months or longer
Part-time, average at least 20 hours per week for one year or longer
(20hours x 52 weeks = 1040 hours) or 50% FTE
Reference: Government Code 20305
“Once a member, always a member”
PERS Monitored Positions – Irregular Time Base:
Full-time employment that continues for longer than six months:
•
Active membership date is on the first day of the pay period of the seventh month.
For temporary, substitute, seasonal, on-call, emergency, intermittent:
•
Monitor for 1,000 hours in a fiscal year (July 1 – June 30), overtime hours are included in the 1,000
hour total. Active membership date is the first day of the following pay period in which 1,000 hours
were completed.
67
Payroll – Retirement
2014
Accumulator Limit Report RCA640 in QCC
This report consolidates hours or days worked for an employee by fiscal year. This report will assist with the
identification of a non-member that is close or has reached the 1,000 hours for mandatory qualification.
Criteria:
Retirement System:
05 for Non-Member
Retirement Account Codes: 00
Pay Codes:
02 & 12 for Classified
It is the employer’s responsibility to determine the eligibility of their employees to participate in CalPERS. If an
employer fails to enroll an eligible employee into CalPERS within 90 days of qualifying, the employer is
required to pay all arrears, cost for member contributions, and administrative costs of $500.00 per member.
The employer cannot pass on these costs assessed to the employee due to untimely enrollment.
Reference:
Government Code 20283
68
Procedure:
Payroll – Retirement
2014
•
Verify PERS membership status at:
https://my.calpers.ca.gov/web/ept/public/systemaccess/selectLoginType.html
•
Click on the Business Partner radial button and Continue to log in
•
From my|CalPERS home page, select Person Information tab, enter SSN, and click on search to check
for the member status.
Member Status can be:
•
Active = Currently employed with a school district
•
If the employee is ACTIVE with another employer, start reporting payroll to PERS immediately
regardless of the time base. Create a NEW Retirement Enrollment (Appointment Id) with effective
date matching hire date. This is required by each district the employee works for.
•
Inactive = Permanent Separation
•
If the member refunds CalPERS contributions, they will need to re-qualify
IMPORTANT: Determine whether employee is a CLASSIC or a PEPRA member and set-up accordingly.
69
Payroll – Retirement
2014
In this example we have a CLASSIC member (membership date 01/06/2003), this employee is new to your
district (contributing appointment date 08/15/2013). Member is still considered a CLASSIC member even
though this employee is new to your district.
my|CalPERS Person Information Screen
QCC W4 Screen
70
Payroll – Retirement
2014
In this example we have a PEPRA member (membership date 08/15/2013), this employee is new to
My|CalPERS and has never been a member of any public retirement system.
my|CalPERS Person Information Screen
QCC W4 Screen
71
Payroll – Retirement
2014
Other Employer Responsibilities for CalPERS Members
Update My|CalPERS of any changes to employees’ employment status:
•
•
•
•
•
Unpaid Leave of Absence
Permanent Separation
Address Change
Name Change
Position Change
The permanent separation date is now part of a series of system validations. Therefore, the permanent
separation date must be reported to My|CalPERS as the day after the last day an employee works for your
district.
