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Lump Sum Payments

Updated: May 17, 2022

When a state employee has reached the top of their grade (tenured employees) all forms of additional compensation outside of their normal paycheck are received in the form of a lump sum payment. When the Governor announced the surprise 2% Cost of Living Adjustment this year these employees received this percentage increase as a lump sum payment (salary x 2% - taxes = net payment) in their following paychecks. Later it was discovered that the Arkansas code for the state employee classification and compensation plan states that the lump sum shall be paid on the first paycheck of the new fiscal year (July) and therefore the law was broken and OPM had to take back the lump sum payments out of their next paychecks.

Then last week an audit report (see attached) strongly suggested that the law also states that the lump sum payments should be prorated from the announcement date and thus would be less than a 2% lump sum payment. This was discussed at last Fridays Legislative Joint Auditing committee. ASEA had enough time to contact committee members and talk to them about what these employees have already been through concerning the COLA payment.

There was a long discussion that this seemed unfair for these employees, but their concern is that as elected officials they must follow the law in every situation and that amending this section of the Arkansas code is something that can be changed during the 2023 general session. The meeting was adjourned without a adopting the recommendation.

ASEA and our Classification and Compensation sub-committee agree that getting paid later than other employees is unfair and receiving all future payments in the form of a lump sum should be modified. During ASEA's August annual business meeting we will compile member suggestions and vote on as members what recommendations we would like to see implemented in the (if everything goes correctly) 2023 pay plan proposal.

John Bridges, Director, ASEA

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