Although all TRS and THIS (hereafter referred to collectively as TRS) contributions from a fiscal year’s contract must be remitted to TRS by July 10th, many teachers and other staff may have contracts that extend beyond that date. To facilitate these payments and ensure that your payment schedule matches the one submitted to TRS, every Illinois public school district should create July and August payrolls prior to July 10th for the affected employees. These “early” payrolls will be used to calculate the total due to TRS on July 10th.
Before beginning, mentally divide employee positions into two groups whose payrolls will be handled separately:
- TRS positions whose previous fiscal year pay schedule continues past June 30th (e.g. teachers who are paid over the summer)
- TRS positions whose previous fiscal year pay schedule ends on or before June 30th (e.g. superintendent whose contract starts on July 1st)
- TRS positions who do not have a contracted salary (e.g. certified substitute teachers, hourly certified positions like Detention Supervision)
- Non-TRS positions
Group 1 positions must have their July and August payrolls prepared in advance, before July 10th, but Group 2 payrolls will be created on a normal schedule. This will ultimately result in two payrolls runs per paycheck date.
The following steps outline the chronological sequence of steps that must be taken to process payroll over the summer:
- Roll over the fiscal year
- Create future payroll runs for Group 1
- Edit payroll registers for Group 1
- Create payroll journal entries for Group 1
- Upload Group 1 data to Gemini
- Pay TRS liabilities for Group 1
- Skip non-TRS liabilities for Group 1
- Process paychecks/direct deposit for Group 1
- Create and process payroll runs for Group 2
- Pay liabilities for Group 1 and Group 2
- Change payroll status to complete
1. Roll over the fiscal year
Before beginning any payroll runs in the next fiscal year, about half of the fiscal year rollover process must be completed. Specifically these steps are necessary before you can run payroll in the next fiscal year (22-23):
- Create the new fiscal year
- Create pay periods and pay period groups
- Roll over employee positions
- Roll over employee payroll items
- Fix invalid rolled over pay periods (for the employees in Group 1)
- Create and assign work calendars to positions
2. Create future payroll runs for Group 1
You must create payroll runs for July and August, up to the first payroll of the new contracts. Make sure to choose the previous year (21-22) in the TRS Gemini Fiscal Year field so that Gemini knows which contract is being paid.
For example, if pay is issued semi-monthly and the first pay of the new contract is Sept 15, then you might need four payroll runs in total to complete the contract:
- July 15
- July 31
- Aug 15
- Aug 31
Be sure to choose the correct pay periods and pay period groups. If some pay period groups do not contain any Group 1 employees (e.g. groups for substitutes or non-certified employees), do not check them.
3. Edit payroll registers for Group 1
In each payroll register, review and edit the data to ensure the Group 1 positions are processed with the correct numbers.
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. TRS items must be included in this payroll, and they must be using the contribution rates from the previous fiscal year (21-22).
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 for Group 1
As with any payroll, change the payroll run’s status from Draft to Approved, then create payroll journal entries. All payroll journal entries will be dated in the future, using the payroll run’s Check Date.
Complete steps 2-4 for ALL remaining payroll dates in the Group 1 contracts before proceeding to the next step.
5. Upload Group 1 data to Gemini
Once the payroll data is complete, you can submit it to Gemini using the file upload or replication method.
After submission, Gemini will tell you how much you are expected to pay. If this amount differs from the liabilities generated in SchoolInsight by more than a few cents, double-check your work, and contact email@example.com if you unable to figure out why.
6. Pay TRS liabilities for Group 1
The method of paying liabilities changes depending on whether the payment will be made after June 30th, in which case it comes out of the about-to-start fiscal year (22-23) budget, or by June 30th, in which case it comes out of the about-to-end fiscal year (21-22) budget
Payment on July 1st or later
If the TRS contributions are being paid after the new fiscal year starts, then they should come out of the new fiscal year’s budget (22-23).
If you are paying through Gemini, and therefore submitting one payment per payroll run, pay the liabilities like normal, one at a time, on each payroll run.
If you are making one lump sum payment through the legacy system for all these summer payrolls:
- Go to Financials Main > Payroll > Payroll Runs
- In the new fiscal year, open the Liabilities page for the first July payroll
- Skip the TRS liabilities
- Repeat for each summer payroll except the last one
- In the last summer payroll, the predicted liability will be the sum of all previously skipped liabilities. Pay it, using the actual payment date (between July 1 and July 10), NOT the default future date.
The early pay date will create a negative liability in your balance sheet. This is normal; as each check date passes, the balance will get closer to zero as the journal entries are taken into account.
Payment on June 30th or earlier
If the TRS contributions are being paid before the new fiscal year starts, then they should come out of the previous fiscal year’s budget (21-22).
After creating the automatic journal entries for all the Group 1 summer payrolls, you will need to create manual journal entries in the previous (21-22) and new (22-23) fiscal years. Although we have provided an explanation of how we anticipate you may want to record these journal entries, it is important that you check with your auditors if you have any concerns.
