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Pay Raise Explanation

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									Pay Raise Explanation
Pay Raise
   Exclusion of Programs
       Any program zeroed in the budget
           e.g. HIP


       Program for which funding for salaries is provided
        elsewhere
           Welfare Assistance – only for welfare payments
           Salaries are paid from Social Services TPA pgm
Pay Raise
   Programs where pay is applied via other
    means are excluded
       Contract Support:
           Indirect: Pay raise is applied to reported salaries for
            admin (overhead) functions and is included when
            Indirect Cost Rate is negotiated.

           Direct: Direct salaries should be paid from the
            program not from contract support. The program gets
            the pay increase though the normal means.
Pay Raise
   Non-base programs
       Road Maintenance, HIP (if it weren’t zeroed)
       These programs DO receive pay raise for both
        Federal and 638 salaries.
       However, the pay raise is NOT distributed to the
        regions as part of the TPA base, because these
        are NOT base programs.
       The pay is distributed to the program, which
        makes the tribal distributions as prescribed
Adjustment for Number of
   Paid Workdays
   Two separate adjustments to salary line
       Pay Raise – calculated on previous year’s total
        salaries; incremental increase to salaries (e.g.
        2.4% of $300M = $7.2M; new amt $307.2M)
       Adjustment for Number of Paid Workdays
           Reduction to TOTAL salary costs (e.g. -$1.15M;
            $307.2M - $1.15M = $306.05M total salaries)
           NOT a reduction to pay raise increment
       Pay Raise & Adjustment for Paid Days are just 2
        components of our fixed cost adjustments
Adjustment for Number of
   Paid Workdays
Number of Paid Work days:
                            Change
FY 2005       261
FY 2006       260             -1
FY 2007       260              0
FY 2008       262             +2
Adjustment for Number of
   Paid Workdays
   Why is this necessary?

   Salary: $100,000
    Hourly Rate 100,000/2087 = $47.91
    2,087 hours = ~261 paid workdays

   Assume 2% pay raise; +$2,000
    100,000 + 2,000 = 102,000/2087 = $48.87/hr
Adjustment for Number of
   Paid Workdays
   FY 2005 – 261 paid work days
   FY 2006 – 260 paid work days

   260 pd wk days x 8 hours of pay = 2080 hours
       2080 hours x $48.87 = $101,649.60.

   So in FY 2006, we had less total salary cost than in
    FY 2005. We didn’t need to budget as much.

   Thus – there was a reduction for “one less day”
Adjustment for Number of
   Paid Workdays
   FY 2007 – 260 work days (like FY 2006)
   FY 2008 – 262 work days (2 additional days)
   Assuming same hourly rate:
       262 pd wk days x 8 hours = 2096 hours
       48.87 x 2096 hours = $102,431
   So in FY 2008, we had to pay out more in
    total salary cost
       So we needed to budget for the additional cost
       Thus – there was an increase for “2 additional
        days”
Adjustment for Number of
   Paid Workdays
   None of this affects the pay raise calculation
       The day adjustment is against total salary
       The adjustment is made AFTER the pay raise is
        added in
       The amount is automatically adjusted as just a
        component of total pay
Adjustment for Number of
   Paid Workdays
   17% issue
       Dave took the one less day and divided it into the
        pay raise & got 17% -- mistakenly
       One less day would equate to .0038314 (1/261)
        or (260/261) -1.
       .0038314 x $307,200,000 (for example) = -1.15M
       Two additional pay days would be:
           .0076628 x 307,200,000 = $2.35M
Adjustment for Number of
   Paid Workdays
   Example – Simplified to help you understand
    purpose of paid workday adjustment

   Calculation done in detail by the department

   Department then provides the number for us
    to use in the budget

								
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