Employee positions that are paid over the summer can be categorized into two groups:
Group 1:
- Positions whose summer pay should affect the current, pre-June 30th fiscal year budget (21-22)
- This group includes employees whose contracts end in August and whose PSRS/PEERS contributions need to be submitted in June, such as teachers.
Group 2:
- Positions whose summer pay should be recorded on a typical schedule, and whose budget will affect the next, post-July 1st fiscal year budget (22-23)
- This group includes employees whose contracts start on July 1, such as the superintendent.
In order to process all the Group 1 employee payrolls by the end of the current fiscal year (21-22), their July and August pays should be completed in June, even if pay is held back until the future pay dates.
The following steps outline the chronological sequence of steps that must be taken to process Group 1 payroll before June 30th.
- Confirm pay period group configuration
- Create summer payrolls
- Edit payroll register
- Create payroll journal entries
- Process paychecks/direct deposit
- Pay liabilities
In the next fiscal year (22-23), payrolls for Group 2 employees can be created like normal as they come due. Be careful to exclude Group 1 positions from the Employees tab so that no one is accidentally paid twice their salary.
1. Confirm pay period group configuration
All employees in Group 1 will need to be in a pay period group that lasts through the summer. This means the pay period dates will extend past the end of the fiscal year. For example, a Group 1 employee who is paid 12 times per year might have a pay period group that lasts from September of one year to August of the next year. A Group 2 employee might have a pay period group that lasts from July of one year to June of the next year.
2. Create summer payrolls
In order for the summer payrolls to affect the June budget, they must be created in the current, pre-June 30th fiscal year, even if you plan to pay some liabilities later in the summer.
Each payroll run should be created individually, so that separate checks can be issued. When choosing a check date for the payroll runs, you can use either of the following options:
Option 1 would date all the summer payroll runs in June. This will cause all payroll journal entries to be dated in June, making it easy to run fiscal year reports from July 1 - June 30. A potential drawback is that the paychecks and direct deposit file will also be dated in June. The direct deposit file will need to be manually edited to use a later date (see step 5).
Option 2 would date the payroll runs in July and August. In this case, many journal entries will be dated post-June 30th, so you will need to include August in any fiscal year reports that you create (ASBR, Budget vs Actual, etc.).
3. Edit payroll register
In the payroll register, review and edit the data to ensure the Group 1 positions are processed with the correct data.
On the Employees tab, make sure that all Group 1 employee positions and ONLY Group 1 employee positions are selected.
Confirm that all wages, deductions, benefits, etc. are correct. Pay careful attention to wages in the last pay period! Because the salary may not divide evenly across pay periods, you should run a report on wages to make sure each employee will get exactly the amount indicated on their contract. You may need to adjust the predicted wages by a few cents.
4. Create payroll journal entries
As with any payroll, change the payroll run’s status from Draft to Approved, then create payroll journal entries. Expenditures and liabilities will be created using the payroll run’s check date, as discussed in step 2 above.
5. Process paychecks/direct deposit
Paychecks should be processed for Group 1 immediately, even if the district will withhold payment until later. This is necessary so that the reduction in assets can be processed and balances can be rolled over to the next fiscal year.
If you chose Option 1 in step 2 above, the ACH file will need its Effective Entry Date edited before you submit it.
- Download the ACH file.
- Open the file in a program like Notepad (Windows) or TextEdit (Mac) that preserves all formatting. Do NOT open the file in Microsoft Excel.
- In Line 2, Col 70, replace the next six characters with the date that the direct deposit should be processed in YYMMDD format.
- Save the file.
- Submit the edited file to the bank a few days before the direct deposit should be processed.
In this example, the payroll run had a date of June 20, 2021, listed in the file as 210620. If the direct deposit should be processed on July 20, 2021, replace it with 210720.
If you chose Option 2, then no changes are necessary.
6. Pay liabilities
We assume that all or most liability payments will be processed in June of the current fiscal year (21-22), even if some checks will be held back until an invoice is received later in the summer. Depending on the liability, you may wish to issue one lump sum payment or write individual checks per pay period.
To make a lump sum payment, skip the liabilities in every payroll except the last. The last payroll should show all the previous skipped liabilities added together, so you can pay that at once.
To make individual payments per pay period, simply process each payroll’s liabilities individually, without skipping.