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How Hours in a Fiscal Year Affect Annual Pay Rates

Employees at the University of Arizona are paid on a fiscal-year basis. The number of hours in a fiscal year may change each July 1, based on the number of regular workdays occurring between July 1 and June 30 of that year. Since the pay rates that generate paychecks are based on an hourly equivalent, the number of work hours in a fiscal year will have a small effect on a salaried employee's biweekly gross earnings. Depending on the number of hours in a fiscal year, the employee's salary may be spread across 26.0, 26.1 or 26.2 pay periods.

Hourly wage employees who are nonexempt under the Fair Labor Standards Act are not affected by the change each July 1 because they are paid a consistent hourly rate for each hour worked. 

Any employees whose pay is based on an annual salary are affected by the change each July 1, because the annual salary is converted to an hourly rate at time of payment. For a given annual salary, the hourly rate decreases slightly in years with more fiscal-year hours, and increases in years with fewer fiscal-year hours; in all cases, the total amount of gross earnings for the fiscal year remains the same.

Annual Salary Position Calculations

Annual Pay ÷ Number of Pay Periods per Year = Converted Hourly Rate
Converted Hourly Rate × Hours Worked = Biweekly Gross Pay

Here is an example of how the change in fiscal-year hours would affect the paycheck of an employee with an annual salary of $50,000. This example assumes full-time employment. If you work less than 80 hours per pay period, multiply the number of hours you work by the converted hourly rate. 

Regular Work Hours in Year Annual Salary Rate Annual Salary
Converted to Hourly Rate
Pay Period Hours Worked Regular Biweekly
Gross Earnings
2,080 (26.0 pay periods
in fiscal year)
$50,000 $24.03846 80 $1,923.08
2,088 (26.1 pay periods
in fiscal year) 
$50,000 $24.03846 80 $1,915.71
2,096 (26.2 pay periods
in fiscal year)
$50,000 $24.03846 80 $1,908.40

Definitions

Annual Salary: The annual rate of pay associated with a position.

Fiscal-Year Bridge Pay Cycle: When the end of one fiscal year is in the same biweekly pay cycle as the beginning of the next fiscal year, the earnings for the last few days of the first year are paid on the first pay date of the next fiscal year.

Classified Staff Alphabetical List and Classified Staff Pay Schedule: These tools always use 2,088 hours for the conversion standard.

More information is available on the Workforce Systems page.