Payroll Services

1
Payroll Services

• An Overview and Discussion with the Privatization
  Advisory Committee

2
Payroll Mission Statement

• Mission
• To provide the district with efficient and
  effective support operations and to provide
  accurate and timely payments to our employees,
  vendors, and various reporting agencies.

3
Getting to Know Payroll

• Staffing
• The Payroll Department consists of 11 staff
  members including the Director, Payroll
  Supervisor, five payroll processing agents, three
  Payroll call center agents, and one
  administrative assistant.

4
Services We Provide

• We provide
• Full-service payroll processing to all employees
  of the district
• Monthly, quarterly, and annual reports to
  governmental agencies
• Payment requests and remittance information to
  non-benefit vendors
• Voluntary deduction and garnishment set-up for
  employees
• Assistance with reconciliation of payroll
  liability general ledger accounts
• Assistance with salary audit exceptions from the
  Department of Public Instruction
• Continuous review and update of the payroll
  system set-up.
• Acceptable customer service level through verbal
  and written communication with both internal and
  external customers
• Resolution to employee inquiries about pay,
  deductions, and other requests for assistance

5
Current Payrolls

• Biweekly includes all non-exempt employees on
  9, 10, and 12 month calendars average volume of
  8,100 employees during school year requires 112
  steps to complete entire payroll paid on Friday
• Monthly - includes all exempt employees on 10,
  11, and 12 month calendars average volume of
  10,800 employees requires 99 steps to complete
  entire payroll paid last day of the month
• Longevity includes all eligible employees with
  10 years of creditable service volume varies
  monthly paid on the 10th day of the month
• Disability includes all employees on Short-term
  Disability volume varies monthly paid on the
  10th day of the month
• Offcycle - processed on demand volume varies
  based on need

6
Document Volumes

• W-2 tax forms

• Payments to employees

Year Number of forms
2007 25,941
2008 25,136
2009 23,630
2010 23,312
Fiscal year Number of payments
2007 2008 371,327
2008 2009 364,194
2009 2010 353,711
2010 2011 340,701
Trend consolidation of payments reduces overall
total reduction in employee count
and a reduction in employee turnover reduces W-2
count
Number of checks or advices created
7
CMS Payroll Department Who Are We?
CMS Payroll Consists of Staff Members, Each
Uniquely Contributing to CMS Support Operations
8
Core Processes Defined

• Preparation monitoring time record and batch
  receipt, keying payroll correction forms, and
  maintaining deductions
• Customer Service providing timely and helpful
  information to our internal and external
  customers via telephone, written, and electronic
  correspondence
• Reporting preparing check requests for vendor
  deductions, federal and state tax returns,
  unemployment wage reports, NC Retirement (ORBIT),
  and Department of Public Instruction (UERS)
• Research responding to customer questions,
  reviewing submitted payroll corrections,
  analyzing vendor payments, and assisting with G/L
  liability account reconciliation
• Managing - leading and directing department to
  insure compliance with labor laws and
  requirements while maintaining efficient and
  effective support operations
• Processing running payroll jobs in a payroll
  cycle (actual time spent)

9
Core Tasks of Payroll Staff
10
Wages by Core Processes
11
Estimated Total Cost

Payroll Salaries and Benefits 687,548.00 12 budgeted positions
Non-Personnel 8,061.00
Supplies 4,108.00
Payroll subtotal 699,717.00

Technology
Hardware annual cost 3,452.00
Software maintenance 37,681.00 50 of HR/PR maintenance
Tech support 192,700.00 Allocated resources from CMS tech services
subtotal 233,833.00

12
Payroll Staffing Trends
Fiscal Year 2005 2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012
Payroll Positions 16 16 16 15 9 (1) 9 12 (2)
Budgeted FTE Positions (3) 18,193 19,149 19,998 19,870 19,166 18,534 18,761
Ratio EEs per payroll staff member 1137 1196 1249 1324 2129 2059 1706

1. 6 positions transferred to HR Direct Connect
2. Currently operating with 11 positions
3. Budgeted positions includes Child Nutrition and
   After School Enrichment

