Attention: | Chief Fiscal Officers, Business Managers, Payroll and Human Resources Officers |
---|---|
Subject: | Treatment of SEBAC v. Rowland Employee Payments for Federal Programs |
Overview
SEBAC v. Rowland Settlement related personal leave and vacation payments to
employees are considered non-allowable costs and should not be charged directly
to Federal programs. In addition, based on Federal guidance, these settlement
payments should not be treated as indirect costs in state agency Federal
indirect cost proposals or cost allocation plans.
Background
As the result of the SEBAC v. John G. Rowland settlement, certain State
employees who are class action members received personal leave (PL) and/or
vacation hours as compensation. In order to differentiate these payments from
normal PL and vacation hours, separate earnings codes were created in the
Core-CT HRMS system. Settlement related payments are charged in the Core-CT
Financials system with expenditure account 51155 - Other
Settlements-Reportable, which helps separate them from typical salary
and wage accounts used for personal leave and vacation hours.
To assist agencies with identifying the amounts in question, the Core-CT earnings code - expenditure account mapping for the SEBAC v. Rowland payments appear below:
HRMS Earnings Codes and Descriptions | Corresponding Core-CT Expenditure Account |
---|---|
AJ3 - SEBAC Vacation Used | 51155 - Other Settlements ? Reportable |
AJ4 - SEBAC Vacation Payout | 51155 - Other Settlements ? Reportable |
AJ7 - SEBAC PL Used | 51155 - Other Settlements ? Reportable |
Federal Guidance on the Treatment of Settlements
Title 2 of the Code of Federal Regulations (CFR) Part 200, Section 200.441
contains clear guidance on the treatment of settlements as they relate to
Federal programs:
Therefore, state agencies should make every effort to avoid charging SEBAC v. Rowland settlement payments to their Federal grants. In addition, state agencies should not treat these amounts as indirect costs in their Federal indirect cost proposals or cost allocation plans.
Spreadsheet Journal Corrections
State agencies are directed to review employee SEBAC v. Rowland settlement
payments to determine whether any of these amounts have been charged to Federal
programs. If so, agencies should process journal corrections in Core-CT to
transfer these expenditures to an appropriate budgeted funding source such as
the General Fund, Special Transportation Fund, or other budgeted special revenue
fund. The source code for the spreadsheet journals should be PC - payroll
correction.
Higher education units that administer Federal grants should transfer settlement payments and any associated fringe benefit amounts to an appropriate non-Federal funding source.
Fringe Benefit Impact
SEBAC v. Rowland settlement amounts are reportable payments to employees and
therefore are subject to all applicable fringe benefits. These fringe benefits
can include group life insurance, medical insurance, unemployment compensation,
FICA-Social Security, FICA-Medicare and the specific retirement plan in which
the employee is enrolled. Agencies transferring settlement payments will also
need to submit a CO-826 form to identify a proportional amount of the fringe
benefits to be credited back to the Federal grant.
Completed electronic copies of CO-826 forms should be sent by e-mail to the following mailbox for processing: Osc.CO-826@ct.gov.
Questions
Questions concerning this memorandum should be directed to the Cost
Reporting Unit of the Budget and Financial Analysis Division at (860) 702-3352.
KEVIN LEMBO
STATE COMPTROLLER
KL: REG
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