May 7, 2002

Dear Classified Staff and Research Assistants:

This past legislative session, the General Assembly and Governor passed legislation authorizing the choice of bonus and leave awards for salaried state employees. These guidelines require that you must elect in writing one of three options listed below using the enclosed "Salaried Employee Option Election Form". You must submit your election form to your Supervisor (your Department) by 5:00 p.m. Friday, May 24, 2002. Elections cannot be changed after 5:00 pm Friday, May 31, 2002. If your election form is not received by your Department by 5:00 pm Friday, May 31, 2002, you will not be eligible for the bonus or leave award. Note: This letter pertains to classified salaried employees and salaried research assistants in the Academic Division. The Provost Office will distribute information on faculty bonuses.

Below are the elections that you may make, which are based on a full-time salaried non-probationary employee. Bonus and leave amounts will be prorated for probationary and part-time salaried employees (see table on second page).

• A one-time bonus payment equal to 2.5% of the July 1, 2002 annual base salary. The annual salary is minus any overtime pay, on-call pay, shift differential pay, or pay of a temporary nature. The bonus payment will be included in the August 30, 2002 pay check and taxed at your regular rate.
• Ten days (eighty hours) of paid bonus leave, which will be credited to employees on July 1, 2002, and must be used no later than June 30, 2003.
• A combination of a one-time bonus payment equal to 1.25% if annual base salary and five days (forty hours) of paid bonus leave. The bonus payment will be included in the August 30, 2002 pay check. The bonus leave will be credited to employees on July 1, 2002 and must be used no later than June 30, 2003.

If you elect the 1.25% or 2.5% bonus, you must be a salaried state employee during May and be on the payroll on August 30, 2002 in order to be eligible for the bonus payment. If you elect to receive 5 or 10 days of leave, you must be employed during May and be employed on July 1, 2002, in order to be credited for the bonus leave.

If you are planning to retire in the near future, you must retire on or after September 1, 2002, in order to receive a bonus payment. You must also continue to work, or be on paid leave, through August 30, 2002, in order to qualify for the bonus payment. Bonus payments will not be included as creditable compensation for determining your future retirement benefits.

If you are covered by the Virginia Law Enforcement Officers Retirement System (VaLORS), you shall receive a 2.5% bonus and will not elect an option. An Election Form is not required from VaLORS participants e.g., campus police officers. The bonus payment will be included in your August 30, 2002 pay check.

You must have been rated "contributor" or higher on your Fall 2001 evaluation to receive the bonus payment or bonus leave.

Probationary Employees:
If you are a probationary employee, you are eligible to receive the bonus and/or leave options based on the following. Employees hired after April 30, 2002 are not eligible for an award. The chart below shows eligibility of probationary employees for the award based on hire date. Probationary employees that have not received an evaluation will need to have a Probationary Progress Review completed and be rated "contributor" by their supervisor. The Probationary Progress Review must be submitted to University Human Resources by May 31, 2002.

The amounts of leave indicated on the above chart above are for full-time salaried employees. The leave amounts will be prorated for part-time salaried employees.

Leave:
If you elect the bonus leave, you must use this leave no later than June 30, 2003. It cannot be carried forward and you cannot be paid or otherwise compensated for any balance of unused leave upon leaving employment. If you move to a different state agency before July 1, 2003, any remaining leave balance shall be transferred to the new agency. Note: Management has the discretion not to permit the election of bonus leave given the requirement to staff critical operations. You may wish to discuss with your manager if there is likelihood that you may not be able to use the bonus leave before you elect it. Additionally, there will be no approved carry forwards for FY 2002-03 of annual or compensatory leave balances resulting from the election of the bonus leave.

Tax-deferring the Bonus:
You may wish to tax defer the bonus in lieu of receiving a bonus payment on August 30, 2002. You may contribute some of, or the entire bonus to a tax-deferred savings plan (TDSP) in order to avoid paying income tax on the bonus. However, FICA tax must be paid on the amount that is contributed and the annual maximum deferral amounts continue to apply. If you wish to tax- defer, you should contact the University Human Resources' Benefits Division for more information at 924-4392. Forms to tax defer some of, or the entire bonus into a TDSP must be received in the UHR Benefits Division by July 15, 2002. The employer cash match is not paid on the bonus.

Remember, you must submit your "Salaried Employee Option Election Form" to your Supervisor (your Department) by 5:00 p.m. Friday, May 24, 2002.

Questions about the state's bonus and leave awards should be directed to University Human Resources at 924-1426.

Sincerely,

Thomas E. Gausvik
Chief Human Resource Officer