•
•
•
From My|CalPERS home page, select Person Information tab, enter SSN, and click on search
Select Employer (district requiring separation), next to Appointment Event History click on Add New
Select type of change under the Event drop down menu
Reference: CalPERS Circular Letter No: 200-070-1
72
Payroll – Retirement
PERS Membership Codes for W4 Screen
Primary RS (Retirement System) Determined by Eligibility:
•
•
•
•
•
02 = CLASSIC Member
12 = PEPRA New Member with OASDI
22 = PEPRA New Member Non OASDI
04 = Retired
05 = Non-Member or Alternative Retirement
QCC W4 Screen
73
2014
Payroll – Retirement
2014
PERS AC-P-C Codes for W4 and PR screen
AC = Account Code:
•
•
•
08 = Member
Coordinated with Social Security and is Equivalent to Miscellaneous Category when setting up member
account in my|CalPERS
00 = Non-Reportable
P = Pay Code:
•
•
•
•
•
0 = Non-Reportable
1 = Monthly Rate
4 = Hourly Rate
8 = Daily Rate
9 = Lump Sum Rate
C = Contribution Code:
•
•
•
•
•
0 = Non-Reportable
1 = Current Month: Member Contributions
3 = Arrears: Prior Period EARNINGS Adjustment, DOES Generate Service Credit
5 = Retro: Ret. Base/Pay Rate Change, does NOT Generate Service Credit
6 = Special Compensation
74
Payroll – Retirement
2014
PERS Guide on Statutory Deductions
St-Ded field may contain up to 6 characters:
•
•
1st character
2nd character
•
3rd character
•
4th - 6th characters
T: Federal & State Taxes
F: Social Security & Medicare
M: Medicare Only
S: State Disability
N: No State Disability
PERS Contributions, please see chart below for options:
St-Ded Profile Characters: 4, 5, & 6
P
PERS Tax-Deferred
PT
PERS Taxable
PS
PERS Survivor Benefit Tax-Deferred, one time election in 1986 in lieu of Social Security & Medicare
PST
PERS Survivor Benefit Taxable, one time election in 1986 in lieu of Social Security & Medicare
PR
PERS Report Only, No Contributions
P70
PERS Employer Paid Member Contributions 7%
PXX PERS EPMC where XX = % District Pays, Tax-Deferred
PXT
PERS EPMC where X = % District Pays, Taxable
N
No Contributions, Non-Reportable
PAR Alternative Retirement PARS, requires 8XXX Vol-Ded
ING
Alternative Retirement ING, requires 8XXX Vol-Ded
APP Alternative Retirement APPLE, requires 8XXX Vol-Ded
All employees must be reported with Tax-Deferred (P) contributions unless:
• District has a MOU with CalPERS that stipulates Taxable (PT) contributions
• The MOU must apply to a class of employees (cannot be for a single employee)
• All pay lines must be reported consistently as Taxable (Do not report a combination of Taxable and TaxDeferred pay lines)
75
Payroll – Retirement
2014
PERS St-Ded’s for W4 & PR Screens
TFSP – PERS Member RS: 02 or 12
T: State & Federal
F: Social Security & Medicare
S: SDI
P: Taxed Deferred Non-Taxable
TFNP – PERS Member RS: 02 or 12
T: State & Federal
F: Social Security & Medicare
N: No SDI
P: Taxed Deferred Non-Taxable
TFSPT – PERS Member RS: 02 or 12
T: State & Federal
F: Social Security & Medicare
S: SDI
PT: Taxable Contributions
TFNPT – PERS Member RS: 02 or 12
T: State & Federal
F: Social Security & Medicare
N: No SDI
PT: Taxable Contributions
TFSXX – PERS Member RS: 02 or12
T: State & Federal
F: Social Security & Medicare
S: SDI
XX: Last 2 Characters determined by district,
depending on Bargaining Unit
TFNXX – PERS Member RS: 02 or 12
T: State & Federal
F: Social Security & Medicare
N: No SDI
XX: Last 2 Characters determined district,
depending on Bargaining Unit
TMNN – PERS Retiree RS: 04
T: State & Federal
M: Medicare Only
N: No SDI
N: No Contributions, Non-Reportable
Reference:
SSSAP Bulletin No. 1 – April 2012
Retired/Rehired Annuitants not contributing to
Social Security
TFNN - PERS Non-Member RS: 05
T: State and Federal
F: Social Security & Medicare
N: No SDI
N: No Contributions, Non-Reportable
76
2014
Payroll – Retirement
PERS Guide on AC-P-C Code Combinations
Members – Primary RS: 02 or 12, St-Ded: Determined by district:
Monthly Contract
Substitutes Hourly
Substitutes Daily
Part-Time Hourly
Part-Time Daily
Special Comp
Non-Reportable
CURRENT
08-1-1
08-4-1
08-8-1
08-4-1
08-8-1
08-9-6
00-0-0
ARREARS
08-1-3
08-4-3
08-8-3
08-4-3
08-8-3
08-9-6
00-0-0
RETRO
08-1-5
08-4-5
08-8-5
08-4-5
08-8-5
08-9-6
00-0-0
Ret. Base/Pay Rate
Monthly
Hourly
Daily
Hourly
Daily
Lump Sum (Rate=Ret. Base)
Monthly, Hourly or Daily
i.e. Overtime Earnings
ARREARS
00-0-0
RETRO
00-0-0
Ret. Base/Pay Rate
Monthly, Hourly or Daily
ARREARS
00-0-0
RETRO
00-0-0
Ret. Base/Pay Rate
Monthly, Hourly or Daily
Non Members – Primary RS: 05, St-Ded: Determined by district:
Non-Reportable
CURRENT
00-0-0
Retirees – Primary RS: 04, St-Ded: TMNN
Non-Reportable
•
•
•
CURRENT
00-0-0
A 960 hour work restriction applies to all retirees per fiscal year
A 180 day waiting period is required to return to work for anyone that retired after 01/01/2013
Please be advised that there is a 180-Day Waiver request form for PERS retirees, contact your
Accounting Specialist for a copy
77
2014
Payroll – Retirement
Special Compensation Categories and Types for CalPERS
Special compensation shall be limited to that which is received by a member pursuant to a labor policy or
agreement to similarly situated members of a group or class of employment and is reported in addition to and
separately from pay rate.
