Appendix B-2. Budgeting Expenditures
Budget Categories - Salaries & Benefits
Salaries should be projected with information on the number of staff/positions in the district measured in full time equivalents (FTE). “This information should be maintained within the district’s position control system and at the school site. Minimum personnel information includes job assignments, with FTE, pay rate for the assignment, and assigned employee.” During budgeting of salaries, you must take precautions to insure that all permanent ongoing job assignments are budgeted even if they are currently vacant. For this reason, it is imperative that the district either have an operating position control document or some type of spreadsheet or document with all district job assignments.
The great majority of teacher salaries in most adult programs will be for contracted or hourly positions. This presents a budgeting challenge. Several options may be considered for budgeting the hourly salaries:
- Use prior year historical costs with adjustments for new year hourly rate information and adjustments for new, deleted, expanded positions or programs;
- Use the teacher contract amounts;
- Use some factor such as an average hourly teacher salary and multiply the number of hours the classes will be offered.
As in the general fund, overtime salary accounts and substitute salary accounts should be budgeted. The most reliable indicator in these types of accounts is historical information. Adjustments would be needed if the Adult School had expanded programs or experienced any changes in the programs or activities offered in the school.
Benefit Accounts (3100-3900)
These percentages are true for 2002-2003.
STRS-State Teacher Retirement (3100) – 8.25%
Expenditures should be budgeted at 8.25% of STRS qualified gross salaries. Since most teachers are employed less than 50%, they can elect STRS or select the retirement alternative.
PERS – Public Employee’s Retirement System (3200) – 13.02%
This will not be a significant problem in the adult fund, but it must be budgeted. The qualified PERS classified employee salaries should be budgeted for 13.02%, with the percentage split between 7270 and 3200. PERS advises on the rates in January and June and the district can either base the entire year expense on the June rate or prepare a composite of the partial year rates.
FICA – Social Security and Medicare (3310/3320 and 3330/3340) – 6.2% & 1.45%
These rates are based on percentages of the gross wages. The percentages do not often change, but, when they do, the change will occur on January 1, and there should be sufficient notice to budget properly. These rates are controlled by the Federal government. These limits are set annually by the Social Security Administration. In the 2001-2002 fiscal year, the Social Security rate was 6.2% on amounts earned up to $61,200. The Medicare rate was 1.45% and there was no limit on earnings. These percentages differ for each district and the district’s business manager should be contacted for the most recent rates.
Retirement In Lieu of OASDI (3350/3360) – 6.2%
Employees not covered by OASDI may include part-time staff under four hours per day (based on an eight-hour day) or substitutes, etc. Federal regulations require covering these employees under OASDI at 6.2%. Offering an alternative rate under 403B (TSA) rules can save the district costs. The critical point here is that all staff should be covered by a qualified plan with either STRS, OASDI, or an alternative in lieu of a retirement plan, and budgeted accordingly. The budget would be based on the percent the district has agreed to pay for employees. Consult the Personnel Department or employee contracts for these percentages and budget based on prior years’ experience.
Health and Welfare (3400)
Budgeting for health and welfare costs is based solely on the individual district’s negotiated packages. It is imperative to have a copy of each labor contract as well as contracts for employees not covered by a labor organization. Amounts paid for retired employees should be included, if these benefits are district paid and the adult education fund is charged.
Unemployment Insurance (3500)
This rate is set by the State and is generally known in the spring for a July 1 change. This percentage is applied to the gross wages of all employees, except for student workers who are enrolled in a district school.
Worker’s Compensation (3600)
The district’s unique rate is determined by the insurance carrier or JPA for that district. The rate is announced in the spring for a July 1 change and is applied to all gross salaries.
Other Employee Benefits (3900)
Budget for this category would be based on the district’s negotiated package with labor unions or contract with employees. This benefit is generally tax-sheltered annuities offered in lieu of health benefits. Be sure to check with the Personnel Department for other types of offerings unique to the district.