Category: Payroll

Attached is important information from CalPERS on Disallowed Compensation Benefit Adjustments and Penalty. Senate Bill 278 changed who is liable for the reporting of disallowed compensation that results in a misapplication or miscalculation of retirement benefits. The district will be liable to CalPERS for the full cost of the overpayment and will also pay the impacted retiree a portion of any reduced retirement benefit as a penalty. CalPERS is providing a service to review district labor agreements with a guaranteed turn-around time of 90 days. Districts may submit their MOU, collective bargaining unit agreement, or other labor policies and/or agreements to MOU_Review@calpers.ca.gov<mailto:MOU_Review@calpers.ca.gov> for CalPERS to review. We highly recommend that districts take advantage of this service to ensure all labor agreements are in compliance with CalPERS rules, especially concerning any special or onetime pay, and anytime the agreements change. Districts should review the new CalPERS webpages Compliance in Compensation Reporting and Special Compensation Reportability Table. www.calpers.ca.gov/page/employers/policies-and-procedures/compliance-in-compensation-reporting www.calpers.ca.gov/page/employers/mycalpers-technical-requirements/special-compensation-reportability-table If you have questions on the circular letter contact CalPERS at 888-225-7377.
Regards, School Business Advisory Services Team Santa Barbara County Education Office www.sbceo.org/sbas<www.sbceo.org/sbas>
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CalSTRS has issued two new Employer Directives about updated polices:
Employer Directive 2021-07: Updated Enrollment in CalSTRS Benefit Programs
ED 2021-07<www.calstrs.com/employer-directive/ed2021-07-enrollment-calstrs-benefit-programs>: Enrollment in CalSTRS Benefit Programs is now available online at calstrs.com/employer-and-administrative-directives<www.calstrs.com/employer-and-administrative-directives>.
This directive provides information related to membership in the Defined Benefit Program, participation in the Cash Balance Benefit Program and elections regarding other public retirement systems. Information provided is inclusive of amendments enacted by Senate Bill 634 (Chapter 186, Statutes of 2021).
Employer Directive 2021-08: Updated Service Credit For an Elected Officer
ED 2021-0<www.calstrs.com/employer-directive/ed2021-08-service-credit-elected-officer>8<www.calstrs.com/employer-directive/ed2021-08-service-credit-elected-officer>: Service Credit For an Elected Officer is now available online at calstrs.com/employer-and-administrative-directives<www.calstrs.com/employer-and-administrative-directives>.
This directive notifies employers of changes to Education Code sections 22711, 44987 and 87768.5 contained in Chapter 539, Statutes of 2021 (Senate Bill 294), which becomes effective January 1, 2022, and applies retroactively to September 1, 1978. This directive is also intended to remind employers how to report service for employees granted a compensated leave of absence to serve as elected officers of an employee organization.
If you have any questions regarding these Employer Directives, please contact EmployerHelp@CalSTRS.com<mailto:EmployerHelp@CalSTRS.com> or 877-227-5778.
Regards, School Business Advisory Services Team Santa Barbara County Education Office www.sbceo.org/sbas<www.sbceo.org/sbas>
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W-2 Reporting
SBAS uses the information contained in Escape to process W-2 forms on behalf of districts and transmit electronic files to the IRS and EDD. Our office sends the printed W-2 forms to the districts for distribution to employees. In order to assist you, the following W-2 Reporting Information is now available on the SBAS Website<www.sbceo.org/domain/273>:
* W-2 processing and distribution * Payroll Year-End Calendar * Group Term Life Insurance * Domestic Partner Insurance * IRS & EDD Resources
This page will be updated if additional information becomes available. Try our NEW Ask SBAS…Live Online Web Chat<sbas.sbceo.org/docs/escapechat2.html> if you have any questions. We are happy to assist!
Regards,
School Business Advisory Services Team Santa Barbara County Education Office
Note: This message was sent on behalf of the School Business Advisory Services Team. Please do not respond to this message. Replies will be routed to an unmonitored mailbox. To unsubscribe, click here<mailto:sbasfinance@sbceo.org?subject=Unsubscribe>