Reference: CCR 571(a) and (b)
REPORTABLE:
CLASSIC
PEPRA
INCENTIVE PAY
Bonus
Longevity Pay
Off-Salary-Schedule Pay
Physical Fitness Program
Value of EPMC
X
X
X
X
X
Educational Incentive
Undergraduate/Graduate/Doc Credit
X
X
X
X
EDUCATIONAL PAY
X
X
PREMIUM PAY
Temporary Upgrade Pay
X
SPECIAL ASSIGNMENT PAY
Bilingual Premium
Confidential Premium
Lead Worker/Supervisor Premium
Severely Disabled Premium
Shift Differential Premium
School Yard Premium
Training Premium
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
STATUTORY ITEMS
Holiday Pay
Uniform Allowance
78
Payroll – Retirement
The following earnings are NOT reportable to PERS
•
•
•
•
•
•
•
•
Overtime
Travel and cellular phone stipend
Cash in lieu of benefit
Vacation and Sick leave pay off
Legal settlement
Retirement incentive
Non-member earnings
Certificated earnings (unless elected PERS)
79
2014
2014
Payroll – Retirement
PERS Common Errors
•
Overtime Earnings reported to PERS: This occurs most often when an employee takes additional duties
on top of their Full-Time contract or when an employee works multiple Part-Time positions.
•
Not using the same Ret. Base/Pay Rate as the original pay line when making negative adjustments to
prior period earnings.
•
When doing negative earnings adjustment, the negative amount should not exceed what was originally
issued.
•
Incorrect Date range on Retro or Arrears pay lines or leaving the date range blank.
•
Using Retro code 5 for Arrears payment code 3 or vice-versa.
•
Using incorrect Ret. Base/Pay Rate on retro and combining different Pay Rates into one pay line.
•
Using the earnings as the Ret. Base/Pay Rate on positions that are not 100% FTE. Ret Base must always
be at 100% FTE.
•
Not using the same Ret. Base/Pay Rate and Rate/Earnings for special compensation.
•
The Ret. Base/Pay Rate and Pay Code not corresponding, they should relate:
 Monthly Rate = PC 1
•
Hourly Rate = PC 4
Daily Rate = PC 8
The Pay Type and Contribution Code not corresponding, they should relate:
 ARR = CC 3
80
RET = CC 5
2014
Payroll – Retirement
When to Issue a RETRO
When an employees’ Ret. Base/Pay Rate changes due to:
•
•
An approved and ratified collective bargaining agreement between School District Boards and
Collective Bargaining Units
A change in Step and Column
Example: A 10 month employee is receiving a 5% pay increase in January 2014 that retro’s from September
2013 to December 2013
New Rate - Old Rate = RET Amount X # of Months = RET Amount to be issued
5,730.00 - 5,491.25 = 238.75
X 4 months
= 955.00 Retro Amount
AC-P-C code 08-1-5 with the NEW Ret. Base/Pay Rate
Important: Date should always cover the pay period for which the retro is being issued. Please keep in mind
your late/change/term contract and add date accordingly.
