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

MEMORANDUM NO. 96-23

May 3, 1996

TO THE HEADS OF ALL STATE AGENCIES

1. AUTHORITY
   

   Pursuant to Section 5-276b of the Connecticut General Statutes, an interest penalty of 5% per annum is to be paid for late implementation of the provisions of the P-4 Interest Arbitration dated December 21, 1995. On March 8, 1996, the interest arbitration award became effective retroactively to December 21, 1995. The 5% is payable for the period December 21, 1995 until the date an employee received all the monies due him/her under the award.

2. CALCULATION OF INTEREST PENALTY

   Comptroller's Memorandum No. 96-13, Section VII, directed agencies to pay the retroactive amount due on the Agreement between the State of Connecticut and the P-4 bargaining unit on April 12, 1996.

   1. Agencies that complied with the implementation date of April 12, 1996 would calculate the interest penalty as follows:

      112/360 multiplied by 5% multiplied by the retroactive
      lump sum payment.

      Example: 112/360 x 5/100 x $1800/1 = $28.00

   2. Agencies that implemented this Agreement on a later date:

      Multiply the retroactive lump sum amount paid by the number of days between December 22, 1995 and date of payment of the retroactive amount divided by 360; then the product multiplied by 5%.

3. PAYROLL PROCEDURES

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

   Payments will be identified as INTRST ARB AWD. This interest penalty should be paid by the check date June 7, 1996 (pay period May 10 through May 23, 1996). Use one of the following procedures as applicable:

   1. Forms: Form 1004; R-3; Amount; D/OE Code IU.

   2. On-Line: Screen 381-382; Same as above.

   3. Remote Job Entry: ZT Transaction; Same as above.

      Agencies should use 01-920, Interest Penalty - Payroll Awards, as the expenditure object code.

4. QUESTIONS

   Questions may be directed as follows:

   Contract Issues: Agency Personnel Officer

   Payroll Procedures: Office of the State Comptroller, Payroll Services Division, 860-566-5428

   Remote Job Entry: Office of the State Comptroller, Payroll Services Division, 860-566-3214

   Memorandum Interpretation: Office of the State Comptroller, Policy Evaluation & Review Division, 860-566-4265

NANCY WYMAN
STATE COMPTROLLER

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