HUMAN RESOURCE MANAGEMENT


Payroll 101: The Basics of Employee Compensation


Simplifying a surprisingly complex area of school district finance. By Maria Anne Parry, CPA, PSA, SFO


P


ayroll is one of the many areas that fall under the umbrella of the school business office. Understanding the basics of payroll can help simplify what can be a surprisingly complex


area. Computers and outside companies can streamline the payroll process, yet school business officials still need to understand the theory, calculations, and regulations behind the data.


The information provided here should serve as a foun- dation; school business officials should check with their auditors or payroll software vendors for detailed guid- ance on payroll and payroll systems.


asbointl.org


Income


Employees’ income is divided into pensionable and non- pensionable (extra) income. What constitutes pension- able income versus extra pay depends on the individual state pension system. If you are unsure, check with your auditor. Additional pay has set federal withholding rates (www.irs.gov/pub/irs-pdf/p15.pdf).


Overtime/daily rate. Federal overtime provisions are included in the Fair Labor Standards Act (FLSA). Unless exempt, employees covered by the Act must receive overtime pay for working more than 40 hours in a


SCHOOL BUSINESS AFFAIRS | APRIL 2022 33


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