Community Schools — Newsletter

Newsletter

STRS Ohio News for Community Schools
November 2007

Table of contents:

Services Offered to 2007–2008 Community Schools
Questions & Answers
Check Accuracy of Your Payroll Estimates
Contact Information Accurate?
Employer Pickup of STRS Ohio Member Contributions

Services Offered to 2007–2008 Community Schools
STRS Ohio offers a variety of resources to STRS Ohio employers. The STRS Ohio Employer Web Site provides easy-to-use information on STRS Ohio topics, including frequently asked questions, as well as STRS Ohio forms you can download and print. And if you need more information, answers are a phone call away with the toll-free number, 1-888-535-4050.

STRS Ohio has an employer advisor program, established to help employers resolve problems and foster a good relationship between employers and STRS Ohio. You may reach your advisor, Christopher Castle, by sending an e-mail to castlec@strsoh.org or by calling (614) 227-2972.

Questions & Answers
(TIP: Please review and retain these questions for future reference.)

Are all teachers required to contribute to STRS Ohio? How do we determine who should be a member of STRS Ohio?
Yes, all teachers, regardless of full- or part-time status, are required to contribute to STRS Ohio. There is no option for community school teachers in Ohio to contribute to Social Security or some other retirement plan. Ohio law defines STRS Ohio membership in Section 3307.01 of the Revised Code. In general, STRS Ohio membership is required for any school employee in a position for which a valid teaching license is required.

Once we have determined the positions for which STRS Ohio membership is required, are there any forms that should be completed for individuals employed in those positions?
Yes, the following forms must be completed.

A New Hire Notification form must be submitted within 10 days of the newly hired member’s first date on payroll, or
A Reemployed Retiree Notification form must be submitted within 10 days of the reemployed retiree’s first date on payroll, and
The SSA-1945 form (under federal law) must be submitted for anyone hired after Jan. 1, 2005.

The first two forms can be submitted online from the STRS Ohio Employer Web Site. They can also be mailed or faxed. The SSA-1945 form must be mailed to STRS Ohio or faxed to (614) 227-2912.

Should our director, principal and other school administrators be members of STRS Ohio, even though in our community school they may not be required to have a teaching license?
Yes. In addition to positions requiring teacher licenses, STRS Ohio membership is required for employees “whose duties are primarily academic in nature or require supervision of academic or licensed personnel.” STRS Ohio considers directors, principals and other school administrators STRS Ohio members under these criteria. A general rule of thumb: If an employee serves in a position that would require STRS Ohio membership at a regular board of education, then he or she is an STRS Ohio member at a community school as well.

If my community school hires a teacher or administrator through an agency or via an independent or private contract, is the individual required to contribute to STRS Ohio?
Yes. Ohio law defines “teacher” for STRS Ohio purposes. Any person who meets this definition is required to contribute to STRS Ohio regardless of the type of contract. Hiring a teacher or administrator through an independent contract, temporary agency or private company does not relieve the obligation for STRS Ohio membership and contributions on earnings. IRS Guidelines and Attorney General Opinions for distinguishing between an independent contractor and an employee cite the right of the employer to control the “mode and manner” of the work performed. If the duties performed by an individual under a private or independent contract are the same as those performed by a teacher or administrator under an employment contract, then there is no difference for STRS Ohio purposes.

Also, a retiree of any of the Ohio public retirement systems who is working as a teacher or administrator is subject to STRS Ohio reemployment restrictions and is required to contribute to STRS Ohio as a reemployed retiree, regardless of his or her contractual arrangement. (A complete explanation of STRS Ohio reemployment restrictions is available on our Web site or in the STRS Ohio Employers Manual.)

What are member contributions?
Each teacher contributes 10% of earned compensation to STRS Ohio. Member contributions are withheld from salary payments by the employer and then remitted to STRS Ohio in total within five business days of the paydate, along with the submission of a payroll report. Annually, employers report to STRS Ohio an accounting of contributions by teacher. Member contributions are held in an individual account for each teacher at STRS Ohio. The member receives a statement of account each October, including
estimates of future benefits.

