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Treasurer outlines time-tracking plan after federal overtime-tax change
Summary
The district treasurer told the board a federal change affecting taxation of overtime pay requires new reporting; the board was asked to approve a payroll promotion and staff were told the district will pursue time-tracking software and possibly time clocks starting in 2026 to comply.
At the Dec. 8 board meeting, the district treasurer updated trustees on the annual audit and described a federal law change affecting how overtime pay is taxed. The treasurer said a provision in the federal bill creates a new tax-exempt class of overtime (retroactive to Jan. 1) and that the Internal Revenue Service/federal guidance offers a limited safe-harbor for calendar year 2025. Because the district cannot retroactively compute exact exempt overtime for prior pay periods, the treasurer said the district will take the safe-harbor for 2025 and move to a more precise reporting system going forward.
To comply, the treasurer proposed implementing time-tracking software and exploring time clocks in 2026, while working with union-represented staff and offering transition overlap between the retiring payroll manager and a promoted staff member. He asked the board to approve promoting an internal employee into the payroll manager role so the district could train a replacement and provide continuity; he said the intent is compliance, not to monitor minor deviations in arrival times.
The treasurer summarized the restrictions and examples: only federal overtime (over 40 hours per week) may qualify as tax-exempt under the new rule, so additional pay for evenings, Saturdays or games might or might not meet the exemption depending on a staff member’s total weekly hours. He described implementation challenges and emphasized the district would work with staff through the transition.
The board voted to approve the treasurer’s personnel recommendation and a related student settlement (the motion combined items and carried by roll call). The treasurer said he will keep the board informed as vendor selection and implementation details progress.