Annual Return of CalSTRS Excess DB/DBS Employee and Employer Contributions Instructions and Overview
Annually, the California State Teachers’ Retirement System (CalSTRS) looks at all of a member’s reported compensation after the fiscal year is over. Compensation earned by a member that is greater than one year of service credit in the Defined Benefit (DB) Program is moved by CalSTRS to the Defined Benefit Supplement (DBS) Program. This action results in “excess contributions” paid by both the employer and employee because contribution rates for the DB and DBS Programs are different.
Each October, CalSTRS returns excess employee and employer contributions to the County Office for distribution to districts and their employees. CalSTRS also sends employee adjustment data that the County Office converts for posting into Escape for each district. To see the employee transactions posted for your district and to correct any errors, follow the path and instructions below:
* HR/Payroll – Employment – Additional Contrib/Deduction * Select the “List” Tab and “Open” * Choose the “Employees” Tab to see a listing of the applicable employees with a return of excess contributions. * No further action is necessary for these transactions. * The adjustment batch has been posted as part of the upload process performed by the County. * The adjustments apply to the October Regular payroll. * Select the “Errors” Tab. * If there are employees listed in the Errors Tab it is mostly likely because the employees are no longer active in Escape. * Adjustments for this group of employees must be manually input by the district. Input data as deduction adjustments using Deduction I.D. “STRSECEE” to return the taxable income to the applicable employees. * For assistance on inputting these adjustments, please contact Sheng Xiong sxiong@sbceo.org<mailto:sxiong@sbceo.org>.
Employee deduction adjustments use monies held in the STRS Employee Trust Fund (9980) for the return of contributions.
* For non-Escape districts, please refer to Journal Entry CT 22-00310 dated 9/29/2021. * If your district would like a listing of the applicable employees in an Excel file, please contact Sheng Xiong at sxiong@sbceo.org<mailto:sxiong@sbceo.org>.
Employer contributions are transferred from the STRS Employer Trust Fund (9983) and placed into each district’s general fund as a lump sum.
* See attached STRS Excess Contributions 2020-21.pdf for a list of each applicable district and their respective employee and employer excess contribution refund amounts. * Refer to Journal Entry CT 22-00354 dated 10/11/2021. * The account coding is 01-0000-0-1110-1000-3101-000-0000-ADJS. * The basis for the account coding is the California School Accounting Manual (CSAM) Procedure 560 Abatement of Expenditures.
For questions about the return of CalSTRS excess contributions, please contact:
Sheng Xiong sxiong@sbceo.org<mailto:sxiong@sbceo.org> Myron Porter mporter@sbceo.org<mailto:mporter@sbceo.org> CalSTRS CalSTRSFullFundingProject@CalSTRS.com<mailto:CalSTRSFullFundingProject@CalSTRS.com>
________________________________ Overview of Excess Employee and Employer Contributions related to the DB and DBS Programs
* Annually, CalSTRS looks at all of a member’s reported compensation after the fiscal year is over. Compensation earned by a member that is greater than one year of service credit in the DB Program is moved to the DBS Program. This action results in “excess contributions” paid by both the employer and employee because the contribution rates for the DB and DBS Programs are different. * In September, CalSTRS notifies active members that have excess contributions with an online message of Retirement Progress Report in Special Messages. Members see this information while logged into their myCalSTRS account and may also select Services, then Excess Contributions to see the report. CalSTRS informs retirees with excess contributions by letter. * In October, excess employer and employee