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Home My WebLink AboutMINUTES - 04081986 - 1.44 TI-It BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on April 8 , 1986 _ , by the following vote: AYES: Supervisors Fanden, McPeak, Schroder , Torlakson, Powers . NOES: None ., ABSENT: None. ABSTAIN: None. SUBJECT: Retroactive Payroll Processing The Board received a report dated April 3 , 1986 from the Director of Personnel and the Auditor-Controller regarding Retroactive Payroll Processing , copy of which is attached herewith and by reference incorporated herein. IT IS BY THE BOARD ORDERED that the above mentioned report is ACKNOWLEDGED. h r�h;r certi�j i vnt t± is is a true ark correct copy of -ed v¢a t.le minutes of the Bo&rj Cjn atae date shown. A3TE31-7.7"r: /9 hoard „ of ;;�r,cr s. �., m; county i&dministrator Deputy ,BY � y Orig. Dept.: cc: County Administrator Auditor-Controller Personnel Contra Personnel Department �^ r,: Administration Bldg. Costa � , 651 Pine Street County s Martinez, California 94553-1292 DATE: April 3, 1986 TO: Board of Supervisors FROM: Harry D. Cisterman, Director of Personnel Donald L. Bouchet, Auditor-Controller / SUBJECT: Retroactive Payroll Processing On March 4, 1986, the Board of Supervisors referred for report the matter of "retroactive pay" , directing staff to develop guidelines relating to the issue of retroactive pay. This report is comprised of three sections: I . How Retroactive Pay is Processed II . Major Problems Associated with Processing Retroactive Pay III . Establishment of a Payroll System Review Taskforce I . How Retroactive Pay is Processed Depending upon the length of the retroactive payroll time frame (i .e. one month, three months or six months) each prior payroll must be reconstituted and updated with new pay and benefit rates. The Personnel Department, through its COPERS System, enters new pay rates for classes and transmits them to the Auditor- Controller' s Payroll System. The Auditor' s Office then has the computer payroll system re-run the subject payroll using the original input files plus the new pay and benefit rates. Each newly constituted payroll (two per month) is then compared to the original payroll and differences in base pay, overtime, dif- ferentials, and certain deductions are accumulated. After one payroll has been run by Data Processing, results are reviewed by the Auditor's Payroll Division to insure that payroll has been processed correctly and to identify and correct problems such as might occur when a classification was changed during a retro period. After this review is completed, the next payroll series is started. Obviously, starting a new payroll rerun before the previous payroll rerun is "Proofed" would be self-defeating. When all the payrolls are processed, the results are combined and processed to calculate the total retro, withholding taxes, etc, and to write the checks. This run requires review and testing before the checks can be released. This is essentially how a retroactive pay, is processed. It is an expensive and time consuming process. The Auditor-Controller estimates that the total direct costs of producing four retros processed or in process during Fiscal Year 1985-86 will exceed $95,000.00. Why then, does it take so much time and cost so much? r -2- II . Major Problems Associated with Processing Retroactive Pay Each payroll included in the retro takes several hours to process in the Data Processing Center plus review time in the Auditor' s Office. The present Payroll System does not allow for simultaneous processing of a retro and a regular payroll or another retro. Therefore, the retro process must be stopped twice a month for two to four days while the regular 10th and 25th payrolls are run. Also, a subsequent retro approved by the Board cannot be started if a retro is in process. Another time consuming element involves manual processes that are necessary. This is because limitations of the existing payroll system require many manual calculations and adjustments each payday. Since the system accom- modates only one salary rate per payday, mid-month promotions require manual calculations and adjusting entries. Likewise, when an employee moves into higher pay for work in a higher classification assignment, manual entries are required. Other transactions such as Workers' Compensation adjustments affecting previous pay periods, Health Plan deduction errors, and late reported overtime or absence without pay transactions require manual adjustments. Because the existing payroll system does not capture detail and applicable dates for these adjustments, the computer, during a retro process, has no way of knowing whether the retro calculation should or should not apply to each adjustment. Similar restrictions apply to typed and cancelled paychecks. There are hundreds of adjustments and typed and cancelled checks each payday. Each of these adjust- ments or typed and cancelled checks must be reviewed manually to see whether they apply or don't apply to the retro, and if so, to calculate and enter the retro adjustment into the retro process and to later verify that these retro adjustments were processed correctly. This is a time consuming, error prone process that must be sandwiched in with regular ongoing work in the payroll sec- tion. The Auditor-Controller estimates that the average retroactive payroll process takes from six (6) to eight (8) weeks time to produce the retro paychecks starting from the time the CAO gives the go ahead to commence a retro and the Personnel Department enters the correct retro pay rates into the system. Were it possible to eliminate most of these manual transactons, processing time to issue retroactive pay could probably be reduced by as much as 25%. The inordinate amount of time required to process retroactive pay is not the only problem in the County's Payroll System; rather it is an outgrowth of the problems with the current payroll system with which the County has been struggling for some time. Timekeeping procedures are completely manual and thus have no automated payroll interface. Currently, operating departments maintain daily timekeeping of employee attendance, absences, vacation, sick leave and the like. This data is then reported to the Auditor's Office monthly (except for hourly employees) , and the totals are entered into the payroll system and become the base from which payroll calculations are made. However, since daily records are not available in the automated payroll system and neither are class and salary changes for individual employees, many manual calculations must be made to process a regular payroll . Also, since the available "buckets" for types of pay, deductions, and leaves have long been used up, many manual processes are required of the Auditor' s Payroll Section and the operating departments' payroll clerks. One significant example is the accrual and tracking of compensatory leave balances,' a task that department payroll clerks must perform. -3- On April 15, 1986, the Fair Labor Standards Act becomes effective nationwide for all affected public employers. The problems associated with the County' s current manual timekeeping system will increase dramatically given the FLSA timekeeping requirements each operating department must maintain. The number of manual calculations will increase and future "retroactive pays" will be even slower than they are now. Needless to say, given the additional volume of work, the "error rate" will increase proportionately. III . Establishment of a Payroll System Review Taskforce With a modern, automated, ".On Line" Timekeeping System, allowing operating departments to interface directly with Payroll along with regular access to the COPERS class-salary-employee data base, most current payroll problems could generally be eliminated and efficiency and production between operating depart- ments and the Auditor's Office and the Personnel Department could increase dra- matically. The County Administrator has therefore directed that a Payroll System Review Taskforce be immediately established and assigned the following goals and objec- tives: 1. Identify all payroll and timekeeping problems, including those resulting from FLSA implementation and its impact on payroll and retroactive pay. 2. Recommend long-term global solutions to the County's payroll and timekeeping work. 3. Identify costs and length of time to implement the recommended global solutions. In order to make sure'. that all the current problems are considered and that the solutions proposed are both workable and meet everyone' s needs, the task force will be made up of staff representatives .from the following departments: County Administrator' s Office Auditor-Controller's Office j Office Services-Planning and Programming (CAO) Personnel Department Representative-Small Operating' Department Representative-Large Operating! Department It is hoped that some systems efficiencies and productivity improvements will be identified by the Payroll System Review Taskforce. However, it should be noted that realistically any major redesign of the Timekeeping and Payroll System will require a substantial investment of "General Fund" dollars. HDC/DB:tm cc: Phil Batchelor County Administrator