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Payroll

Videos—Click here to see a list videos that outline the guidance included in the USFR and discuss proper internal controls and commonly asked questions about payroll processing.

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1. Are school districts required to establish a delayed payroll system?

Yes, districts should establish a delayed payroll system. This type of system allows time for payroll adjustments to be made before payment to help ensure that employees receive the appropriate amount of compensation. Districts should determine how long to delay payment to allow adequate time for adjustments, but may not delay payments more than 7 business days during their normal 2-week payroll processing cycle. If an employee is discharged from district service, the district must pay the wages due to the employee within 10 calendar days from the date of discharge. Arizona Revised Statutes (A.R.S.) §§15-502(F) and 23-351

2. Can an hourly employee's pay be prorated so that equal payments are made each pay period over the school year?

Yes, provided that at no point during the year the hourly employee is paid more than actual hours worked to date. Pursuant to Arizona Attorney General Opinion I04-007, all school district employees may request that their compensation be paid over the actual months worked or be prorated in any number of payments as set forth in A.R.S. §23-351(C)(2). Districts should refer to guidance in the USFR §VI-H, Payroll.

3. If a school district has a board-adopted policy or a provision in an employee's contract for college tuition reimbursements, should the reimbursements be paid through the accounts payable system or payroll system? If paid through the payroll system, are the reimbursements subject to employment taxes?

College tuition reimbursements should be paid through the payroll system and coded to object code 6240—Tuition Reimbursement. Tuition reimbursement is typically a non-taxable fringe benefit; however, districts should review IRS Employer’s Tax Guide to Fringe Benefits (Publication 15-B) for more information on taxable and nontaxable fringe benefits, and the limitations on those benefits.