contributions for active members are returned to the County Office for distribution to employers. Employers are responsible for returning the contributions to their employees. * After the end of each quarter, any excess contributions accumulated for members who refund, retire, receive a disability benefit, or die are returned to the County Office and transferred to the employer for disbursement. * Interest is not paid on excess contributions as CalSTRS has no legal requirement or authority to pay interest on the return of excess contributions. * Returned pre-tax contributions are taxable income in the year employees receive them regardless of when the contributions were initially paid. * If there is an adjustment that reduces a member’s excess service credit from a prior year, employer or member contributions may be due back to CalSTRS. * January 2, 2001 * Moving of contributions into the DBS Program from the DB Program began. * No adjustments to contributions were necessary because the contribution rates for the DB and DBS programs were the same. * January 1, 2001 to December 31, 2010 * One-fourth of a member’s 8% DB retirement contributions were moved into the DBS program. * January 1, 2011 to present * DBS Program receives contribution funds based on: * Earnings in excess of one year of service credit. * Special limited term payments. * See attached CalSTRS Employer Information Circular on Creditable Compensation Regulations Effective Jan. 1, 2015 (Volume 30; Issue 5, Dec. 10, 2014). * July 1, 2014 to June 30, 2022 * Contribution rates for the DB and DBS Programs are not the same. * This occurred with the passage of AB 1469, the CalSTRS 2014 Full Funding Plan<www.calstrs.com/plan-funding> (Ctrl + Click to connect to the link to see the plan). * More information on excess contributions can be found on the CalSTRS website. Type in “excess contributions” in the search box. * The attached CalSTRS Welcome to CalSTRS booklet, welcometocalstrs2021.pdf, page 9, provides an explanation of excess contributions to new members.
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Regards,
School Business Advisory Services Team Santa Barbara County Education Office
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[See the source image]RETIREES CalPERS charging fees for retiree non-compliant reporting
As a reminder, please be aware that the California Public Employees’ Retirement System (CalPERS) is assessing fees for retiree non-compliant reporting. While this message contains a lot of information with supporting documentation, please know that the main points are:
* Follow the rules for hiring a CalPERS retiree. * Pay retirees in the month they work. * Every month before Submitting Payroll, log into the my|CalPERS system to validate retiree Appointment dates and compensation reporting to avoid fees.
If you have general questions about CalPERS retirees and how to access retiree data in CalPERS please call:
* Myron Porter 805-964-4711 x 5280 * Staci Hunter 805-964-4711 x 5254
You may also contact:
* The CalPERS Customer Contact Center at 1-888-225-7377.
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Fees – $200 for each non-compliant occurrence may include:
* Late Enrollment – applies to the timely inputting of beginning and ending Appointment dates. * Late Payroll – reporting of compensation must take place during the month the retiree works. * Missing Payroll – Once there is a beginning Appointment date, CalPERS expects the reporting of compensation every month until an ending Appointment date is input. If no end date is input, the non-reporting of a retiree’s expected compensation is considered a “Missing Payroll.” * Improper pay rates for the performance of temporary, limited-duration work. * Retirees must be identified as “Member Type R” in Escape to properly report compensation and hours worked.
District Action:
* Follow the mandated rules for hiring and reporting a retiree. See attached CalPERS documentation.

