FIACCT 17-02_12 Labor Distribution – Excess/Comp Pool – Yearend Liability

Purpose

This policy provides information concerning the yearend liability in the excess/comp pools.

Background

The yearend liability in the pool will be calculated from the vested excess/comp hours by employee within an agency. The vested portion at each yearend will be calculated by the Division of Finance as follows:

(Accumulated Excess/Comp Hours) * (Employee Pay Rate) * (1 + Dept. Benefit Rate)

The actual yearend liability will result in a journal entry as follows:
Debit = Comp/excess pool orgs/expenditure objects
Credit = Fund liability.

The unused balance in the pool is compared to the actual liability as described above. This will be done by agency to determine each agency’s over or under funded liability.

If the agency’s liability is underfunded, the underfunded amount will need to be funded. This should be done at or before yearend. If the agency is not able to fund the deficit in the current year, it will be carried into the new year, and the agency’s rate should be increased a sufficient amount to cover the deficit in the new year.

If an agency is overfunded for their comp/excess liability at yearend, that agency may choose to reduce their departmental benefit rate.

Any overfunded portion will be carried forward in the pool.

Procedures

Responsibility

Action

For the yearend liability in the excess/comp pools.

Departments

Compare the unused balance in the pool to the actual liability. This will be done by each agency to determine their over or under funded liability.

If an unfunded situation exists for an agency at yearend, that agency should notify the Payroll Coordinator in the Division of Finance to adjust their departmental benefit rate upward.

If an agency is over funded for their comp/excess liability at yearend, that agency may choose to reduce their departmental benefit rate. This is accomplished by notifying the Payroll Coordinator in the Division of Finance.

Division of Finance

Calculate the yearend liability in the pool from the vested excess/comp hours by employee within the department.

Periodically throughout the year, provide reports to enable the agencies to see how they are progressing toward being fully funded and encourage agencies to become fully funded.

At yearend compare the unused balance in the pool for each department to the actual liability to determine that any unfunded amounts are not material to the state’s overall financial condition.

Adjust the departmental benefit rate at the request of the agencies.