The Fayette County school board agreed Monday night to spend $1 million on a midyear raise for the district’s 7,000 employees.
The move recommended by Fayette County Superintendent Manny Caulk is to offset an Internal Revenue Service change in paycheck calculations that will reduce take-home pay for Fayette County school district employees and other state government workers. Beginning Jan. 1, Fayette County school hourly employees would receive a 0.75 percent salary increase, and salaried employees would receive a 0.5 percent raise.
A settlement between the state of Kentucky and the IRS mandated the change in how employee paychecks are calculated, Caulk told employees in an email two weeks ago.
“We did not initiate this mandate, but by giving our employees a raise, we do want to help ensure that it will not have a negative impact on your family finances,” Caulk said.
Pamela Trautner, spokeswoman for the state Finance and Administration Cabinet, has confirmed that the settlement affects all state and local governmental employees in Kentucky. Traunter has said a state employee earning $40,500 annually will typically pay $6.45 more each pay period. State officials had estimated that the amount could be less for teachers.
The district has some remaining money in the budget, and the raise would be paid for with that.
The settlement affects all governmental employers in various retirement plans, including the executive, legislative and judicial branches of state government; eight universities; the community and technical college system; and 1,471 county and city governments and local school districts. Trauntner said state officials have worked more than a year to give agencies adequate time to plan for budgeting, make changes to payroll systems, and communicate with all employers and employees.
Employers and employees will have to pay the increased amount. The additional annual cost could be approximately $5.7 million for state government agencies alone, school board documents said.
In the past, Social Security and Medicare taxes have been based on a salary after retirement contributions were deducted. Beginning next month, those taxes will be based on the total salary before retirement contributions come out.