Some school district employees strapped with tax bills because of payroll error

Published 12:10 am Thursday, June 2, 2022

SALISBURY — Rowan-Salisbury Schools officials have acknowledged a payroll error resulted in some employees owing federal taxes when filing this year’s returns. The issue continued into 2022 for some.

A May 12 letter to  all district staff members from Interim Superintendent Jason Gardner acknowledged the error without specifying an exact date range. The letter said the district received “feedback and many questions” about federal tax withholding and noted the recent hiring of Chief Finance Officer Faith Lambeth and Director of Payroll Kim Saunders in April.

“I know it has been challenging as we have been working through financial matters related to overpayments and federal tax withholdings,” the letter reads. “I also want you to know that we recognize that each employee works for RSS out of our collective love for our students. We know you also have a responsibility to support your families. Therefore, we acknowledge it is vitally important that we are financially transparent.”

Lambeth started working on May 16 and Saunders started May 2.

“Since her arrival, Mrs. Saunders, who has extensive experience in payroll administration, has worked tirelessly with our software vendor, Serenic, to determine what happened concerning federal tax withholdings,” the letter from Gardner reads. “As of today, I can tell you we now know what happened with our software and we are confident the issue has been resolved. You will notice that resolution in your May 2022 payroll checks and moving forward.”

The district also hired school finance firm HIL Consultants.

The Post heard from some employees who had updated their tax withholding per messages sent in 2021, but the district confirmed to the Post there was a miscalculation that resulted in some employees having their tax withholding under-calculated from January of 2021 through April of 2022 and the district became aware of the issue on May 6.

Not every employee was affected and the district is unsure of how many employees were affected by the withholding error, but in a statement to the Post, officials said they are trying to determine that number. District officials also said they are unsure of the amount of tax not withheld in error.

Michelle Whitson, a certified interventionist at Rockwell Elementary School, told the Post she and her husband, who worked for the district at the time, updated their tax information per district instructions. She said her husband’s withholdings were correct, but the family owed $6,000 because Whitson’s were not. Whitson said she knows of nine people at her school who had unexpected tax bills in the thousands of dollars.

“I had zero federal taxes taken out for the entire year of 2021,” Whitson said.

Whitson said she knows employees should check their pay stubs, but since educators have so much work today they should be able to trust the payroll department to handle withholding details correctly. She said she had to revisit the issue with the district more than once and finally began to have taxes withheld normally this March.

Whitson’s family had to set up a payment plan with the Internal Revenue Service and the family is hoping to pay off the tax bill quickly to minimize interest on the plan. She said her family’s circumstance is unique because they recently inherited a property they are in the process of selling that would cover the bill.

“Not everybody is even going to have that kind of thing to fall back on,” she said.

RSS Board Chair Dean Hunter said he has heard from several employees over the past few months who had more taxes taken out or had to pay more than they ever had.

“That is not a singular issue. That is more a variety of different types of issues, not just the tax codes,” Hunter said.

Hunter said his understanding is the number of employees who had unexpected tax issues this year from the error are slim.

Former CFO Carol Herndon resigned from the district in late 2021 to take the same position with Cabarrus County Schools but former payroll director Elizabeth Williams departed more recently, resigning effective March 31. Williams had worked for the district since September of 2013.

The district sent a series of messages to employees in January of 2021 and later in June of 2021 about tax law changes and advised them to update their withholding forms.

The first message, sent by Williams on Jan. 5, 2021, said all employees needed to update their tax withholdings.

“I’m very sorry for the short notice as this needs to be completed before your first paycheck in 2021,” the message reads.

A follow-up message from Williams the next day included the answers to some questions on updating withholdings, along with instructional videos. On Jan. 8 another message from Williams advised employees they needed to update their information by Jan. 10.

On Jan. 22, a message from Herndon advised employees to take another look at their withholdings and if employees made the changes by the end of the day on Jan. 25, they would be shown in their next paychecks.

Months later, on June 23, a message from Herndon once again encouraged employees to check their pay stubs and make sure withholdings were what they expected.

Whitson is one of two educators with the district selected in February for the North Carolina Principal Fellows program, which covers the cost to obtain a master’s degree in school administration and guarantees them leadership positions in the district. She said her recent experience with payroll made her question her future with the district and she worries about payroll issues resulting in more staff turnover.

“When people get upset enough that they do leave our district, those gaping holes, even if they can be filled, are still going to affect our kids,” Whitson said.

This is not the only recent payroll issue in the district. On May 6, a message was sent to 10-month staff notifying them they were overpaid a retroactive increase to the previous five months of pay and the district would recoup the money in their next paycheck per what is required by state law. The district has now allowed employees to spread the recoupment over multiple paychecks.

Whitson said she appreciated Hunter apologizing for the overpayment error publicly during the school board’s May 9 meeting and credited Gardner for his response to the payroll issues.

Are you an RSS employee who has had issues with tax withholding? Email or call 704-797-4264.

About Carl Blankenship

Carl Blankenship has covered education for the Post since December 2019. Before coming to Salisbury he was a staff writer for The Avery Journal-Times in Newland and graduated from Appalachian State University in 2017, where he was editor of The Appalachian.

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