Make sure the Pay Schedule corresponds to contracted position. i.e. E10B07 for 10 month contract
Pay Rate
NEW
OLD
5,730.00
5,491.25
5,730.00
5,491.25
5,730.00
5,491.25
5,730.00
5,491.25
81
EARNINGS
5,491.25
5,491.25
5,491.25
5,491.25
Total Retro
FTE
.100
.100
.100
.100
Amount
RETRO
238.75
238.75
238.75
238.75
955.00
Service Period
SEPT
OCT
NOV
DEC
Payroll – Retirement
2014
Common Retro Error: Reporting retro pay lines for PERS members that have multiple Ret. Bases & FTE’s. This
is due to the different positions they hold. my|CalPERS does not have the ability to distinguish where to
allocate the two retros that need to be issued.
Error Resolution
Step 1: The Retro for the position with the HIGHER Ret. Base/Pay Rate can be reported as a single RET pay line
covering the entire span of the retro.
Step 2: For the Retro on the position with the LOWER Ret. Base/Pay Rate, back out the original pay line as ARR
with negative earnings. For multiple pay periods, back out each pay line individually.
Step 3: Re-Reported as ARR adding the original earnings back PLUS the retro amount using the New Ret. Base.
For multiple pay periods, re-report each pay line individually.
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When to Issue ARREARS
When there is a change in FTE (paid at higher/lower amount not due to change in Ret. Base/Pay Rate),
contribution code 3 is used to report corrections to prior period earnings.
Create a separate pay line for each arrears pay period (month) so that service credit can be posted properly to
the member’s account, e.g. one pay line for January’s arrear, one pay line for February’s arrear, another pay
line for March’s arrear, etc.
PR Screen Sample: ARR to January
PR Screen Sample: ARR to February
PR Screen Sample: ARR to March
Common Error: For example, when paying employee earnings earned 1/15 to 1/31 on the February 10th
payroll, under AC-P-C, use contribution code 1 instead of 3. These earnings are still considered CURRENT, not
ARREARS.
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Payroll – Retirement
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Scenario #1:
An employee’s overtime earnings were coded with PERS contributions which generated excessive service
credit. Overtime earnings are NOT reportable to PERS. These earnings need to be backed out and re-reported
without contributions.
Step 1: Create a new pay line, back out the original entry as ARR with negative earnings and use contribution
code 3, same Ret. Base and St-Ded as reported on original pay line that was issued incorrectly, add date range
that corresponds to pay period issued.
Step 2: Create a new pay line and re-report earnings without contributions also using ARR.
84
Payroll – Retirement
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Scenario #2:
PERS retiree was paid as a member in error; these earnings need to be reversed.
Step 1: Please make sure that the W4 screen Primary RS indicates PERS member 02 in order to enter a
negative pay line to back out the previously reported incorrectly.
Step 2: Create a new pay line, back out the original entry as ARR with negative earnings and use contribution
code 3, same Ret. Base and St-Ded as reported on original pay line that was issued incorrectly, add date range
that corresponds to pay period issued.
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Payroll – Retirement
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Step 3: Now change W4 screen Primary RS to 04 to indicate PERS Retired
Step 4: Create new pay line and re-report earnings with no PERS and no Social Security, as ARR with positive
earnings, using AC-P-C code 00-0-0
Step 5: A refund of the Social Security is required. The original pay line took Social Security from the employee
and employer and the negative pay line entered does not automatically generate Social Security reversal. On
the PD screen set up Vol-Ded code 8310 to refund the Social Security portion as a negative amount
86
Payroll – Retirement
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PERS PRE-PAYROLL QCC AUDIT
In September of 2011, CalPERS launched a new system called my|CalPERS. In order to post retirement
contributions on time, all pay lines must be reported correctly. If not, payroll submission will be delayed and
may be subject to penalty and interest. It is imperative that districts clear all PERS errors prior to closing
payroll (EOM, TENTH, WED, FRI).
Please note: This process only helps clear errors that can be detected through the payroll system. After the
payroll file is uploaded to PERS, there may be other errors that my|CalPERS will reject, which QCC does not
have edits for.
