Compensation

1. What is considered compensation?
2. Are some types of payments excluded from STRS Ohio compensation?
3. What is the effect of employee benefit cafeteria plans on STRS Ohio compensation?
4. At our school, employees who do not participate in the school’s health care plan receive an extra payment. Is this considered compensation?
5. Are payments for Medicare taxes considered STRS Ohio compensation?
6. Are retroactive increases considered compensation for STRS Ohio purposes?
7. Are bonuses, such as merit, longevity, sign-on and retention, considered compensation for STRS Ohio purposes?
8. Our district recently negotiated a settlement with one of our employees and we need to know if retirement contributions should be deducted from the settlement payment?

1. What is considered compensation?
   Compensation is salary, wages and other earnings paid to an employee, including amounts paid for a supplemental contract. Compensation is defined under 3307.01 of the Ohio Revised Code.
2. Are some types of payments excluded from STRS Ohio compensation?
   Yes. The following types of payments are examples of payments not subject to STRS Ohio contributions in accordance with Ohio law:
   • Payments for accrued but unused sick leave, personal leave and vacation leave, including payments for perfect attendance;
   • Vacation pay concurrent with other periods for which compensation is paid;
   • Amounts paid to provide insurance coverage or cash payments in lieu of providing insurance, including Medicare;
   • Payments based on retirement;
   • Retroactive increases not paid in accordance with uniform criteria applicable to all employees;
   • Payments for services not actually rendered;
   • Reimbursed job-related expenses such as car allowances; and
   • Severance pay.
     
3. What is the effect of employee benefit cafeteria plans on STRS Ohio compensation?
   Cafeteria plans do not change the base compensation for retirement contributions. The basis for member and employer contributions is the salary specified by the contract or salary schedule.
4. At our school, employees who do not participate in the school’s health care plan receive an extra payment. Is this considered compensation?
   No. Payments made to provide insurance of any kind or payments made in lieu of insurance are not considered compensation.
5. Are payments for Medicare taxes considered STRS Ohio compensation?
   If an employer pays or reimburses any part of a member’s Medicare tax, the amount the employer pays or reimburses may not be included in the member’s compensation for STRS Ohio purposes.
6. Are retroactive increases considered compensation for STRS Ohio purposes?
   In general, retroactive increases are not subject to STRS Ohio compensation. However, retroactive increases may be subject to STRS Ohio contributions if retroactive increases are granted to:
   • All teachers,
   • All administrators, or
   • A superintendent, provided all teachers also received the retroactive increase.
7. Are bonuses, such as merit, longevity, sign-on and retention, considered compensation for STRS Ohio purposes?
   Bonuses are generally considered compensation for STRS Ohio purposes, as long as they are earned by reason of employment. However, if any bonus is attributable to retirement, paid in lieu of items not considered STRS Ohio compensation or retroactive, it may be excluded from compensation. Questions about whether a specific bonus is included in compensation should be directed to STRS Ohio.
8. Our district recently negotiated a settlement with one of our employees and we need to know if retirement contributions should be deducted from the settlement payment?
   All settlements must be reviewed by STRS Ohio prior to remitting contributions on these types of payments. Please contact your STRS Ohio employer advisor and submit a copy of the agreement for review. If the settlement is based on punitive damages rather than compensation for actual work performed, then STRS Ohio cannot accept contributions on the payment.

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