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Covered Compensation

Employee and employer contributions are required to be made to SERS based upon the employee’s SERS compensation.

The employee’s contributions are deducted from the employee’s compensation, and the employer remits a separate contribution, called the employer contribution.

The employee contributions should be withheld from the employee’s payroll during each payroll period in an amount equal to the current contribution rate, which is set by the Board. The employee contribution rate is currently 10%. The employer contribution rate is 14%.

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Monthly contributions are to be remitted to SERS by the 15th of the following month. It is important to remit contributions promptly and accurately. Failure to do so may result in the accural of penalties. Employee or survivor benefits are dependent on accurate compensation information reported to SERS.

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“Compensation” includes all salary, wages, and other earnings paid to an employee by reason of employment. Compensation is determined prior to the amount deducted as the employee’s contributions and before any of the compensation is treated as deferred income for federal income tax purposes.

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Compensation subject to SERS contributions includes, but is not limited to:

  • Regular salary or wages
  • Overtime earnings
  • Pay for used vacation and sick leave
  • Paid holidays
  • Calamity days
  • Across-the-board retroactive wage settlements
  • Longevity pay
  • Merit increases
  • As of the 2014-15 school year, a lump-sum payment in lieu of a salary or wage increase to all persons in a class of employees, in the same dollar amount or percentage, and in accordance with a written contract
  • Payments paid on behalf of the individual to an eligible retirement plan
  • Back pay awards that reinstate an employee to the employee’s position without interruption of loss of time
  • Payments made by the employer to the employee for Workers’ Compensation Salary Continuation
  • Payments made as a differential payment for an employee who enters active military duty for more than 30 days

Compensation not subject to SERS contributions, includes, but is not limited to:

  • Payments for accrued but unused sick leave, personal leave, vacation leave, or compensatory time
  • Amounts paid to provide life insurance, sickness, accident, endowment, health, medical,hospital, dental, surgical coverage, other insurance for the employee, or amounts paid to the employee in lieu of providing the insurance
  • Incidental benefits, including lodging; food; laundry, including clothing/uniform allowance; parking; services furnished by the employer; use of the employer’s property or equipment, including cell phones; and reimbursement for job-related expenses authorized by the employer, including moving and travel expenses; and expenses related to professional development
  • Compensation made to, or on behalf of, an employee that is in excess of the allowable amount under federal tax law
  • Anything of value paid to an employee that is based on or attributable to retirement or an agreement to retire
  • One-time and/or lump-sum payments made to an employee where such payments are not made for additional services actually rendered, or not based on an employee's standard rate of pay, such as
    • severance
    • incentive bonuses for low use of leave
    • signing bonuses
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When a question exists as to whether a payment is subject to SERS’ withholding, the employer should request, in writing, a determination from SERS. This request should include complete information about the compensation (contract, board resolutions, etc.). SERS may request additional information to make a determination.

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Upon a review of all the information, SERS’ staff determines if the payment is considered covered compensation. If an employer or the individual whose payment is at issue questions a staff determination, an appeal may be taken to the Board. The Board is responsible for a final determination, and all decisions of the Board are final.

If you do not request a determination from SERS on a payment issued to an employee, and it is determined that the payment is not compensation for SERS’ purposes, any contributions received on the payment will be considered unauthorized and refunded back to the employer.

However, if you do not request a determination from SERS on a payment issued to an employee, and it is determined that the payment is compensation for SERS’ purposes, you will have 30 days to certify the earnings paid to the employee on the Certification of Salary for Non-Contributing Service Form (35.2).

A charge will be made to you for both the employee and employer contributions, plus interest.

Failure to certify the earnings will result in a charge based on estimated figures. Once the cost has been calculated and submitted, you have 30 days to send payment. If the payment is not received by SERS within 30 days of such notification, a charge against the school district will be made for collection through the Foundation Program funds, where available, or by direct billing.

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