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Off-Salary-Schedule Pay

October 4, 2023
Circular Letter: 200-044-23
Topic: Special Compensation

To: All Contracting Public Agencies and Schools

Purpose

The purpose of this Circular Letter is to define Off-Salary-Schedule Pay (OSSP), provide the correct method for reporting this pay for classic members, and provide examples of compensation commonly misreported as OSSP.

This Circular Letter supersedes and replaces Circular Letter No. 200-048-16.

Related Terms

Compensation Earnable
Defined in Government (Gov.) Code sections 20636 and 20636.1 and includes pay rate and special compensation.
Special Compensation
Defined in Gov. Code section 20636(c). Special compensation reportable for classic members is listed in section 571 of Title 2 of the California Code of Regulations (CCR).

Defining OSSP

CCR section 571(a) defines OSSP as:

Compensation in addition to base salary paid in similar lump-sum amounts to a group or class of employees. These payments are routinely negotiated through collective bargaining in lieu of increases to the salary schedule. These payments are based on a similar percent of scheduled salary not to exceed six percent (6%) per fiscal year. The contracting agency or school employer may adopt similar action for non-represented groups or classes of employment as were negotiated through collective bargaining.

Reporting OSSP

OSSP is reportable when the following criteria are met:

  • The member’s group or class has not received a general salary increase in the same fiscal year.
  • The member is a classic member.
  • The OSSP is documented in a public record available for public review, as stated in Gov. Code sections 20636(d) and 20636.1(d).
  • The OSSP is in lieu of a general salary increase.

Only OSSP up to 6% can be reported to CalPERS and must be reported in the fiscal year it was earned. OSSP must be prorated and reported monthly throughout the fiscal year as earned, not as a lump sum.

Example

The member worked four-fifths part-time, with a $5,000 per month pay rate, $4,000 per month earnings, and the member’s group or class is receiving 8% OSSP for the 2021-22 fiscal year. OSSP is reportable because the member’s group or class did not receive a general salary increase in the 2021-22 fiscal year and the member is a classic member. Although the OSSP is 8%, only up to 6% can be reported to CalPERS.

  • Full-time pay rate: $5000
  • Monthly part-time earnings: $4000
  • OSSP Approved: Sep 1, 2022
  • OSSP Approved for Fiscal Year: 2021-22
  • OSSP Percentage: 8%
  • OSSP Percentage Reportable to CalPERS: 6%
Annual Earnings

$4000 × 12 = $48000

(monthly part-time earnings × 12 months)

Total OSSP

$48000 × 8% = $3840

(Annual earnings × OSSP Percentage)

Total OSSP Reportable to CalPERS

$48000 × 6% = $2880

(Annual earnings × OSSP Percentage Reportable to CalPERS)

OSSP Reporting

July 2021 – June 2022:

$2880 ÷ 12 = $240 per month

(Total OSSP Reportable to CalPERS ÷ 12 months)

OSSP Eligibility

OSSP is only reportable for classic members. Under the Public Employees’ Pension Reform Act (PEPRA), new members are typically those individuals who became members of CalPERS for the first time on or after January 1, 2013. All members that do not fall within the definition of a new member as defined by Gov. Code section 7522.04(f) are considered classic members.

Common Issues Reporting OSSP

  • OSSP reported for PEPRA members
    • This payment is considered an ad hoc payment and is not pensionable compensation for PEPRA members.
  • OSSP reported as a lump sum
    • As required by Gov. Code sections 20630(b), 20636(c)(3)(A), and 20636.1(c)(3)(A), special compensation must be reported in the period earned regardless of when it was paid and prorated over the periods earned when reported to CalPERS.
  • OSSP reported when the group or class received a general salary increase
    • OSSP is only reportable when it is specifically in lieu of a general salary increase and cannot be reported to CalPERS if the employer provided one during the OSSP period.
  • OSSP reported to CalPERS exceeds 6%
    • Even if an employer agrees to pay a group or class of employees more than 6% for OSSP, the maximum OSSP reportable to CalPERS is 6%.
  • OSSP substituted for other types of compensation
    • OSSP must fit the specific parameters outlined in CCR 571(a). Bonus Pay, COVID Pay, and other types of compensation that do not fit the OSSP definition are not reportable as OSSP.

When OSSP is not reported correctly, CalPERS employers may experience delays in payroll posting, and members may experience delays in retirement estimates and retirement processing.

Questions

Questions related to OSSP compliance and reporting can be emailed to the Employer Account Management Division, Audit Compliance and Resolution Unit at MOU_Review@calpers.ca.gov. If you have questions, call our Customer Contact Center at 888 CalPERS (or 888-225-7377888-225-7377).

 

Renee Ostrander, Chief
Employer Account Management Division