Page Updated: October 3rd, 2018
University HR policy (https://kb.wisc.edu/ohr/policies/page.php?id=53409) allows employees to bank unused annual leave. The banked leave does not expire and may accumulate from year to year. At the time an employee retires or terminates employment, he or she may elect to receive a lump sum payment of the ALRA or sabbatical account balance.
As of July 1, 2016, UW-Madison changed how it accounts for and makes lump sum terminal leave payments.
OLD: Prior to July 1, 2016 UW-Madison treated lump sum payments on a cash basis. Payments were made from the funding in place at the time the employee retired or terminated employment.
CURRENT: Effective July 1, 2016 UW-Madison charges a terminal leave rate as part of the fringe benefit rate. The funds associated with this charge are housed in a central pool. The terminal leave pool account is used to make any lump sum terminal leave payments.
The updated methodology for terminal leave lump sum payments is one of two acceptable accounting methods described in the Uniform Guidance, 2 CFR §200.431(b)(3). Note that this change was made across UW System campuses.
Additional information about this change is available in the following documents:
Terminal Leave presentation to College/School Research Administrators, presented by Dan Langer, Accounting Services, May 10, 2016
Funding Lump Sum ALRA and Sabbatical Terminal Leave presentation, prepared by UW Service Center