Procedure:
Log into QCC - Click on the following selections:
•
Payroll Job Menu
•
Double Click on Request Payroll Prelist
•
District Selection Tab: Your district number will appear
•
Payroll Selection Tab: Select the Payroll Name, Pay Date, & Period End
•
Report Selection Tab: Select RCA320 – PERS Pre-list / Data File
 Leave “Totals Only” unchecked
•
Optional Selection Tab: Enter Service Period (MMYY) and Arrears (MMYY)
 Example: EOM Payroll Pre-list for February 2014
 Service Period 0214
Arrears 0114
 Example: TENTH Payroll Pre-list for April 2014
 Service Period 0314
Arrears 0314
•
Click Submit to launch the job
87
Click on Payroll Job Menu
Payroll – Retirement
Select Request Payroll Prelist
Select Payroll Name, Pay Date, & Period End
88
2014
Payroll – Retirement
2014
Select RCA320 – PERS Prelist / Data File (leave “Totals Only” unchecked)
Enter Service Period (MMYY) and Arrears (MMYY)
 EOM Payroll Prelist February 2014
 Service Period 0214
 Arrears 0114
 TENTH Payroll Prelist April 2014
 Service Period 0314
 Arrears 0214
Click on
89
to submit job
Payroll – Retirement
From Print Manager (LSPOOL)
Step 1: Select Job RCA320, Click on Download File
Step 2: Click on Get Preset
Step 3: Find Preset PERS PRE-PAYROLL and Click on Retrieve then OK
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2014
Payroll – Retirement
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Step 4: Click on Excel to Open File
Step 5: Insert a Row for heading and Label Columns as shown - DELETE all columns without headings
Step 6: Turn Filter ON
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Payroll – Retirement
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1. Filter Column I by Contribution Code (CC6) Special Comp, add a formula to Column L (Diff) where:
• (Pay Rate – Earnings); this should always equal to zero.
• Special Comp can have current and prior period dates Column C (Month).
• No future period dates are acceptable.
• For PEPRA members (Column H = Rate 600) you must identify a Compensation Category and Type for
this payment. Refer to page 81 of this handout for details of SPC’s reportable to PERS.
• Delete Rows after this filter – print if you need a copy.
2. Filter Column I by (CC3) Arrears, earnings adjustment should have a prior period date:
• No current or future period dates are acceptable.
• Verify that these Arrears will not cause excess service credit for period adjustment.
• For negative earnings adjustment, confirm that negative amount does not exceed what was originally
reported; verify that the Pay Rate and Pay Code are the same as the original pay line you are adjusting.
• Delete Rows after this filter – print if you need a copy.
• Verify that Pay Rate and Pay Code meet the criteria described on Step 5 on next page.
3. Filter Column I by (CC5) Retro, Ret. Base/Pay Rate increase should have a prior period date:
• No current or future period dates are acceptable
• No negative Retros are acceptable, only if you are backing out a previously reported RET
• Verify that you are reporting the NEW Pay Rate on RET
• Do not combine different Pay Rates into one RET pay line
• Reference page 83 & 84 of this handout for more details
• Delete Rows after this filter – print if you need a copy
• Verify that the Pay Rate and Pay Code meet the criteria described on Step 5 on next page.
4. Filter Column I by (CC0) Buy Backs, delete these rows.
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2014
Payroll – Retirement
5. Filter Column I by (CC 1) Current Month, and then apply the following filters:
IMPORTANT: All earnings for current month should be positive
•
Filter Column E by Pay Code (PC1) Monthly Pay Rate
 Min. $1,386.00
 Max. $25,000.00
 Add formula to Column K Service Credit (Earnings/Pay Rate = Service Credit)
•
Filter Column E by (PC4) Hourly Pay Rate
 Min. $8.00
 Max. $86.00
 Add formula to Column K Service Credit (Earnings/Pay Rate/172 = Service Credit)
•
Filter Column E by (PC8) Daily Pay Rate
 Min. $64.00
 Max. $400.00
 Add formula to Column K Service Credit (Earnings/Pay Rate/21.5 = Service Credit)
Full Time Equivalent (FTE) = 1.000 Year Service Credit
10 Month Contract = 1.000 year
1720 hours = 1.000 year
215 Days = 1.000 year
Reference: Government Code Section 20962
6. Turn OFF Filter, all Rows & Columns must have a value:
 Delete Column L (Diff)
 Select entire worksheet
 Pivot Table will detect Overtime Earnings which equals Excessive Service Credit
If 1 position is @ 100% FTE equal 1.00 Service Credit, all other earnings are over 1.00 are considered overtime
therefore not-reportable to PERS.
