1. Pay Raise Explanation

2. Pay Raise • Exclusion of Programs • Any program zeroed in the budget • e.g. HIP • Program for which funding for salaries is provided elsewhere • Welfare Assistance – only for welfare payments • Salaries are paid from Social Services TPA pgm

3. Pay Raise • Programs where pay is applied via other means are excluded • Contract Support: • Indirect: Pay raise is applied to reported salaries for admin (overhead) functions and is included when Indirect Cost Rate is negotiated. • Direct: Direct salaries should be paid from the program not from contract support. The program gets the pay increase though the normal means.

4. Pay Raise • Non-base programs • Road Maintenance, HIP (if it weren’t zeroed) • These programs DO receive pay raise for both Federal and 638 salaries. • However, the pay raise is NOT distributed to the regions as part of the TPA base, because these are NOT base programs. • The pay is distributed to the program, which makes the tribal distributions as prescribed

5. Adjustment for Number of Paid Workdays • Two separate adjustments to salary line • Pay Raise – calculated on previous year’s total salaries; incremental increase to salaries (e.g. 2.4% of $300M = $7.2M; new amt $307.2M) • Adjustment for Number of Paid Workdays • Reduction to TOTAL salary costs (e.g. -$1.15M; $307.2M - $1.15M = $306.05M total salaries) • NOT a reduction to pay raise increment • Pay Raise & Adjustment for Paid Days are just 2 components of our fixed cost adjustments

6. Adjustment for Number of Paid Workdays Number of Paid Work days: Change FY 2005 261 FY 2006 260 -1 FY 2007 260 0 FY 2008 262 +2

7. Adjustment for Number of Paid Workdays • Why is this necessary? • Salary: $100,000 Hourly Rate 100,000/2087 = $47.91 2,087 hours = ~261 paid workdays • Assume 2% pay raise; +$2,000 100,000 + 2,000 = 102,000/2087 = $48.87/hr

8. Adjustment for Number of Paid Workdays • FY 2005 – 261 paid work days • FY 2006 – 260 paid work days • 260 pd wk days x 8 hours of pay = 2080 hours • 2080 hours x $48.87 = $101,649.60. • So in FY 2006, we had less total salary cost than in FY 2005. We didn’t need to budget as much. • Thus – there was a reduction for “one less day”

9. Adjustment for Number of Paid Workdays • FY 2007 – 260 work days (like FY 2006) • FY 2008 – 262 work days (2 additional days) • Assuming same hourly rate: • 262 pd wk days x 8 hours = 2096 hours • 48.87 x 2096 hours = $102,431 • So in FY 2008, we had to pay out more in total salary cost • So we needed to budget for the additional cost • Thus – there was an increase for “2 additional days”

10. Adjustment for Number of Paid Workdays • None of this affects the pay raise calculation • The day adjustment is against total salary • The adjustment is made AFTER the pay raise is added in • The amount is automatically adjusted as just a component of total pay

11. Adjustment for Number of Paid Workdays • 17% issue • Dave took the one less day and divided it into the pay raise & got 17% -- mistakenly • One less day would equate to .0038314 (1/261) or (260/261) -1. • .0038314 x $307,200,000 (for example) = -1.15M • Two additional pay days would be: .0076628 x 307,200,000 = $2.35M

12. Adjustment for Number of Paid Workdays • Example – Simplified to help you understand purpose of paid workday adjustment • Calculation done in detail by the department • Department then provides the number for us to use in the budget