Kansas Department of Administration

00-P-020 Salary Overpayments and Outstanding Arrearages (Supersedes Informational Circulars 912 and 1225)

Posted on 10/21/2021 at 12:50 PM by Kansas Department of Administration

DATE: February 10, 2000
SUBJECT: Salary Overpayments and Outstanding Arrearages
EFFECTIVE DATE: Immediately
CONTACT: Payroll Services,
Sunni Zentner

(785) 296-7058

(sunni.zentner@da.state.ks.us)
Joyce Dickerson (785) 296-3979 (joyce.dickerson@da.state.ks.us)
Setoff Program,
Pam Fink

(785) 296-4234

(pam.fink@da.state.ks.us)
APPROVAL: approved by Shirley Moses
SUMMARY: Revised policies and procedures have been established for agencies to follow regarding salary overpayments and uncollectible arrearages.

A revised policy and corresponding procedures for salary overpayments have been established to reduce the number of outstanding arrearage balances due to the processing of salary overpayments. Also, revised policies and procedures for uncollectible arrearages were established in accordance with Policy and Procedure Manual Filing Number 8001. It is very important that these collection procedures be followed in an expedient manner to alleviate the increasing number of uncollectible arrearages in SHARP.

Part I: Policy and Procedures for Salary Overpayments 

There are currently outstanding arrearages in SHARP that were the result of agencies running on-line adjustments to correct paychecks where the employee was overpaid. The outstanding arrearages remain because the employees had already terminated employment or terminated employment before the full arrearage could be collected from their paychecks. These situations have led to the following policy:

For cases where an employee has been overpaid, if the agency is not certain that the overpayment can be recovered from the employee through deductions from future payroll checks or by personal reimbursement, then payroll adjustment(s) to correct the paycheck(s) containing the overpayment should not be processed.

If an overpayment has occurred and the agency is uncertain that the overpayment can be recovered, the agency should follow the steps below to identify the net amount due from the employee and begin collection efforts.

  1. For a paycheck containing a salary overpayment, use the on-line pay computation panel to calculate the net that the employee should have received. (See SHARP Computer-Based Training, Payroll Book One, On-line Computation.)  
  2. Document the 'was' and 'should be' amounts on a DA-180 Attachment form. The difference in net pay will be the arrearage amount. (If the employee was overpaid on more than one check, repeat this step for all of the paychecks involved and combine the net pay differences to arrive at the arrearage amount.)
  3. a. At this point, if it is determined that the employee will have sufficient income to deduct the arrearage from a future paycheck(s), proceed with processing the on-line adjustment(s). If an on-line adjustment(s) has already been processed for the paycheck(s) involved correcting a different problem, submit a completed DA-180 form to Accounts and Reports for processing. The result will be that an arrearage amount is set-up in SHaRP. The agency must advise the employee about the amount owed and the deduction schedule for the arrearage. If the arrearage is not collected within a reasonable amount of time, the agency should refer to the policies and procedures for uncollectible arrearages that can be found in Part II of this informational circular.

    b. If it is determined that the employee will not have sufficient income to deduct the arrearage from a future paycheck(s), continue with the steps below.

    1. Contact the employee about the overpayment and ask for a personal reimbursement of the arrearage amount due.
    2. If the arrearage amount is collected, deposit the payment, and process the on-line paycheck adjustment(s) to create the arrearage balance. Submit a DA-180 form with a copy of your receipt voucher to Payroll Services so that the personal reimbursement will be recorded to satisfy the arrearage amount. (The agency may be able to receipt the payment and remove the arrearage balance following the instructions found in the SHaRP Computer-Based Training, Payroll Book Two, Collect an Arrearage Balance by Receiving a Personal Reimbursement.) (If an on-line adjustment(s) has already been processed for the paycheck(s) involved correcting a different problem, submit a completed DA-180 form and a copy of the receipt voucher to Accounts and Reports to process both the salary overpayment and the personal reimbursement.)

      If the arrearage amount is not collected, refer to the policies and procedures for uncollectible arrearages, found in Part II of this informational circular, following through the procedures to the point that the debt is submitted to Accounts and Reports Setoff Program or submitted for write-off. In this case, the amount that should be submitted to the Setoff Program or for write-off would be the gross amount of the salary overpayment.

      If the arrearage amount is partially collected from the employee, please contact Payroll Services to assist you in determining the salary overpayment transaction that can be processed and the remaining amount that would be submitted to the Setoff Program or for write-off.

Part II: Policies and Procedures for Uncollectible Arrearages

The SHARP report KPAY007, Deductions in Arrears Report, is generated after each off-cycle payroll and is distributed via agency MVS mailboxes. (Paper users receive a printed copy of the report.) It is the responsibility of each agency to review their arrearage balances and take the appropriate action to resolve the debt. Below are the procedures that have been written in accordance with the Policy and Procedure Manual Filing Number 8001, K.A.R.s 1-2b-1 and 1-2b-2, and K.S.A. 75-3728b. These are the procedures that an agency must follow once it has been determined that an arrearage is delinquent. 

  1. Minimum Collection Procedures: It is the responsibility of each state agency to collect amounts owed to the State in the most effective and efficient manner. Unless the Director of Accounts and Reports approves an agency's alternative collection procedure, all state agencies will adhere to the following basic procedures relating to collection of past due arrearages. These procedures are considered minimum efforts. Certain state agencies may find it necessary to expand these general procedures to fit their particular circumstances.

