17-4: Leave additives for ALT, OEBT, and OPEB funds

Effective: July 1, 1994
Revised: April 29, 2026
References: Utah Code 63A‑17, Utah Code 67-19f, Utah Code 67-19d, GASB Statement No. 101

Purpose

This policy provides information concerning payments to individuals which are charged to the Termination Leave pool when a state employee retires.

Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of state government. This definition includes the executive, legislative, and judicial branches.

Annual Leave Trust (ALT) Fund – An “other” employee benefit trust fund used to pay unused vested annual leave when an employee terminates or retires.

Converted sick leave (Programs I and II) – Sick leave earned prior to January 4, 2014, that has vested conversion or retirement value under state statute and policy.

GAAP – Generally Accepted Accounting Principles.

GASB – Governmental Accounting Standards Board.

GovOps – The Department of Government Operations.

Leave additive rate – A percentage applied to eligible payroll costs each pay period to fund the OPEB, OEBT, and ALT Funds.

Other Employee Benefits Trust (OEBT) Fund – A trust fund used to pay non‑pension, non‑OPEB termination and retirement benefits. This includes certain sick leave conversions and mandatory employer contributions to defined contribution plans under Programs I and II.

Other Postemployment Benefits (OPEB) Trust Fund – An irrevocable trust fund used to provide postemployment health and life insurance benefits to eligible retirees.

PEHP – Public Employee’s Health Program (PEHP).

State Finance – The GovOps Division of Finance.

Vested annual leave – Accrued annual leave that an employee has earned and is entitled to receive in cash or convert upon termination or retirement as eligible.

Policy

A – General leave additive framework

1 – Leave‑related termination and retirement benefits are funded through payroll‑based leave additive rates instead of direct agency charges at the employee’s separation.

2 – State Finance will maintain the time distribution and mandatory pool components in Vantage Payroll. Vantage Payroll calculates the optional leave additive amounts, which are then posted in Vantage Financial.

3 – Leave additive charges are recognized as employee benefit expenditures in agency budgets as employees earn the benefits.

4 – Benefit payments are disbursed from the applicable trust fund at the time of termination or retirement.

5 – Once required leave additive contributions have been made, agencies aren’t responsible for any more costs.

6 – State Finance is responsible for establishing, maintaining, and administering:

leave additive rate structures within the Vantage Payroll,
proper allocations of additive charges, and
proper accounting in accordance with GAAP and GASB.

7 – Agencies must budget for leave additive charges as part of regular payroll costs.

B – Funding principles

1 – The trust funds are funded using the pay‑as‑you-earn method of funding. Agencies are charged the leave additive rates as the leave is earned by the employee.

2 – State Finance allocates the leave additive amounts to the applicable trust fund based on the type of benefit funded.

Annual leave obligations are funded through the ALT Fund.
Non‑OPEB sick leave and other employee benefit obligations are funded through the OEBT Fund.
Postemployment health and life insurance benefits are funded through the OPEB Trust Fund.

3 – By pooling the costs into statewide trust funds, agencies are able to share the costs and risks associated with the leave benefit payouts. This establishes consistent budgeting and makes sure costs are shared fairly over time.

4 – Internal trust fund pools may be administered using multiple internal pools or groupings to track benefit costs by employee population, department, or statutory plan design (e.g., public safety, transportation, education, or general government). These internal pools help with actuarial valuation, rate setting, and financial reporting.

C – Development of leave additive rates

1 – Leave additive rates are developed to ensure sufficient, systematic, and equitable funding of the OPEB, OEBT, and ALT Funds based on benefits earned by active employees.

2 – State Finance develops rates in coordination with Trust Fund Boards, the Governor’s Office of Planning and Budget, and the Legislature.

3 – These rates are adjusted annually as necessary to ensure:

compliance with GASB funding and reporting requirements;
long‑term sustainability of trust fund balances; and
alignment with actuarial valuations and projections.

D – Application of leave additive rates

1 – Leave additive rates are applied to eligible payroll costs each pay period for benefited employees.

1a – Additive rates may differ by trust fund and employee population.

2 – Non-benefited employees’ payroll isn’t subject to leave additive charges.

3 – Leave additive rates are approved in year 1 and applied through Vantage Payroll at the start of year 3. For example, rates approved in FY 2026 will apply beginning FY 2028.

E – Termination of employment and retirement benefits

1 – When an employee terminates employment or retires, the employing agency records the event in the Vantage personnel system. This action begins the processing and calculation of eligible leave balances and benefits in Vantage Payroll.

2 – When an employee’s employment is terminated, their vested annual leave is paid from the ALT Fund and their converted sick leave eligible for payout is paid from the OEBT Fund.

3 – When an employee retires, their benefit payments are made from the applicable trust funds as follows:

Vested annual leave is paid from the ALT fund;
mandatory employer contributions and other non‑OPEB sick leave conversions under Programs I and II are paid from the OEBT Fund; and
postemployment health and life insurance benefits are paid directly to PEHP from the OPEB Trust Fund.