For one-time pay increases to be TRS-eligible compensation, the pay must be for service rendered and the right to receive it must accrue proportionately as the employee renders service. For example, if the Board of Trustees approves a one-time payment in the amount of $1,500 for all teachers and agrees to make the payment in June 2024, the right to receive the payment must accrue proportionately each month as the employee works so that an employee terminating employment in December will have accrued the right to receive approximately 84/187 of the $1,500 payment (assuming the teacher began working on August 20, 2023 and terminated employment effective December 31, 2023). In this example, the proportionate share of the $1,500 payment is creditable for TRS purposes.
However, if the Board of Trustees requires that to receive the one-time pay increase, an employee must be employed on the date the payment is made, the compensation does not accrue proportionately as service is rendered and is not creditable for TRS purposes. The payment in this example is more of a payment for the employee continuing employment with the employer rather than a payment for services rendered. Retention bonuses are expressly excluded from creditable compensation by Section 25.21(d)(5) of Title 34, Part 3, Texas Administrative Code.
If the one-time pay increase is intended to be a payment for performance or student achievement, the payment must qualify as performance pay as that term is defined by TRS or it must be a payment made under Subchapter O of Chapter 21 of the Texas Education Code (Educator Excellence Award s Program administered by the Commissioner of Education). Other one-time bonus payments are excluded as creditable compensation for TRS purposes by Section 25.21(d)(5) of Title 34, Part 3, Texas Administrative Code.
Employers considering one-time pay increases must approve the increase in advance of the school year and before employees begin work. One-time pay increases approved after the employees have rendered the service required of them are not creditable for TRS purposes and should not be reported to TRS. Please contact your TRAQs coach if you have questions regarding one-time pay increases.