13
Payroll Staffing Comparisons
Year 2011 -12 Charlotte-Mecklenburg Winston-Salem/Forsyth County Wake County Cumberland County
Payroll Positions 12 7 18 8
Budget Positions 18,761 8,500 18,200 6,807
Ratio EEs per payroll staff member 1563 1214 1011 850

14
Current Automated Processes That May be Impacted
by Outsourcing Payroll Administration

• KRONOS Time and Attendance for all non-exempt
  employees, excluding bus drivers
• Department of Public Instruction monthly UERS
  file
• Direct Deposit transmission
• Retirement data file (ORBIT) transmission
• State Employees and Carolina Cooperative Credit
  Unions outbound transmissions
• MetLife Insurance inbound and outbound
  transmission
• Prudential 401-k outbound transmission
• Tax Sheltered Annuities outbound transmission
• North Carolina Association of Educators
  outbound transmission
• Texas Life Insurance inbound and outbound
  transmission
• UNUM flexible spending - inbound and outbound
  transmission

15
Challenges to Consider if Outsourcing Payroll
Administration Considerations

• North Carolina Department of Public Instruction
  system benchmark requirements
• Ability to process employees with varying months
  of employment in the same payrollExample 10
  month teacher and 12 month administrator, both
  monthly exempt employees
• Ability to track multiple funding sources so CMS
  can reconcile funds for State/Federal/Local
  payments and deductions
• Ability to distribute benefit expenses across
  multiple funding sources
• Current efficiencies gained with current system
  integration of HR and Payroll may not be realized
• Intercompany funding of deposits and deductions
  State banking requirements are very specific

16
Challenges to Consider if Outsourcing Payroll
Administration Considerations

• Ability to support the use of benefit escrow
  accounts for employees working less than 12
  months to cover the additional months
• Ability to recalculate deduction amounts for
  benefits when employees change from 9 months to
  12 months
• Ability to support multiple calendars for
  specific groups of employees
• Ability to apply unique and different leave rules
  to specific groups of employees
• Ability to modify, enhance, or customize programs
  to meet requirements set forth by the North
  Carolina General Assembly

17
Understanding the Criteria for Consideration

• To recommend to the BOE additional outsourcing
  opportunities within key areas of CMS that
  deliver on the following criteria
• People minimize negative impact to CMS
  employees -- reduction in
  force/salary/benefits, shifting of work
  responsibilities
• Money - return of substantial, ongoing net
  savings to the CMS Operating Budget
  when brought to scale
• Service maintain or exceed current service
  levels and service quality to key
  stakeholders in support of student
  achievement
• Risk minimize scope of risk to CMS ease
  of returning service in-house
• Measurement ability to reliably project and
  measure the most critical aspects of
  the outsourced effort savings, service
  quality, etc.

18
We Have Developed and Completed A Preliminary
Outsourcing Assessment
Understanding the Assessment Tool
What This Is an informed preliminary
assessment of the viability of some initial
outsourcing options What This IS NOT a
recommended list of areas to outsource Color
Index likely will not satisfy criteria OR
risk of failure to CMS is high could
meet criteria but more information needed
likely will satisfy criteria ? externally
driven by bidding process
Example Full Operational Outsourcing
Overall assessment for that option
Committee Defined Selection Criteria Option 1 Option 2 Option 3 Option 4 Option 5
PEOPLE
MONEY
SERVICE
RISK
MEASUREMENT
Assessment of each criteria by option
19
CMS Payroll Services Preliminary Outsourcing
Assessment
Committee Defined Selection Criteria Payroll Admistration Garnishment Processing W-2 Tax Reporting
PEOPLE result in CMS employee RIF, salary, benefits affect significant employees at scale
MONEY result in return of ongoing net savings to CMS Op Budget ?
SERVICE negative impact on service levels
SERVICE negative impact on service quality
RISK result in significant risk to CMS
RISK ability to return the service in-house
MEASUREMENT can be measured/evaluated
20
CMS Payroll Services Privatization Advisory
Committee Meeting Summary Discussion Next
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