    1. Arrearage collection schedules should be extended on a limited basis, only after determining that the employee is unable to pay the balance in full. The arrearage collection schedule should be complete within the current calendar year and preferably not extend beyond six months. A general guide would be to allow the employee to pay back the arrearage over the same number of pay periods that the error occurred. However, the collection schedule can be extended for a few months more where large balances are concerned and payment of such balances within the current calendar year would create a hardship. (See the SHaRP Computer-Based Training, Payroll Book Two, Arrearages, for use of the General Deduction Override Panel.)
    2. All arrearages that are more than 30 days past due must be subjected to collection procedures.
    3. A record must be kept for each action taken to collect an arrearage, the name of the person taking the action, and the date the action was taken. This documentary evidence of collection efforts must be available at the agency to support classifying an arrearage as delinquent.
    4. At least three documented efforts should be made to collect all delinquent arrearages over $25. Arrearages $25 and under require only one documented attempt.
    5. As authorized by K.S.A. 75-6201 et seq., the State's right to set off debts owed the State against state payments due such debtors should be utilized for debts equaling $25.00 or more. Please refer to filing No. 8002 for information about the Setoff Program. Procedures for submitting a debt to the Setoff Program may be obtained by contacting the Setoff Program contact identified on the front of this informational circular. After an arrearage is accepted by the Setoff Program, the agency should promptly remove the arrearage from SHa>RP. Please refer to the SHaRP Computer-Based Training, Payroll Book Two, Adjust Arrears Balances Using the Adjust Arrears Balance Panel instructions for removing the arrearage from SHaRP. (A debt that is submitted to the Setoff Program will be collected out of payments from the State which are payable to the debtor. Following the collection of the debt, the agency will receive the amount collected and a collection assistance fee will be deducted from the remittance.)
  2. Write-off Request Procedures: K.S.A. 75-3728a-d establishes write off procedures for accounts written off as uncollectible by an agency. These procedures should be followed for all delinquent debts regardless of amount and also for debts that have remained in the Setoff Program for an excessive amount of time. In order to write-off an arrearage the agency must follow the steps below.

    1. An agency must apply to the Director of Accounts and Reports for authority to write off an arrearage when the following criteria are met:

      1. A valid arrearage does exist; i.e. there are no unsettled differences between the agency and the employee as to the validity of the arrearage.
      2. The arrearage is past due (having missed a scheduled personal reimbursement if the employee is no longer being paid).
      3. The agency has complied with the "Minimum Collection Procedure" section, without success, and has determined that the arrearage is uncollectible.
    2. As soon as the criteria noted above are met, the agency should prepare a request for write off to be sent to the Director of Accounts and Reports for approval. A copy of the request must be retained by the agency. The request should include the following:

      1. The number of arrearages to be written off.
      2. The total dollars for the arrearages to be written off.
      3. For each arrearage, list the employee's name, social security number, employee ID, amount, and a brief statement of the reason or basis for determining the arrearage uncollectible.

        Note: Agencies should make sure that the statement clearly identifies arrearages that have been discharged in bankruptcy.
      4. A statement by the responsible individual that in his or her opinion the arrearages are uncollectible and that this request is submitted in accordance with K.S.A. 75-3728a-d and Policies and Procedures Manual Filing Number 8001.
      5. The signature of the agency head which certifies his or her approval of the request.
    3. The agency should leave the arrearage set up in SHaRP pending notification (in the form of a signed letter) of approval from the Division of Accounts and Reports. Upon receiving such notification, the agency should promptly remove the arrearage from SHaRP if the arrearage has not already been removed.
    4. The agency must maintain all information relating to the arrearages that were written off.

All arrearage amounts written off by the state agency as described above are thereby assigned to the Director of Accounts and Reports for collection. Arrearage amounts equal to or greater than $25 will be recorded as a receivable through the Setoff Program. However, the agency will not receive back any funds that are collected through the Setoff Program for arrearage amounts that are submitted on a write-off request. Agency personnel may be required by the Director to participate in, and provide documentation for, hearings or litigation regarding the collection of the receivable. 

Regent Institutions are responsible for making the necessary modifications to their payroll policies and procedures to be in compliance with this informational circular.

Glossary 

Arrearage Amount - An amount the employee owes the agency. The arrearage could be the result of a payroll adjustment or the result of an advance of earnings to cover certain deductions.

Collection Schedule - The schedule of collections from an employee to satisfy an arrearage balance. Collections can be made through one or more payroll deductions or by one or more personal reimbursements following a schedule set by the agency. If the employee is in pay status, the SHaRP panel General Deduction Override could be used to set a maximum amount to be collected out of each paycheck. If no entry is made on the General Deduction Override panel, SHaRP will deduct all (or as much as possible) of the arrearage balance from the employee's next paycheck.

Employee - In this informational circular, employee refers to a current or former employee of a state agency.

Personal Reimbursement - A collection by personal check, cash, money order, etc., from an employee to fulfill a debt owed to an agency. 

Payroll Adjustment - A transaction that changes or corrects an original paycheck recorded in SHaRP. An on-line adjustment transaction processes a reversal of the original paycheck, then records a new paycheck with the original net pay showing as a deduction. An off-line adjustment transaction, which can only be processed by Accounts and Reports Payroll Services, records a new paycheck that records the difference between the original paycheck and what a correct paycheck should have contained.

Salary Overpayment - Any paycheck where the wages paid to an employee exceeds what the employee actually earned. 

 

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