State of California

  M E M O R A N D U M

  REFERENCE CODE:
  2000-041

  DATE:
  July 24, 2000

  TO:
  Personnel Officers
  Employee Relations Officers

  FROM:
  Marty Morgenstern, Director
  Department of Personnel Administration
  
  SUBJECT:
  Excluded Employee Compensation - Leave Buy-Back

  CONTACT:
  Robert K. Clifford, Personnel Program Manager
  (916) 322-5714, CALNET 492-5714
  FAX: (916) 324-0524
  EMAIL: RobertClifford@dpa.ca.gov

  A few weeks ago, the Department of Personnel 
  Administration (DPA) announced in a Personnel Management Liaison mem
  Employee Compensation Plan (Exec Plan) to recognize the 
  vital and respected role of State managers, supervisors, 
  and confidential employees.    The first of these items is the new excluded employee leave 
  buy-back program.  The most significant feature of this 
  plan is that for FY 2000 the leave buy-back program for 
  excluded employees is fully funded by the State.  The Exec 
  Plan also includes a new 401(k) Employer Contribution 
  Program.  Details of that program will be announced 
  shortly.    Eligibility for the new leave buy-back program begins 
  July 1, 2000, and ends December 31, 2000.  Further, there 
  is a processing window period beginning September 1st running 
  through December 31st when eligible employees may be 
  compensated for surrender of accrued vacation leave, annual 
  leave, personal leave, personal holiday, or holiday 
  credits. 
  Payments beginning with the September 1st processing date may include 
  documents based on eligibility and pay rates in effect for the months 
  of July and August 2000.  This is so departments can give eligible 
  employees an opportunity to participate in the buy-back even if their 
  eligibility (CBID) changes prior to September 1st.  It is the intent of 
  DPA to not exclude these otherwise eligible employees.    Beginning July 1, 2000, departments shall ask employees to designate 
  which leave type(s) and what quantity of each leave type they want to 
  cash out.  Departments may devise their own worksheets for employee 
  elections and, if feasible, may carry out the buy-back election using 
  electronic means.    Employees designated managerial and related (M/E59/E79/E99) may elect 
  to cash out up to a maximum of 80 hours.  Supervisory and related 
  (S/E48/E58/E68/E78/E98), and confidential/other-excluded employees 
  (C/E67/E77/E97) may elect to cash out up to a maximum of 40 hours.    Leave may be sold in any combination of eligible leaves in 8-hour 
  increments (e.g., 20 hours of annual leave and 4 hours of personal 
  leave).  An employee's CBID and salary rate will determine maximum 
  eligibility and the hourly rate to be paid.  Under DPA 
  Regulation 599.744 (attached), an employee may only cash out leave one 
  time in a FY.  Further, departments cannot exceed any of the foregoing 
  limits for any employee in a FY.    Departments may "key" payment information at any time during the 
  eligible period, but all input processing under this buy-back must be 
  completed not-later-than December 31, 2000.  For tax purposes, 
  payments will be ordinary income in the month that payment is made.  
  Tax withholding rates for this buy-back will be: (a) Federal 
  Tax, 28.0%; (b) State Tax, 6.0%; (c) Social Security (if 
  applicable), 6.2%; and (d) MediCare (if applicable), 1.45%.  These 
  funds are not subject to retirement withholding.    Unlike the FY 1999 excluded employee leave buy-back program, the 
  FY 2000 program is funded by the State.  Thus, departments are not 
  required to identify a payment source or certify the availability of 
  funds.  Since the program is funded, participation by individual 
  departments is not elective and employees must be paid if they want to 
  participate in the program.   
  Additional details will be issued by the State Controller's Office 
  (SCO) in the near future providing instructions for requesting pay. 
  Payroll process and procedural questions should be directed to SCO's 
  Personnel/Payroll Services Division (PPSD), Payroll Liaison 
  Unit, (916) 323-3081, or CALNET 473-3081.    Buy-back program policy questions should be directed to Robert 
  Clifford, Policy and Operations Division, (916) 322-5714, 
  RobertClifford@dpa.ca.gov.      Attachments will be distributed via mail.