In August we issued a Law Alert regarding Public Act 96-0434, which requires school districts to annually prepare an itemized salary compensation report for every employee holding an administrative certificate and working in that capacity. The report must be: 1) presented as an information item at a regularly scheduled school board meeting; 2) sent to the Regional Office of Education; and 3) posted on the school district website by October 1.

The legislation is not entirely clear on a number of important issues and, understandably, we have received many questions about what districts must include in their salary compensation report and how the information must be presented. Since the Illinois State Board of Education has yet to release a format for these new reporting requirements, districts are left to comply, as best they can, with the murkier aspects of this legislation. To help districts in this regard, we have developed a sample salary compensation report spreadsheet, which you may use to meet these new School Code requirements.

Some points should be made with respect to this legislation and about completing this report.

We believe that it is not enough to identify the administrative positions and titles but that to comply with the statute the district must identify employees by name and title for each administrator.

Also, we recommend that the report cover the salaries and compensation for the previous school year (2008-09) because these amounts are actual and not projected. The legislation specifies reporting "paid" sick and vacation day payouts which implies that the previous school year's actual, known, amounts are to be reported, not the projected school year's amount. (We do recognize, however, that given the ambiguity of the statute, reporting the current year's information would be a reasonable interpretation of the Act and would certainly constitute a good faith effort to comply with the Act.) If your district report covers the 2008-2009 school year, it should add new 2009-10 administrators to the report with a footnote that "all amounts reported regarding this individual are projected and not actual."

Regarding pension contributions, the Act simply states, without elaboration, that the compensation report must include "pension contributions." Under the Illinois Teachers' Retirement System ("TRS"), a member and employer are each responsible for making separate contributions for the employee. We believe that the legislative intent of the Act is to make clear what compensation packages districts have elected to provide their administrators. Accordingly, we believe a reasonable interpretation of the Act is that districts must report TRS pension contributions paid by the district on behalf of the employee, but not the 'employer share' which by statute must be paid by the district, and over which, the district has no discretion.

While the maximum employee TRS contribution is 9.4% of creditable earnings if the employer "picks up" the employee's TRS contribution in addition to the employee's salary, the "gross up" factor requires that the district report the multiplier of 10.375% as creditable earnings. (If your school district picks up less than the maximum TRS contribution rate, consult Chapter 3, page 17 of the 2009 TRS Employer Guide for the table of factors to determine the reportable rates.)

Like TRS contributions, there are separate contributions which must be made by both the member and the district to the Teachers' Health Insurance Security Fund (THIS). Like our opinion on TRS contributions, we believe it is reasonable for a district to report board-paid, employee THIS contributions and not the legislatively-required employer THIS contributions. (The member THIS contribution rate is .84% for both the 2008-2009 and 2009-2010 school years.)

We believe that districts may report the number of sick and personal days awarded annually and not their theoretical, per diem, value. Assigning per diem dollar amounts to personal and sick days is misleading and suggests, incorrectly, that administrators are being paid over and above their salaries for the per diem value of the unused days. Vacation days are somewhat different since in some districts administrators may sell a number of unused vacation days back to the district at the end of a school year at their per diem rate. At this time, and until we receive further guidance from ISBE or the legislature, we recommend reporting, by category (sick, personal, and vacation), the number of days allotted, the number of days actually used, and the number of days an employee may sell back to the district. If the district is reporting information from the previous year, the number of vacation days actually sold back to the district from the previous year should be included.

While some may find a "grand total" useful, Public Act 96-0434 does not state that the compensation amounts must be totaled. Given the difficulties in valuing certain aspects of "total compensation" for such things as sick days, personal days and THIS and TRS "benefits," we believe that attempting to come up with a total figure could be daunting and could mislead by overstating or understating the total package, depending on how the district costed ancillary benefits.

As always, we will keep you posted of any developments and further clarifications of this legislation. If you have any questions regarding Public Act 96-0434 please contact Robert E. Riley or Maryam T. Brotine in our Chicago office.

Sample Salary Compensation Report

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