If multiple Part-time and Hourly positions equal 1.0698 Service Credit it’s OK, all other earnings over 1.0698
are considered overtime therefore not-reportable to PERS.
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Payroll – Retirement
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Click on Insert Tab, select PivotTable, and then click OK
Please follow the steps outlined below:
Step 3:
Format
Column B
to 3
decimals
Step 4:
Select
entire
worksheet
Turn Filter
ON then
Filter by
Column B:
Sum of
Service
Credit
Greater
than 1.001
94
Step 1 Select:
SSN
LAST
DIST
Service Credit
These items automatically
get dragged under:
Row Labels
Step 2 Drag:
Service Credit
under Values, then click
on drop down arrow &
Add Value Field Setting to
Service Credit (Sum)
Payroll – Retirement
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Glossary of School Business Terms
Adult Education
Classes for students 18 or older offered by local high school districts. State law requires certain courses,
including citizenship and English, be offered at no charge. Other classes may carry a fee.
California Public Employees Retirement System (CalPERS)
Is an agency in the California executive branch that "manages pension and health benefits for more than 1.6
million California public employees, retirees, and their families".
California State Teachers’ Retirement System (CalSTRS)
Provides retirement, disability and survivor benefits for California's 852,316 prekindergarten through
community college educators and their families. CalSTRS was established by law in 1913 and is part of the
California State and Consumer Services Agency.
CalSTRS Match File Program
This program provides the employer with a systematic, method for confirming CalSTRS membership data
contained in the employer's payroll record. This is done each month, prior to finalization of employer payroll,
before sending the Monthly Report of Retirement Contributions (F496) to CalSTRS. Using the Match File allows
employers to minimize reporting errors and the extra work that results from incorrect membership data.
Certificated Employees
Employees whom are required by the state to hold teaching credentials, including full-time, part-time,
substitute or temporary teachers, and most administrators.
Classified Employees
School employees who are not required to hold teaching credentials, such as secretaries, custodians, bus
drivers and some management personnel are referred to as classified employees and are paid through a 2###
object code.
Collective Bargaining SB 160 (1975)
A California law which sets out the manner and scope of negotiations between school districts and employee
organizations. The law also mandates a regulatory board.
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Payroll – Retirement
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Cost of Living Adjustment (COLA)
Is an increase in funding for LCFF or categorical programs. Current law ties COLAs to the Implicit Price Deflator
for State and Local Government Purchase of Goods and Services for the United States, although different
amounts are appropriated in some years.
Deferred Pay
Employees who work less than a 12 month fiscal year may elect to split their net pay over twelve months. This
does not affect their gross wages or their taxable income.
Defined Benefit Account (DB) CalSTRS
An employer-sponsored retirement plan where employee benefits are sorted out based on a formula using
factors such as salary history and duration of employment.
Defined Benefit Supplemental Program Account (DBS) CalSTRS
Assembly Bill 1509 (Chapter 74, Statutes of 2000) established the Defined Benefit Supplement Program. This is
an additional benefit for active CalSTRS Defined Benefit Program members. It is designed to provide a lumpsum cash or monthly annuity benefit in addition to benefits from the DB program at no extra cost. AB 1509
required that 1/4 of an employee’s 8 percent CalSTRS contribution be allocated to a new account from January
1, 2001 to December 31, 2010. At retirement, disability, death or six months following termination of CalSTRScovered employment, the funds will be available to the employee or beneficiary, whichever is applicable.
Disposable Wages or Net Pay
The term Disposable Wages pertains to your net payroll after all Statutory Deductions have been deducted.
