What is the underlying problem?
Full-timers in the CalSTRS Defined Benefit (STRS DB) retirement plan are required to contribute 8% of their earnings to CalSTRS. Most full-timers are paid for their regular year-long assignments in 12 equal monthly payments, July through June. However, full-timers are only obligated to actually work those assignments during 10 months of the year, August through May.
CalSTRS now requires that DB contributions only be sent to CalSTRS for months that employees actually work and only for the earnings for that month. CCSF will continue to deduct 8% contributions from each of the 12 monthly paychecks; i.e., 8% of 1/12 of annual salary. However, CCSF will only forward contributions to CalSTRS during 10 months, and the amount forwarded will be 8% of 1/10 of annual salary.
For example, a full-timer’s July paycheck will include an 8% STRS DB deduction from July gross pay. Since the full-timer technically did not work that month, CCSF will forward nothing to CalSTRS and will keep a record of the full-timer’s July 8% contribution as a “STRS DB Credit Balance.” (This is what we decided to call it and not necessarily what Payroll calls it.) The full-timer’s August paycheck will include another 8% STRS DB deduction from August gross pay. Because the full-timer worked in August and earned 1/10 of his/her annual salary, CCSF will forward 8% of 1/10 of the annual salary to CalSTRS. Because only 8% of 1/12 of the annual salary was deducted from the August paycheck, CCSF will take the rest from the full-timer’s STRS DB Credit Balance.
This will continue each month. By the end of December, the full-timer’s year-to-date (YTD) STRS DB Credit Balance should have gradually been reduced to zero. In January it should start being a negative amount (8% of 1/12 of annual salary withheld but 8% of 1/10 of annual salary sent to CalSTRS). By the end of June the negative STRS DB Credit balance should be zero again.
How will this be reflected in faculty paychecks?
Starting July 2013 there will be up to three different STRS DB deduction lines on each paycheck.
The first STRS DB paycheck deduction: This represents current and YTD deductions from your current paycheck and from your STRS DB Credit Balance which were sent to CalSTRS.
The second STRS DB paycheck deduction: This represents current and YTD amounts added to your STRS DB Credit Balance.
The third STRS DB paycheck deduction: This represents current and YTD amounts subtracted from your STRS DB Credit Balance and sent to CalSTRS.
Adding together the current amounts from the first and third deduction should give you the 8% deduction from gross earnings on your current paycheck (which may include overload, retro contributions, parking or prescription reimbursement, etc.).
Adding together the YTD amounts from the second and third deductions should give you your net YTD STRS DB Credit Balance withheld by CCSF and waiting to be sent to CalSTRS.