* Consequences of improper hiring and reporting may result in fees or require the retiree to reinstate and pay contributions for work already performed. Reinstatement of a Classic (2% at 55) retiree would cause this individual to become a PEPRA (2% at 62) member and be subject to a different retirement formula. CalPERS cannot apply PEPRA compensation toward Classic service and vice versa.
* Critical → Pay retirees during the month their work is performed. For instance, the retiree works in September. Make payment for the September reporting period using the September Regular, October Supplemental or by manual warrant processing that is available during the first few days in October.
* Update records in the my|CalPERS system on a monthly basis. Reconcile CalPERS identified potential “Missing Payroll” information. Complete this task prior to Submitting Payroll for the month to avoid CalPERS imposed fees of $200 for each non-compliant occurrence.

* CalPERS recently opened new features in their my|CalPERS system that allow districts to run reports for reviewing open-ended appointments with no earnings for retirees and other employees that may have intermittent work. Prior to this, the School Business Advisory Services Payroll Team was downloading and sending reporting information to the applicable districts for district staff to resolve discrepancies. Resolving discrepancies includes:

* Promptly inputting beginning and ending Appointment dates for a retiree in both the my|CalPERS and Escape systems. * Verifying no reportable earnings for the pay period for a retiree. If it is likely a retiree will have intermittent and reoccurring work during the year, a district may choose the option of confirming “No Earnings” for a given month in the my|CalPERS system. Confirmation of “No Earnings” is not meant to be an indefinite action by a District.

* The Payroll Team is available to help districts navigate within my|CalPERS system to locate and run the Projected Contributions Detail Report to reconcile whether CalPERS expects the reporting of retiree compensation and deposit of contribution for the month. Districts may use this report or go to the Retirement Appointment Reconciliation screen in the my|CalPERS system to address missing Appointment information or verify “no earnings” for the reporting period.
* Closely monitor retires for how many hours they work to stay within the 960-hour limitation.
* Use the Escape Retire10-PERS Retiree report to monitor hours. As a suggestion, change the default of 960 hours to 1 hour in the “Hours Threshold” field before ordering the report.

* SBAS collects CalPERS assessed fees using a journal voucher for each applicable District. This method is similar to the CalSTRS Penalties and Interest journal voucher, with backup documentation attached identifying the retiree. The general account code 01-0000-0-0000-7200-5800-000-0000-0000 will appear on the journal voucher. Please move the CalPERS fees from this account to your District’s desired account (some districts may use the retiree’s payroll account as a starting point).

* For information about active member reporting fees, please refer to SBAS Communications “PERS – Active members – Fees for missing payroll data.”
________________________________ Examples:
* The retiree: * Has a July 1 beginning Appointment date. * There is no compensation reported for July.
$200 fee – July Based on the July 1 beginning appointment date, CalPERS expects to have compensation reported for the July reporting period. Because no compensation was reported for July, CalPERS will assess a $200 fee for Missing Payroll data.
* The retiree: * Has a July 1 beginning Appointment date. * Works in July and has compensation reported in July. * Does not work again until November.
No fee – July A fee is not applied because there is a July 1 beginning Appointment date and reporting of compensation takes place in July. $200 fee – August $200 fee – September $200 fee – October CalPERS will assess a $200 Missing Payroll fee for every month compensation is expected and not reported. This will occur until an ending Appointment date is input into the my|CalPERS system.
* An employee’s Appointment date history:
* Hire date as an “Active Member” is March 1, 1993. * Beginning Appointment date is March 1, 1993. * Last day worked is December 30, 2018. * Ending Appointment date is December 31, 2018. * Hire date as a Retiree in a “Retired Annuitant Position” is July 8, 2019. * Beginning Appointment date as a Retiree is July 8, 2019. * The same month the temporary, limited-duration work is complete, an ending Appointment date must be input into the my|CalPERS system. The ending Appointment date is the day after the last day worked. For instance, last day worked is October 15, 2019 and the ending Appointment date is October 16, 2019.
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Attached, please find information from CalPERS:
* Enrolling and Reporting Retired Members – August 2, 2018 * Enrolling and Reporting Retired Members – March 30, 2018 * Post Service Retirement Employment Requirements – January 14, 2014 * Employer Checklist for Hiring CalPERS Retirees Effective January 1, 2013
Key points from the attached documentation:
* “An employer shall enroll a retired member within 30 days of the effective date of hire or a fee of $200 will be assessed per month until the retired annuitant is enrolled in my|CalPERS.” * “CalPERS retirees cannot be hired into permanent or regular staff positions without reinstatement from retirement. Retirees should be hired into retired annuitant-designated positions only. These appointments are authorized during an emergency to prevent stoppage of public business or because the retiree has skills needed to perform work of limited duration.” * “Limited duration does not mean an indefinite appointment to a permanent part-time position.”
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Regards,
School Business Advisory Services Team Santa Barbara County Education Office
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