BILLING FOR SERVICES OF EMPLOYEES PAID ON MONTHLY BASIS - 8299

(Revised: 06/2023)

This section provides the methodology and formula for determining the hourly billing rate when an agency/department bills for the services of employees paid on a monthly basis on or after January 1, 2023.

 

The hourly billing rate is computed using the total actual working time per year and the state’s staff benefit contribution percentage. The total actual working time per year is determined by deducting the number of hours for Saturdays, Sundays, holidays, and other absences from the total hours for the calendar year. To determine other absences, agencies/departments will compile and average absences such as vacation leave, annual leave, personal leave program, sick leave, bereavement leave, informal time off, jury duty leave, military leave, furlough leave, and professional development leave.

 

This formula provides billing for actual hours worked. The formula does not include an amount for such costs as identifiable operating expenses incurred in rendering the service, charges for other than incidental use of equipment, overhead, and other costs. In addition, Workers’ Compensation, Industrial Disability, Unemployment Compensation, and Life Insurance benefits are not included in the formula as these expenses can vary substantially among agencies/departments. Such costs should be included in billing for services in accordance with SAM Sections 9211 and 9217.1.

CALENDAR YEAR	365 days x 8 hours =	2920 hours
LESS DEDUCTIONS
Saturdays	52 days X 8 hours =	416 hours
Sundays	53 days x 8 hours =	424 hours
Holidays: New Year’s Day Martin Luther King Jr. Day President’s Day Cesar Chavez Day Memorial Day Independence Day Labor Day Veterans Day Thanksgiving Day Day After Thanksgiving Christmas Day Personal Holiday	12 days x 8 hours =	96 hours
Other Absences (averages)*: Vacation/Annual Leave Personal Leave Program (PLP) Miscellaneous – Sick, Bereavement, Informal Time Off, Jury Duty, Military, Furlough Off, Professional Development Leave
Subtotal of Other Absences
TOTAL DEDUCTIONS
(Include all amounts calculated under deductions)
TOTAL ACTUAL WORKING TIME PER YEAR
(2920 hours. less Total Deductions)

*Statewide data is not available. Each agency/department, based on previous experience and expertise, must compile the information for Other Absences. Remember to calculate a separate average for each type of Other Absences (i.e., average vacation/annual leave, average PLP, and average miscellaneous absences.

 

STATE’S STAFF BENEFIT CONTRIBUTION PERCENTAGES

(Effective January 1, 2023)

Employee’s Retirement	32.00
OASDI	6.20
Medicare	1.45
Health, Vision, and Dental Benefits	15.46
TOTAL PERCENT	55.11 1/

 

FORMULA FOR CALCULATING THE HOURLY BILLING RATE:

 

(Monthly Salary Rate x 1.5511) divided by

(“Total Actual Working Time per Year” divided by 12)

 

Note: Monthly Salary Rate should be adjusted as necessary to reflect (average) salary reductions for PLPs.

 

FORMULA FOR CALCULATING THE DAILY RATE FOR 2,000 HOURS OR LESS PER YEAR:

 

The number of working hours per month is not appropriate for employees not expected to work 2,000 hours per year, less vacation and sick leave. In such instances, an estimate of actual working time per month or year, considering average holiday, vacation, and sick leave should be used. For example, billing rates for academic year employees, such as college instructors, would be computed based on the number of workdays in a year, less the average of sick leave usage. (Holidays and vacation are not considered in this instance since they are considered in determining the number of working days.)

 

Daily Rate = (Annual Salary Rate x 1.5511) divided by

(Working Days per Year - Average Sick Leave Days Used per year)

 

Hourly Rate = Daily Rate divided by 8

 

1/Note: The 55.11 percent rate is applicable only to employees who are Miscellaneous Tier 1 members of the Public Employees’ Retirement System. If an employee is not a Miscellaneous Tier 1 member, but is still contributing to OASDI (i.e., Social Security), their appropriate retirement contribution rate will be substituted for the 32.00 percent rate. Those employees who are not Miscellaneous Tier 1 members and do not contribute to Social Security will include their appropriate Medicare and retirement rates, and health, vision, and dental benefit rates. For example, the appropriate total rate for members of the Safety Retirement Category who do not contribute to OASDI is 39.66 percent consisting of:

 

Employee’s Retirement (State Safety)	22.75
Medicare	1.45
Health, Vision, and Dental Benefits	15.46
TOTAL PERCENT	39.66

This 39.66 percent figure will be used in lieu of the 55.11 percent figure shown above. Agencies/Departments with employee members in different retirement categories may use a composite employer contribution rate, based on agency/department experience. Agencies/Departments may use other rates for OASDI, Medicare, and health, vision, and dental benefits if more accurate rates can be determined through actual operations.