Despite Salary Increases, PWCS Employees Say Net Pay Is Stagnant

| September 24, 2013 | 0 Comments | Education

While Prince William County School employees did see a 3 percent pay increase, many are not seeing that in terms of actual money in their pay checks. According to Prince William County Education Associate President Jim Livingston, there are multiple reasons for this.

“This is a complicated issue,” said Livingston, explaining that it comes down to taxes, Virginia Retirement System contributions and a number of other deductions.

“(Employees receive) a 2 percent salary increase plus 1 percent for VRS for a total of 3 percent- the 1 percent for VRS is taken back and goes to the state for a net salary increase of 2 percent,” Livingston said.

While most school employees understood that 1 percent of an employee’s salary increase defaults back to the VRS, they may not have accounted for the other deductions that come directly out of their pay.

Livingston said some factors school employees may not have included include:

  • 5 percent increase in their insurance premiums from last year
  • 1 person addition contribution to VRS this year verses last year for a total of 2 percent of overall pay being deducted.
  • Elections to make changes in their benefits.
  • The raise placing them into a higher tax bracket.

“The most common cause for lack of increase in take-home pay is that the raise has put some individuals in a higher tax bracket, and therefore, they are seeing more (of their take-home pay) taken out in taxes, resulting in stagnant or less take-home pay,” Livingston said.

Phil Kavits, Director of Communications for Prince William County Schools, gave a similar explanation, saying that with an increase in salary before taxes and other deductions, the salary is now being taxed based on that higher number.

Therefore, even if the salary increase does not push employees into a higher tax bracket, according to Kavits, they will still be taxed more than they were last year because on paper, they are making more. Additionally, since the pay increases were nominal for average salaried employees, they can possibly be eaten away by the increase in insurance contributions as well.

For those who are additionally pushed into that higher tax bracket, their net income could be more noticeably reduced, depending on the rate of taxation in their tax bracket.

Needless to say, county educators were disappointed to see the pay increases they have fought so hard far, even gotten the Board of County Supervisors to change their revenue sharing agreement to help fund, amount to pennies on the dollar in their take-home pay-and that’s if they are lucky!

However, without salary increases, employees would have an even more difficult time keeping up with rising insurance premiums and VRS contributions, and as more baby boomers age and retire, the entire nation of workers may be facing similar problems.

 

 

 

© 2013, Bristow Beat. All rights reserved.

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