When creating journal entries be VERY CAREFUL that you are in the correct fiscal year. Once you’ve opened the Create Journal Entry window, do not click anything in another tab that would take you to a different fiscal year.
Start by going to General Ledger > Saved Reports and running the TRS Entry Summary report for a single payroll. This report is scoped to show the Debit and Credit totals per account for all TRS items. You can also run the TRS Entry Detail report to see the data broken down in more detail.
Entries in the new fiscal year (22-23)
The purpose of the entries in the new fiscal year is to reduce your TRS liability balance and TRS expenditures to $0 before moving those liabilities and expenditures back to the previous fiscal year.
If the district covers all employee contributions (i.e. all TRS contributions are non-taxable benefits), only the expenditure accounts and Payroll Deductions and Withholdings accounts should be affected. However, if employees pay their own contributions (i.e. there are some TRS pre-tax deductions), you will need to designate an asset function (e.g. 199) to move the deductions back to the previous fiscal year. You may need to add new asset accounts to your Chart of Accounts in order to use them in journal entries.
In the new fiscal year (22-23), we suggest creating separate journal entries for each payroll run and vendor according to these rules:
- Debit the Payroll Deductions and Withholdings accounts (usually function 481)
- Credit the expenditure accounts
- If any Accrued Salaries and Benefits accounts (usually function 471) are on the report, credit an asset account (suggestion: function 199) with the Accrued Salaries and Benefits accounts’ totals.
Using the data in the above report, the journal entries for the first payroll would like this:
Each payroll run should have its own entries, with the same date as the payroll run. Re-run the TRS Entry Summary report to find the numbers for each date.
This simple example uses only one fund and responsibility center, but your actual data may be more complicated.
Entries in the previous fiscal year (21-22)
The purpose of the entries in the previous fiscal year is to increase your TRS expenditures and reduce your cash balance.
In the previous fiscal year (21-22), you can combine all the Group 1 summer payroll runs together, and create a journal entry for each vendor. Modify the TRS Entry Summary report to count all the relevant payroll runs, then create the journal entries according to these rules:
- Debit the expenditure accounts
- If you have Accrued Salaries and Benefits accounts (usually function 471) on the report, debit the asset account (suggestion: function 199) for the same amount
- Credit the cash account linked to the bank that will be used to make the payment to TRS. The total amount for each vendor should match the total for each vendor’s Payroll Deductions and Withholdings accounts (usually function 481)
Using the data in the above report, and assuming that there were four identical payroll runs, the journal entries in the previous fiscal year (21-22) would look like this:
7. Skip non-TRS liabilities for Group 1
Other liabilities (e.g. insurance, tax withholding) should generally not be paid until they come due later in the summer. Skip these liabilities so that they will be added as previous balances on the future Group 2 payrolls.
8. Process paychecks/direct deposit for Group 1
We recommend leaving your Group 1 payroll runs with the status “Journal Entries Created” until it’s actually time to pay them. If you wait, you’ll be able to reset the payroll run to Draft if any changes are necessary (e.g. if an employee drops insurance coverage, enrolls in a 457(b) plan, change their direct deposit information).
When the first payroll run for Group 1 comes due, you’ll issue pay using the Paychecks page like normal.
9. Create and process payroll runs for Group 2
As each payroll run comes due, you will create additional payroll runs for Group 2 positions on a normal schedule. This will result in two payroll runs with the same date (one for Group 1, created earlier, and one for Group 2).
For Group 2, choose the new year (22-23) in the TRS Gemini Fiscal Year field so that Gemini knows which contract is being paid.
Make sure to exclude Group 1 positions from the Employees tab so that no one is accidentally double-paid for the same work.
10. Pay liabilities for Group 1 and Group 2
The skipped liabilities from the Group 1 payroll run will be added to the liabilities for the Group 2 payroll run, so that they can be paid together.
For districts whose early TRS payment came out of the new fiscal year (22-23), a custom payment will be required for the Group 2 TRS liabilities. Instead of paying the current balance + previous balance, you should only pay the current balance.
- Go to Financials Main > Payroll > Payroll Runs
- In the new fiscal year (22-23), open the Group 2 payroll run
- Use the arrow on the left to expand the TRS liabilities. Record the Current Liabilities data for each account, for reference in the next window.
- Pay Liability for the TRS vendor
- Check Use Custom Amount
- Replace all the payment amounts per liability account with the amounts from the Current Liabilities column
- Confirm that the total payment matches the vendor’s Current Liabilities from this payroll
- Enter other payment details (date, financial institution account, etc.)
The image below represents an example in which the TRS payments were made in the new fiscal year (22-23). The red boxes indicate the real total payment due to each vendor.
If the TRS payment had been made in the previous fiscal year (21-22), then those vendors should have no Previous Balance, so the Balance column could be used for all vendors.
11. Change payroll status to complete
Like any payroll run, you should change every payroll run’s status to complete once all pay is issued and liabilities are paid.