President’s Perspective

PAYDAY ISN’T JUST A CANDY BAR

Charles Warren, AAEA Board President

Nobody goes to college or starts a career with a goal to someday process payroll for a living. In my career, I’ve worked with talented payroll people. Typically, they were really good at their first clerical job and someone noticed. That someone asked them to work in the payroll office. The rest is history. When you find a good one – one that is detailed, accurate, and cares – you work to keep them around.

For me, that’s Katrina Efurd. I worked with her in the “real world” and then things happened and we moved on to other jobs. As CFO, when a payroll job opened up, I begged her to work at the school district. Now she is the Payroll Coordinator on a team that pays over two thousand employees TWICE a month.

Katrina and I still talk about the nuanced differences between real world payroll and public school payroll. It took me almost a year to fully embrace that public school compensation is about contract days and not an annual salary. In the real world, I got paid holidays. At the district, I have non-contract days. Neither way is right or wrong – just different.

I recently had a payroll-related conversation with Carol Longino, Chief Financial Officer of Magnolia School District. She is the President-Elect of AASBO. As a School Business Official (SBO), she also ran payroll in the “real world” before starting at Magnolia in 2015.

Our conversation felt like a therapy session because she affirmed that the whole contract-days compensation is hard to comprehend at first, especially if you’ve processed payroll outside of public schools. Carol also shared how important it was to establish overtime rules and procedures that conform to Division of Labor (DOL) regulations. Distinguishing the difference between exempt versus non-exempt employees can be a daunting task if your school district is treating all employees in the same manner.

Basically, exempt employees are paid a salary for the work they do. An exempt employee is not paid for overtime. I learned that lesson quickly in my CPA (exempt employee) career. My first tax season included a required 65-hour work week for four weeks. No extra pay for that extra time.

As an administrator, you’ve likely experienced the same long hours without any overtime pay in your pocket. The thought is that you are paid a salary for your work (no matter how long it takes) and not for your time; therefore, you don’t get paid for your extra hours spent doing your work.

At times, exempt status for teachers seems contrary to the paid “planning period” and the stipends paid for after-school meetings. Schools and industries can have benefits, such as compensation for working after hours, but that’s an employee benefit, not a DOL regulation.

Non-exempt employees, however, are paid for their “time.” They do qualify for overtime. Overtime is required by the Fair Labor Standards Act (FLSA) for non-exempt employees. FLSA gave authority to the DOL to set rules for paying overtime and a minimum wage.

Educators are not formally trained to supervise non-exempt employees. College prepares educators to supervise and evaluate teachers and other professional (exempt) employees. There’s very little guidance provided to prepare the first year Principal for supervising non-exempt employees that may earn overtime. That’s why I try to simplify DOL regulations for administrators as much as I can. I have created a handbook on time sheets and overtime in order to provide a Principal with a resource for supervising classified employees (exempt or non-exempt). To support the Principal as the CEO of the school, my role is to help them adhere to payroll regulations, so they can focus on teaching and learning.

Carol took a similar approach when she started at Magnolia a decade ago. She established procedures to ensure overtime that was earned was actually paid. Don’t be surprised if you have a new SBO at your district and one of their first action items is to review payroll related processes and procedures to ensure that your district is compliant, just like Carol and I did.

During my therapy session with Carol, we talked about two great benefits that we enjoy as a public school employee. It may not always feel like it in the moment, but if you compare and contrast the benefits to the corporate world, the benefits are, well, beneficial.

Arkansas Teachers Retirement System (ATRS)

The pension system provided by ATRS is elite. It is well funded and well managed, including a board that consists of current and retired public school employees. It is the envy of public school teachers from other states and state employees of Arkansas.

This ATRS pension is a “defined benefit plan.” I had to study a variety of pension programs because there was always a question or two about them on the CPA exam. The pension gets its name because the benefit is defined (or set). Based upon a number of factors, your retirement benefits are set. The benefits stay with you as long as you live. Since retiring in the late 1900s, my mom and dad have been enjoying these benefits for decades. My much younger brother started contributing as a teen-ager and is already eligible to retire with full benefits. More about his story next month.

You won’t see this type of pension in the corporate world. Sure, I still have the 401(k) plan I had when I worked in the “real world,” but I can still participate in supplemental retirement programs known as 403(b) and 457 plans. Carol is proud of her supplemental programs in Magnolia which do include both 403(b) and 457 plans. I was fortunate enough to be at Fort Smith when we developed these plans for our employees.

I am a big fan of our “district sponsored 403(b) plan.” We created it to fight the burdensome fees associated with many annuity programs. I created a slide show to support the idea that when employees pool retirement savings together, we can drive down program fees and keep more of our own earnings. If you ever want to see the slides, drop me a line. Maybe one day, I can incorporate both an auto-enrollment and an auto-escalation feature in our plan.

Employee Benefits Division (EBD)

Our employee health care costs have remained steady over the last decade while public corporations are driving those costs up and reducing benefits for their employees. EBD, also known as ARBenefits, has had its ups and downs, but the network is large and the options are plentiful. I’m a classic plan guy taking advantage of health savings accounts to save taxes on medical bills. EBD also provides health insurance for retirees. That does not happen in the corporate world.

October is open enrollment month for our health insurance plan. Whether or not you make any changes, please take time to reflect on the many benefits we receive as a public school employee. When we talk about “salary and benefits,” sometimes we focus too much on salaries and forget that the benefits are an important part of our compensation as educators.

Also, take a moment to say thank you to your payroll team. They ensure you get paid in a timely manner each pay period.