When setting up budget formats, you may want to include columns to calculate a merit increase, especially for payroll budgeting. The budget format has a setting to enter component details either annually or monthly. (Menu option Settings > Budgeting > Formats. Double-click to edit a format and click on the Settings button). 

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Annual Budget Format

If the format is set to enter components “Annually”, add a row defined for merit increase on the Format setup. Set the Type to Checkbox 1 (or any other available checkbox number).  

• At the top of the Edit Budget Format screen, click on the Settings button. Check the box “Include Merit Increase” and click on Settings, where you will define the merit increase.
  • Percent increase: The percent that you wish to increase by. This will be applied to each month starting with the effective month. (Example: enter 2% as 2.00.
  • Checkbox column: This is the Checkbox number assigned in to the merit increase row on the previous screen under “Type”. 
  • Effective month: Determines what month to begin applying the merit increase.
  • Percent of effective month: Determines the percentage of the increase to apply to the effective month. Typically this is 100%. If this were a payroll account, distributing by pay period and there are 2 pays in the effective month and you want to apply the percent increase starting with the second pay of the effective month, then you would enter 50% (50.00)
  • Allow override: Determines if a user can override the defaulted merit percentage during budget entry.  
  • Click OK on each screen and Save when finished.
• The Budget Format must have the Apply Merit Increase box checked (far right side of the screen) on the appropriate row, so the system knows which column is to calculate the new salary amount. 

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Monthly Budget Format

If the format is set to enter components “Monthly”, the merit increase is defined on the Edit Budget Format screen. 

• Add a row for Merit Increase and assign a Number data slot under “Type”.  The data slot number must be unique on this screen. 
  • To set the rate for the merit increase, click the Dft Value cell on the merit increase row. Click on the Search icon. Check the Separate values per month box to enter the percentage rate for the merit increase in the appropriate effective month/s. (Example enter “2.5 on the row for March” for a 2-1/2% increase in March.) Click OK when finished.
  • On the Merit Increase row, the Read Only box determines if a user can override the defaulted merit percent settings during budget entry.  
• If you want an option during budget entry to apply the merit increase to an employee, or not, add a row on the Budget Format to enter a 1=Yes; 0=No.
• It is common to have columns on the budget entry screen for Hourly Rate, Merit Increase%, Apply Merit Y/N, and the new hourly rate. Any columns may be hidden as you wish. Here is one example:

Warning: If a salary rate increase has been calculated using a merit increase and is saved on the budget entry screen, the new pay rate has been saved.  Later if it is decided to change the merit percentage, there is not a way to globally change the merit percentage after budgets are entered. Changes to employee rate or merit % must be manually re-entered after a GL account’s budget has been saved so the new rate is recalculated.

For more details on merit increase, as well as suggestions on how to change the merit increase after components have been entered: see Budget Formats