‘THOMAS P. DiNAPOLI ‘STATE COMPTROLLER Jos, TeavLoa EXECUTIVE DEPUTY Compmoten Orrice oF OPERATIONS: ‘STATE OF NEW YORK Tel (S18) 402-4103 OFFICE OF THE STATE COMPTROLLER December 6, 2019 Mr. Robert Mujica Budget Director, State of New York State Capitol Albany, NY Re: April 1, 2020 Payroll Issue Dear Mr. Muj 1am writing to call to your attention a unique circumstance in the State’s 2020-21 fiscal calendar that creates a potential obstacle to this Office’s ability to process the April 1, 2020 administrative payroll. In short, sufficient appropriation authority must be in place prior to April 1 to permit us to pay State employees and the federal Social Security ‘Administration, ‘The April 1 administrative payroll will cover approximately 155,000 State ‘employees, most of whom are on a lagged pay basis. For these employees, 2019-20 “carry out” appropriation authority will be charged for payroll costs as a prior year obligation. However, for employees who are paid on a current basis (temporary, hourly and certain other employees) and for any other personal service (PS) costs thet will be charged as current liabilities, new appropriation authority must be in place. Historically in these situations, the State has appropriated a portion of total PS costs to cover these liabilities. Social security obligations are paid on a current obligation cash basis when the associated payroll costs are incurred. ‘This Office works with the State Treasurer to create the bank files and print the ‘checks for payroll distribution each week. Since sufficient appropriations are in place during the fiscal year, we are able to guarantee funds are available to all recipient banks each payday and release these files and checks on the prior business day. However, release of the April 1, 2020 payroll cannot occur until appropriations sufficient to permit payment of the entire obligation are in place. Should the 2020-21 budget not be adopted by mid-day on March 31, the distribution of the administrative payroll could be delayed. This delay would have a significant adverse impact on employees, particularly those who have deductions and other adjustments made either before or after their payment is distributed (€.g., automatic mortgage payments, child support payments, etc.) As way of context, you may recall that this Office has issued notifications to agencies in the past about the possibility of a late payroll due to the timing of budgetadoption, most recently in 2015 for the April 2 institutional payroll and again in 2017 ‘when budget extender bills were required in order to process the April 5 administrative payroll 7 Tam sure you share our desire to avoid any inadvertent financial harm to employees due to potential timing-related issues with adoption of the 2020-21 State budget. Therefore, we are asking you to consider inserting appropriations into the 2020- 21 debt service bill sufficient to cover that portion of 2020-21 PS expenses that will be charged on April 1 in accordance with the State’s split payroll procedure (one day or one- tenth), and the related employer social security obligations (which avoids federal penalties). This treats the State’s payments to bondholders, employees and the federal government as mandatory obligations that would be addressed prior to April 1 in order to ‘guarantee payment. Subsequently, costs would be transferred to their respective appropriations in the adopted budget. Staff and I would be happy to work with DOB to construct the appropriations, We estimate an appropriation of $27 million for the April 1 split payroll and a $31 million appropriation for the employer share of social security, Please let me know if we can provide any additional information or answer any questions. We look forward to working with you to resolve this issue. Sincerely, ‘Traylor OS Executive Deputy Comptroller ce: Pete Grannis, First Deputy Comptroller Christopher Curtis, State Treasurer Dominic Colafati, Chief Budget Examiner