Payroll ServicesAn Overview and Discussion with the

Privatization Advisory Committee

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.

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.

Services We ProvideWe 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

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

Document Volumes

W-2 tax formsYear Number of forms

2007 25,941

2008 25,136

2009 23,630

2010 23,312

Payments to employeesFiscal year Number of

payments *

2007 – 2008 371,327

2008 – 2009 364,194

2009 – 2010 353,711

2010 – 2011 340,701

* Number of checks or advices created

Trend – consolidation of payments reduces overall total reduction in employee count and a reduction in employee

turnover reduces W-2 count

CMS Payroll Consists of Staff Members, Each Uniquely Contributing to CMS Support Operations

CMS Payroll

Department

Payroll ProcessingProcessing 62 regular payrolls and weekly offcycle

payrolls to compensate employees

ReportingGenerating timely and accurate

payments , reports, and tax returns to vendors and reporting agencies

Payroll PreparationPreparing time records and deductions for

payroll processing

Customer ServiceDedicating staff to achieve World Class

Customer Service and resolve inquiries to the department

ResearchAnalyzing payments for employees, NCDPI,

and vendor deductions

ManagingProviding leadership and direction to

maximize department efficiency

CMS Payroll Department: Who Are We?

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)

Core Tasks of Payroll Staff

Wages by Core Processes

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

Payroll Staffing TrendsFiscal Year 2005 –

20062006-2007

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= EE’s per payroll staff member

1137 1196 1249 1324 2129 2059 1706

1) 6 positions transferred to HR Direct Connect2) Currently operating with 11 positions3) Budgeted positions includes Child Nutrition and After School Enrichment

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= EE’s per payroll staff member

1563 1214 1011 850

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

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 payroll…Example: 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

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

04/10/23

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.

Committee Defined Selection Criteria Option 1: Option 2 Option 3 Option 4 Option 5

PEOPLE

MONEY

SERVICE

RISK

MEASUREMENT

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

We Have Developed and Completed A Preliminary Outsourcing Assessment

Understanding the Assessment Tool

Overall assessment for that option

Assessment of each criteria by option

Example: Full Operational Outsourcing

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

CMS Payroll Services Preliminary Outsourcing Assessment

CMS Payroll Services & Privatization Advisory Committee Meeting

Summary Discussion&

Next Steps