COMPTROLLER'S SEAL STATE OF CONNECTICUT

STATE OF CONNECTICUT

NANCY WYMAN
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MARK OJAKIAN
DEPUTY COMPTROLLER

MEMORANDUM NO. 2005-16

May 3, 2005

TO THE HEADS OF ALL STATE AGENCIES

Attention: Chief Administrative and Fiscal Officers, Business Managers, and Payroll and Personnel Officers
Subject: Retroactive Salary Increases, Retroactive Annual Increments and Lump Sum Payments for Retired and Separated Administrative and Residual (P-5) Bargaining Unit Employees

I. AUTHORITY

The arbitration award between the State of Connecticut and the Administrative and Residual (P-5) bargaining unit for the period July 1, 2003 through June 30, 2007 became effective on April 18, 2005.

II. ELIGIBLE EMPLOYEES

Administrative and Residual bargaining unit (P-5) employees who were actively employed on July 1, 2003 and on or after the retroactive effective date of a contract wage increase but have since retired or separated from State service.

III. INSTRUCTIONS TO ACTIVATE RETIRED OR SEPARATED EMPLOYEES

Core-CT has created a job aid titled "Check List for Retroactive Payments to Terminated Employees" which will be posted on the Core-CT website. Agencies should refer to this job aid for assistance in rehiring or activating terminated and retired employees for the purpose of making retroactive payments.

IV. PAYROLL PROCEDURES FOR RETROACTIVE PAYMENTS FOR RETIRED AND SEPARATED EMPLOYEES

Payroll procedures for processing retroactive payments are contained in a March 31, 2004 memorandum to all agency payroll and personnel offices issued by the Department of Administrative Services, the Office of the State Comptroller and Core-CT. Refer to Office of the State Comptroller Memorandum No. 2005-12 for retroactive compensation information.

V. COMPENSATION

A. Retroactive General Wage Increases are effective as follows:

Effective Date Increase
June 25, 2004 (Retroactive) 3.5% of Base Salary

B. Retroactive Annual Increments and Retroactive Lump Sum Payments for Maximum Step Employees

There are no annual increments or lump sum payments for the 2003-2004 contract year. Annual increments and 2.5% lump sum payments will be delayed three months for the 2004-2005 contract year.

VI. RETROACTIVE PAYMENTS FOR RETIRED AND SEPARATED EMPLOYEES

When calculating the retroactive payments, agencies are to calculate to the date of retirement or separation from state service. For the period June 25, 2004 through date of separation, agency staff must calculate and process the following retroactive payments manually. Checks dated May 13, 2005 should reflect the additional compensation due as a result of the manual calculation of the retroactive difference due on the biweekly and overtime payments made to impacted former employees during the aforementioned dates and lump sums as applicable.

Such payments are subject to mandatory deductions: federal withholding tax and state income tax annualized, social security tax and retirement contributions.

A. Retroactive General Wage Increase (GWI)

Effective Date Salary Increases Period Covered Check Date
June 25, 2004 3.5% of base salary 06/25/04 - date of separation 05/13/05

B. Retroactive Annual Increments and Retroactive Lump Sum Payment at Maximum Step.

Annual Increment Date Period Covered Check Date
July 1, 2004 10/01/04 - date of separation 05/13/05
January 1, 2005 04/01/05 - date of separation 05/13/05

VII. RETIREMENT PROCEDURES

The additional retroactive compensation must be reported to the Retirement and Benefit Services Division in the manner described below as such additional payments may have an impact for retirement benefit purposes.

Each agency must provide the Retirement and Benefit Services Division's Audit Unit with a list of affected retirees by name, employee number and retirement date accompanied by the worksheet detailing the calculations utilized for these adjustment payments. Worksheets for separated employees must also be provided with a clear notation on each worksheet indicating such status.

VIII. CALCULATION OF INTEREST PENALTY

If payment is made in the check dated May13, 2005, no interest is due. If payment is made after check date May13, 2005, an interest penalty of 5% is payable for the period March 7, 2005 until the date the eligible employee receives all the retroactive amounts due him/her under the arbitration award.

* In the example below, the check date of June 10, 2005 is being used. Agencies must calculate to the actual check date of payment.

Retroactive Payments for Eligible P-5 Employees Actively Employed Between June 25, 2004 and * June 10, 2005 Who Have Since Retired Or Separated

95 days/360 days multiplied by 5% multiplied by the retroactive lump sum payment.

Example: If the retroactive amount was $300:
 
95 days /360 days x .05 x $300 = $3.96

Multiply the retroactive lump sum amount paid by the number of days between March 7, 2005 and the date of the payment of the retroactive payment, *June 10, 2005 (which is 95 days) divided by 360, then the product multiplied by 5%.

IX. PAYROLL PROCEDURES FOR INTEREST ARBITRATION AWARD

On the Additional Pay Page: Amount; Earnings Code INT.

Agencies should use Account 50740, Interest Penalty - Payroll Awards as the expenditure account code.

Interest paid on a wage award is not considered wages (IRS Revenue Ruling 72-268). Therefore, the subject interest penalty would not be subject to withholding for income taxes, employment taxes and retirement contributions.

X. PAYROLL PROCEDURES

Payment of Retroactive Salary Increases and Retroactive Annual Increments and Retroactive Lump Sums

On the Additional Pay Page: Amount; Earnings Code RTR.

XI. GENERAL

Questions may be directed as follows:

Payroll Procedures: Office of the State Comptroller, Payroll Services Division, (860) 702-3463;
Memorandum Interpretation: Office of the State Comptroller, Fiscal Policy Division, (860) 702-3440;
Direct List of Affected Retirees and Separated Employees
With a Copy of Calculation Worksheet to: Retirement & Benefits Division
  Audit Unit
  55 Elm Street, Hartford, CT 06106.

NANCY WYMAN
STATE COMPTROLLER

NW:CH

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