Pay Raise Explanation

Pay Raise

Exclusion of Programs Any program zeroed in the budget

e.g. HIP

Program for which funding for salaries is provided elsewhere Welfare Assistance – only for welfare payments Salaries are paid from Social Services TPA pgm

Pay Raise

Programs where pay is applied via other means are excluded Contract Support:

Indirect: Pay raise is applied to reported salaries for admin (overhead) functions and is included when Indirect Cost Rate is negotiated.

Direct: Direct salaries should be paid from the program not from contract support. The program gets the pay increase though the normal means.

Pay Raise

Non-base programs Road Maintenance, HIP (if it weren’t zeroed) These programs DO receive pay raise for both

Federal and 638 salaries. However, the pay raise is NOT distributed to the

regions as part of the TPA base, because these are NOT base programs.

The pay is distributed to the program, which makes the tribal distributions as prescribed

Adjustment for Number of Paid Workdays

Two separate adjustments to salary line Pay Raise – calculated on previous year’s total

salaries; incremental increase to salaries (e.g. 2.4% of $300M = $7.2M; new amt $307.2M)

Adjustment for Number of Paid Workdays Reduction to TOTAL salary costs (e.g. -$1.15M;

$307.2M - $1.15M = $306.05M total salaries) NOT a reduction to pay raise increment

Pay Raise & Adjustment for Paid Days are just 2 components of our fixed cost adjustments

Number of Paid Work days:

Change

FY 2005 261

FY 2006 260 -1

FY 2007 260 0

FY 2008 262 +2

Adjustment for Number of Paid Workdays

Why is this necessary?

Salary: $100,000

Hourly Rate 100,000/2087 = $47.91

2,087 hours = ~261 paid workdays

Assume 2% pay raise; +$2,000

100,000 + 2,000 = 102,000/2087 = $48.87/hr

Adjustment for Number of Paid Workdays

FY 2005 – 261 paid work days FY 2006 – 260 paid work days

260 pd wk days x 8 hours of pay = 2080 hours 2080 hours x $48.87 = $101,649.60.

So in FY 2006, we had less total salary cost than in FY 2005. We didn’t need to budget as much.

Thus – there was a reduction for “one less day”

Adjustment for Number of Paid Workdays

FY 2007 – 260 work days (like FY 2006) FY 2008 – 262 work days (2 additional days) Assuming same hourly rate:

262 pd wk days x 8 hours = 2096 hours 48.87 x 2096 hours = $102,431

So in FY 2008, we had to pay out more in total salary cost So we needed to budget for the additional cost Thus – there was an increase for “2 additional

days”

Adjustment for Number of Paid Workdays

None of this affects the pay raise calculation The day adjustment is against total salary The adjustment is made AFTER the pay raise is

added in The amount is automatically adjusted as just a

component of total pay

Adjustment for Number of Paid Workdays

17% issue Dave took the one less day and divided it into the

pay raise & got 17% -- mistakenly One less day would equate to .0038314 (1/261)

or (260/261) -1. .0038314 x $307,200,000 (for example) = -1.15M Two additional pay days would be:

.0076628 x 307,200,000 = $2.35M

Adjustment for Number of Paid Workdays

Example – Simplified to help you understand purpose of paid workday adjustment

Calculation done in detail by the department

Department then provides the number for us to use in the budget

Adjustment for Number of Paid Workdays