SUBJECT:

1995-96 State Budget Update -- Delay in July 1 Merit Increases

As you may know, the official deadline for adoption of the 1995-96 State budget
has passed without an agreement between the Governor and the Legislature. On
7/6/95, Provost Massey sent a letter to Chancellors which announced the
University's official position in regards to academic and staff merits. The
second paragraph of the letter reads:

"Although about 33,000 State employees, including legislative employees, will
not be paid in July if there is no budget, the State Controller has reported to
the Legislature that under provisions of the California Constitution the State
will provide sufficient funds to meet the University's July payroll (paid on
August 1) even if a settlement is not reached by the end of this month. All UC
employees will continue to be paid at their current rate of pay. Those who have
been awarded merit salary increases effective July 1 will be paid the merit
portion of their salary retroactively as soon as possible after the budget is
signed."

During the last week of June, departments received notification from this office
that recommended merit increases for Staff employees were approved to take
effect on 7/1/95 (7/2/95 for biweekly paid employees). Pursuant to the 1994-95
Salary Plan, these employees were originally eligible for merit increases on
1/95, but given budget considerations, the merit increases were being processed
on a six-month delayed schedule and therefore, not implemented until July. PAFs
have been distributed reflecting these approved merit increases.

Pursuant to the decision made by the Office of the President (as stated above),
until the 1995-96 budget is signed, merit increases that were deferred from
1/1/95 and were to have been effective 7/1/95 will not be reflected in
employees' paychecks (starting with August 1 paychecks for those paid monthly,
and July 26 paychecks for those on biweekly payroll). Once the 1995-96 budget is
signed, these merit increases will be paid retroactive to 7/1/95 (7/2/95 for
biweekly paid employees), and reflected in paychecks as soon as feasible.

A mechanism has been developed to temporarily reduce the pay for affected
employees back to the old rate without modifying the employee database. Base
pay will be reduced prior to any tax calculations. No action is required by
departments to either submit PAF corrections, or override timesheets.
Similarly, no PAFs will be generated reversing the merit increases. In order to
process this payroll adjustment, the database will be frozen for the entire day
next Wednesday, July 19th. On-line update will not be available on this day
only. Paychecks will be generated with a line item entitled "Merit Delay" which
will indicate the amount of the salary reduction.

Key Administrators are requested to notify any affected employees in the unit in
regards to this new development. If you should have any questions or wish to
comment, Campus employees may contact Judy Johnson at extension 40986 or
via electronic mail (jjohnson@ucsd.edu); Medical Center employees may contact
either Ann Skinner or Virginia Kramp at extension 33581/36434 or via SYSM at
"VGK" or "AMR1".

Rogers Davis Assistant Vice Chancellor