Education Code
The Education Code, along with additional regulations such as the California Administrative Code (Titles 5 and
8), the Government Code, and general statutes regulate public education in California.
Employee Benefits
Amounts paid by the school system on behalf of employees; these amounts are not included in the gross
salary, but are over and above. They are fringe benefit payments and, while not paid directly to employees,
they are still part of the cost of salaries and benefits. Examples are: group health or life insurance payments;
Social Security taxes; contributions to employee retirement; Workers’ Compensation payments; and payments
made to personnel on sabbatical leave.
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Employer Circular E
The Employers Tax Guide published by the Internal Revenue to communicate relevant tax information.
Employer Information Circular (EIC)
The method of communication published by California State Teachers Retirement System (Cal STRS)
Employer Paid Member Contributions (EPMC)
Effective October 22, 1999, California Public Retirement System (CalPERS) announced regulation sections 569
and 571 to include the new hire "time-in-grade" exception for the payment of Employer Paid Member
Contributions (EPMC), and paying and reporting the value of EPMC, as requested by contracting agencies. This
created a new option for employers of up to a five year vesting period to pay or report the value of EPMC for
newly hired employees. Section 571 also includes a new special compensation item, often utilized by school
employers, in the form of negotiated "off-salary-schedule pay" in lieu of pay increases. Section 573 clarifies
compensation earnable for optional or elective members.
Garnishments
The most common type of garnishment, is the process of deducting money from an employee's monetary
compensation (including salary), sometimes as a result of a court order. Wage garnishments continue until the
entire debt is paid or arrangements are made to pay off the debt.
Joint Powers Authority (JPA)
School districts that have agreed to combine their powers and resources to work on their common problems.
Joint School Districts
School districts with boundaries which cross county lines.
Local Educational Agency (LEA)
LEA's include school districts, joint powers agencies, county offices of education, community college districts,
and other educational agencies that have a separate board of governance.
Public Employment Relations Board (PERB)
Is a five member Board appointed by the Governor to regulate collective bargaining between school districts
and employee organizations.
Remote Employer Access Program (REAP) CalSTRS
Is a valuable tool where all employers can access CalSTRS database to help resolve membership issues.
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Payroll – Retirement
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ROC/P
Regional Occupational Center/Program is established by a school district, group of districts, or county offices
of education. The centers provide training for entry level jobs, counseling, and upgrading of skills for youths
ages 16-18.
Secure Employer Website (SEW) CalSTRS
In May, 2007 CalSTRS announced a new site, Secure Employer Web Site, which changed the way employers
submitted retirement files and received reports from CalSTRS.
Standardized Account Code Structure (SACS)
SACS was developed to establish a uniform chart of accounts statewide to improve data collection, reporting,
transmission, accuracy, and comparability. SACS also meets federal compliance guidelines and ensures that
LEA’s comply with generally accepted accounting principles.
Statutory Deductions
The term Statutory Deductions pertains to payroll tax deductions that are taken from employee’s gross
income. These taxes are deducted from the gross pay amount before any additional voluntary deductions. The
statutory/mandatory deductions taken from your payroll check are:
• Federal/State Income Taxes, Social Security/Medicare Taxes, Retirement (if applicable.)
Voluntary Deductions
Amounts taken from an employee’s net pay after all statutory deductions:
• Medical/Dental Insurance, TSA’s, Garnishments, Credit Unions and CTA’s
Workers' Compensation
Workers’ Compensation is a form of insurance providing wage replacement and medical benefits to
employees injured in the course of employment in exchange for mandatory relinquishment of the employee's
right to sue his or her employer for the tort of negligence.
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Payroll – Retirement
Resources District Business & Advisory Services
CalPERS
CalPERS Website: http://www.calpers.ca.gov/
Phone number: 888-225-7377 or 888-Cal-PERS
Regional Office: 181 Metro Drive, Ste. # 520, San Jose, CA 95110
Main Office mailing address: P.O. Box 1982, Sacramento, CA 95812-1982
CalSTRS
CalSTRS Website:
www.calstrs.com
Access: https://sew.calstrs.com
Login help: 916-414-5450 or [email protected]
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2014
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