Should STRS Ohio contributions be withheld from all payments made to teachers?
In most cases, the answer is “yes.” STRS Ohio contributions should be withheld from salary, wages and other earnings, including compensation paid under supplemental contracts. However, there are certain types of payments that are specifically excluded from compensation for STRS Ohio purposes, such as payments for unused sick or vacation leave; amounts paid to provide insurance coverage or cash payments in lieu of providing insurance; or reimbursed job-related expenses. A complete listing of payments not subject to STRS Ohio contributions is available on our Web site or in the STRS Ohio Employers Manual.

Check Accuracy of Your Payroll Estimates
The Estimated 2007–2008 Annual Payroll for Members of State Teachers Retirement System of Ohio form that was due on Oct. 12, 2007, is used to calculate your employer contributions due from the State Foundation Program. This amount is deducted from the State Foundation Program for STRS Ohio on a monthly basis. STRS Ohio monitors the payroll estimate and the actual payroll amounts being received throughout the fiscal year. If there is a sizable difference, STRS Ohio may make adjustments to the monthly deduction from the State Foundation Program. If you review the accuracy of your estimates and find a discrepancy, please contact Christopher Castle at (614) 227-2972.

Contact Information Accurate?
It is important that we have current contact information for your school to ensure that the appropriate people receive information from STRS Ohio in a timely manner. Please inform us of changes with your administrative or fiscal personnel. This includes any changes in treasurer, director/superintendent, sponsor, management company, fiscal agents, etc. To update us, send an e-mail to report@strsoh.org with the individual’s name, title, mailing address, phone number and e-mail address.

Employer Pickup of STRS Ohio Member Contributions
Want to give your teachers an additional benefit with little or no cost? You can, by deferring their STRS Ohio contributions for tax purposes. The tax deferral of STRS Ohio member contributions is called “employer pickup.” Individual employers who qualify may choose to “pick up” employee retirement contributions (currently 10%) as a means of deferring federal and state income taxes. The authority for employer pickup is the Internal Revenue Code, Section 414(h)(2).

Picked-up contributions are not included in taxable income for federal or state income tax purposes at the time the contributions are made to STRS Ohio. The amounts become taxable when received by the member in the form of a refund or a retirement benefit.

The most common form of pickup is called “salary reduction.” Under this form of pickup, the employees’ salaries are reduced by the amount of employee retirement contributions before the calculation of federal and state income taxes. The employer then pays the contributions to STRS Ohio.

Example: Assume that a teacher is employed on a full-time contract for $30,000 and his or her employer has a salary reduction pickup plan in effect:

Contract Salary	$30,000
Employee retirement contributions picked up by salary reduction (10% of contract salary)	-$3,000
Taxable income (federal and state)	$27,000
Earnings for STRS Ohio purposes	$30,000

Another form of employer pickup is called “fringe benefit.” Under this form of pickup, the employer pays the employees’ contributions to STRS Ohio without reducing the employees’ salaries. For more information on this form of pickup, please refer to the STRS Ohio Employers Manual or contact Christopher Castle at (614) 227-2972.

Steps to Implement a Pickup Plan:

The board adopts a pickup plan for one or more of the three recognized groups (teachers, administrators, superintendent). The board action must include the effective date (pickup cannot be retroactive), rate of pickup (e.g., 10%) and group(s) covered.
The treasurer completes a Notification for Employer Pickup of Employee Contributions form and sends it to STRS Ohio, along with a copy of the board action.
The treasurer implements the pickup plan on the effective date. Once these steps are completed a confirmation will be sent from STRS Ohio to the school, but it is not necessary to wait for the confirmation to begin the plan on the effective date.

Notification forms, a sample board resolution and answers to your questions regarding the adoption of pickup plans are available on our Web site or from Christopher Castle at (614) 227-2972.