For those in the independent school sector, you know spring has sprung when it’s time to focus on payroll accruals and setting compensation for the coming school year. If we were to create a bulletin board with our top recommendations to prepare, here’s what would be on it:
- Cast a wide net when calculating payroll accruals – when you think about payroll accruals, the first things that come to mind are salaries, wages, and taxes. But you’ll also need to accrue benefits like health insurance, retirement contributions, tuition assistance, and accrued vacation. If it’s part of your school’s benefits package, it should be considered in the year-end payroll accruals.
- Don’t skimp on restricted gift and endowment reporting – now is the time to make sure restricted gifts and endowments have been reconciled, tracked, and accounted for correctly. Check to make sure you have documentation for restricted gifts and endowments.
- Budget sufficient time for setting compensation – according to data from the National Association of Independent Schools (NAIS), salaries and benefits can account for anywhere from 50-80% of a school’s operating budget. So, it makes sense that about 50-80% of your budget preparation time should be spent creating and finetuning salaries and benefits worksheets. We recommend starting with a list of every available position – filled or not – and building out your worksheets from there.
- Strike a balance between competitive compensation and fiscal responsibility – when determining salary adjustments or position changes, take into account your school’s budget constraints and financial sustainability. Communicating the results of compensation analysis and market benchmarks with faculty and staff will go a long way toward helping folks understand the rationale behind salary decisions.
- Assign a job classification to each position – classify positions based on job requirements, qualifications, and experience. This will make it easier to compare similar positions both internally and externally, especially when performing a broader market analysis. We’ve found job posting sites to be great resources for researching average pay rates by job classification.
One final note for our bulletin board: new federal overtime regulations are expected to take effect in 2024. The proposed regulations would increase the minimum salary threshold for exempt employees. Thus, employers may need to reclassify employees or adjust salaries to meet the new threshold…all the more reason to have your job classifications in order!
Looking for support during this year’s budget season? YPTC’s Independent Schools specialization can help with templates, financial statement analysis, or process optimizations.
