Surcharge Calculations

The Surcharge is an additional employer charge based on the salaries of lower-paid SERS members. It is used exclusively to fund health care.

It is calculated at 14% of the difference between an employee’s annual compensation and the minimum compensation amount, which is an amount determined annually by the System’s actuaries and available on the Audit Resources page.

The Surcharge is limited to 2% of each district’s total qualified SERS payroll. The statewide limit is set at 1.5% of total qualified payroll for all employers.

Example: For FY2019, if the minimum compensation level is $21,600, and the employee earns $7,000, the surcharge is $2,044.

Surcharge base

$21,600

Covered compensation

7,000

Difference

14,600

Initial Individual Surcharge

$14,600 x 14% = $2,044

If the member is paid for less than 120 days during the year, the Surcharge is pro-rated. The fraction used is the number of days paid over 180 days, a school year. This is the same fraction used in determining the amount of contributing service credit for a member.

Example: The Surcharge for the above employee who works only 110 days is $2,338. 

Initial individual surcharge

$2,044

Pro-rated fraction

110 days/180 days = 0.611

Pro-rated Surcharge

.611 x $2,044 = $1,248.88

The Surcharge applies to all SERS members reported during the fiscal year on the Contribution Maintenance Screen except:

  1. Members who retired, refunded their account, or received disability benefits effective before July 1
  2. Members who died before July 1
  3. Reemployed Ohio public retirees

The first exception is tracked by SERS internally, and the affected member should not appear in the Surcharge listing.

However, SERS is not always aware of the second and third exceptions. During the Surcharge process, you are allowed to review your Surcharge listing and exempt any members who you identify as meeting the last two qualifications.

A list of members subject to the Surcharge is available through eSERS in August of each year.


Surcharge Payment

Payment of the Surcharge amount is due within 30 days from notification that the final Surcharge amount has been calculated.


Foundation Program

The district’s total Surcharge may be included in the Foundation Program deductions for Foundation-participating employers, or paid directly to SERS.