Dear Colleagues,
Since April of this year, we have provided information through various channels about Cornell's plan to convert the schedule of the exempt (including faculty payroll and graduate assistant stipends) payroll from a biweekly to a semimonthly basis. This letter contains specific reminders of actions that you may want to consider in your planning now for the rest of the year.
With the implementation of the new PeopleSoft Human Resources and Payroll software, we have an opportunity to move away from the biweekly pay schedule to a semi-monthly schedule. The project team recommended that this be accomplished, and the executive sponsors agreed with the recommendation.
Why change to semimonthly?
1) The calculation of pay amounts using the current biweekly pay factor method has always created confusion. The average person finds it difficult to calculate the quoted annual salary using a biweekly amount because of the "pay factor." The payroll office is always inundated with questions related to this "pay factor." For a non-leap year, the pay factor is .038356 (1/365x14), and for a leap year, the pay factor is different for endowed and statutory personnel. PeopleSoft as delivered does not support Cornell's biweekly pay factor method. Converting to a semimonthly schedule simplifies the pay calculation. Each pay amount multiplied by 24 equals the corresponding annual salary. This provides an easy double-check for everyone.
2) Another advantage of this conversion is that many financial arrangements are based on a monthly schedule: most mortgages, rents, car payments and so on.
3) From an administrative standpoint, processing 24 payrolls is less costly than 26 payrolls. There will be a workload reduction for every person who is involved in the pay process, from the payroll clerk in the payroll office who sorts the checks to every employee in your department who has to review or handle every paycheck or pay advice that must be distributed.
4) Additionally, the alternative of modifying PeopleSoft to accommodate Cornell's biweekly pay factor method is expensive to install and also to maintain on an ongoing basis.
How does the change affect you?
1) The conversion to semimonthly payroll currently is planned for January 1999. Upon implementation of the new PeopleSoft system, the two pay periods in each month will be from the 1st to the 15th, and from the 16th to the end of the month. The schedule of actual pay dates is: Jan. 15 and 29; Feb. 12 and 26; March 15 and 31; April 15 and 30; May 14 and 28; June 15 and 30; July 15 and 30; Aug. 13 and 31; Sept. 15 and 30; Oct. 15 and 29; Nov. 15 and 30; and Dec. 15 and 31. These pay dates take into consideration weekends and bank holidays.
2) There will be two fewer paychecks (24 instead of 26) every year. Each payment will be larger but must last longer. You may have to change your budgeting time frame.
3) You may need to make adjustments as you do your personal financial planning for 1999. For example, if you have a mortgage or loan that has a biweekly repayment schedule, you may have to do some additional planning to ensure that your account has adequate balances for each payment, given the change in the pay schedule. If you are planning to refinance a mortgage or other loan, you might consider changing the mortgage or loan repayment schedule to correspond to your pay schedule. Upon research, our financial institutions found about 300 of us who have biweekly mortgage repayment schedules. All the banks involved have been alerted of the proposed change and asked to collaborate with us to achieve a smooth transition for the affected employees.
4) If you are not already on direct deposit, we strongly urge you to sign up now through your department payroll representative; or you may obtain an enrollment form from the payroll office. You may also print a copy of the form from this payroll web site: http://www.univco.cornell.edu/payroll/DD.html. Direct deposit will ensure that your pay is deposited into your bank account as quickly as possible, regardless of holidays and vacations. Under the semimonthly arrangement, payday will not always fall on the same day of the week. In the new system, checks and direct deposits will be processed at the same time, but direct deposits will hit the banks before checks are distributed manually to employees.
5) For the first few months after implementation of the new system, we would appreciate your help in auditing your pay advices and deposits to ensure that any unforeseen problems are identified as early as possible.
Who is not affected?
Hourly employees are not affected. According to the Fair Labor Standards Act (FLSA), employees who are paid based on number of hours worked and a stated hourly rate must be paid overtime. Since overtime pay is calculated based on a total number of hours a week, it would be difficult to perform the calculation on a semimonthly basis. Therefore, "non-exempt" (i.e. not exempt from FLSA) employees at Cornell will continue to be paid on a biweekly schedule.
How do I find out more about this change in pay schedule?
Send specific questions to the payroll mailbox at uco-pavroll@cornell.edu or to Anne Shapiro, assistant controller for disbursements and tax, at as57@cornell.edu.
Thank you very much for your attention.
Sincerely,
Yoke San L. Reynolds
Vice president for financial affairs and university controller
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