Bridge Loan Payments
Procedure Number: 5.5.15-P
Current Effective Date: 07/01/2017
Original Effective Date: 05/01/2012
Revision Dates: 05/1/2012, 01/01/2014, 05/30/2017
Revision Number: 3
Responsible Official: Director of Payroll
To outline KCTCS’s bridge loan process.
This procedure applies to all KCTCS employees eligible to receive a bridge loan.
Bridge loans are optional payments that may be offered to employees when they are transitioning from a current pay status to an arrears pay status. The employment of a bridge loan helps offset the full pay period delay in payroll payment with the status change.
Employees are not required to take a bridge loan.
Employees may choose to use vacation time to offset the change to arrears or may choose to receive no payment for the first payday under the KCTCS personnel system.
4. Initial Award
The KCTCS Office of Human Resources in consultation with the KCTCS Office of Payroll Services will calculate the maximum potential bridge loan amount.
The maximum payment cannot exceed the employee’s semi-monthly gross salary.
The KCTCS Office of Human Resources will consult with the employee to determine the dollar amount the employee wishes to receive as a bridge loan.
After proper paperwork has been submitted requesting the bridge loan, KCTCS Office of Payroll Services will issue the bridge loan payment.
Bridge loan payments are included as wages for taxation purposes and reported on the employee’s W-2 form at year-end as income.
5. Repayment Options
Bridge loans must be repaid no later than the end of the individual’s active regular full-time employment with KCTCS.
Prior to separation of employment, employees have the opportunity to payback all or part of the bridge loan by applying (1) salary that would have been received or (2) available vacation time towards the amount owed for the bridge loan.
- If vacation time is used to repay the loan, the minimum vacation leave exchanged for an installment payment will be the lesser of five (5) days per installment or the amount equal to the remaining loan balance.
- If salary is used to repay the loan prior to separation of employment, employees have the opportunity to payback all or part of the bridge loan by requesting a limited series of deductions from their regular paycheck. Installment periods cannot exceed more than four consecutive paychecks.
Upon separation of employment if any unpaid loan balance remains, collection efforts will be employed to collect the loan in full.
In the event that an employee applies and is approved for long-term disability benefits prior to the full repayment of his/her loan, he/she will not be required to repay the balance of the bridge loan.
In the event that an employee’s death occurs prior to the full repayment of his/her bridge loan, including the period that approval is pending for long-term disability benefits application, he/she will not be required to repay the balance of the bridge loan.
6. College Financial Reporting For Uncollected Bridge Loans
Each individual college is responsible for the collection of their respective bridge loan receivables. The bridge loan will be written off charging the college’s financials in the event of any of the following:
- College leadership decides not to pursue collection of a specific bridge loan or;
- The employee receiving the bridge loan has terminated with an unpaid bridge loan balance and/or;
- The due date (from date of employee’s separation) is longer than one fiscal year, and collection activities are not in process, nor desired by the college leadership.
Under applicable IRS regulations, KCTCS will issue an appropriate tax form for the ‘loan’ and the individual will be liable for all applicable taxes and penalties.