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Monday, October 20, 2008

Why stop at one day?

South Dakota is having fun with the miracles of accounting by proposing to push back, BY ONE DAY the payday for state school employees - thereby saving $11m:
The South Dakota State Board of Regents has proposed a payroll date change that could fund bringing the state's six university campuses up to speed with wireless technology. However, the plan affects employees planning to retire in the next three years. The board plans to push its payroll date back one day for all employees in 2009. The timing, with a change of fiscal years, would free up almost $11 million for technology upgrades, regent president Tad Perry said.
Why stop at one day? Surely 7 days would save $77m?

Miracles of accounting do not exist - the $11m must come from somewhere. But the story makes it all seem magical:
The transition would begin between June and July 2009, which means the paycheck for the last month of the fiscal year would be paid in the following fiscal year.

Employees would still earn the same amount of money. Funds from the overall appropriation approved by the state would be transferred to equipment needs in a one-time proposal.

So what's the big deal? An unintended consequence? Those who retire in the next few years can be out some coin:
It's more than inconvenient for the people planning to retire, said David Boyles, faculty senate president at the South Dakota School of Mines & Technology in Rapid City.

The South Dakota Retirement System formula is based on the best 12 consecutive quarters of the past 10 years. For most employees, their peak salary is closest to retirement. But if employees retire during the next 12 quarters, their retirement checks will be smaller because it will reflect the year that includes fewer paychecks.

More here


Americans lost $2 trillion in their retirement savings over the last 15 months. So what is the future for them? They saved from their life to secure it in the future. Is their life secured?

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