University of Northern Colorado Charting the Future. Unit Report: PAYROLL Submitted by: Krystal Dilka Date: November 24, 2003

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1 University of Northern Colorado Charting the Future Unit Report: PAYROLL Submitted by: Krystal Dilka Date: November 24, 2003 I. PAST: REFLECTING ON OUR HERITAGE Beginning records of payroll are non-existent and must be extrapolated from the activities of the Normal School at its inception in Records do indicate that S. F. McCreery was paid $1500 in July of So we can imagine that McCreery might have been the first person requiring the services of a payroll clerk whose mission remains true even today: to support the goals and mission of the university by providing accurate and timely compensation for work performed and insuring we are at all times in compliance with all UNC, State, and Federal rules and regulations. Payroll was done by hand through 1948 on written ledgers still used and protected today for the purposes of verifying past employments and providing information for people purchasing retirement service credits. The oldest payroll record in our archives dates to January We know that payroll was once located in Frasier Hall. Since 1981 payroll has been located in Carter Hall and has occupied various spaces in the Accounting department, Human Resources (HR), and even a hallway, small storage room, and offices on the third floor in what is now Institutional Research. Mechanized entries started in 1949 and were used until the early 70 s when an in-house computer system was developed. Payroll was part of the accounting department until about 1986 when it was combined with Human Resources. This appears to have occurred simultaneously with the move to a new integrated software system. Reasons for this move included: Single source data entry for personnel/payroll to reduce errors Desire to move from payment by check to direct deposit The ability for staff to support each other during different busy times of the month for each department Centralized Personnel Office where all employee groups would have a one stop shop for all personnel issues salary, benefit counseling, promotional issues, grievance issues, records. 1 Sometime in Payroll/HR went to their first purchased computer program called an Integral system. It was the system of choice for the State of Colorado classified employees. While it reduced errors, and greatly improved the efficiency and consolidation of records/information, it relied heavily on computer technicians. Transfer of information between Accounting, Student Financial Aid, and Payroll/HR was still not easy. 1 interview with retired Personnel Director, Doug Stutler, November, 2003

2 UNC began researching an integrated Payroll/HR database system in 1995 and January of 1996 Peoplesoft was purchased at a cost of $400,000. This cost included Oracle database software, training, travel, and incidentals required to get the new system up and running. Peoplesoft moved UNC into the 21 st century and has resulted in greater data accuracy, improved error checking, ease of use, and moved the contract writing process to a word processing type of function. It allowed decentralized data entry, and allowed the ability of Payroll/HR to maintain edit tables rather than being dependent on Information Technology (IT). Pay calculations could be done at any point in the calculation process rather than an overnight computer process scheduled by the computer center. Specialized queries and reports could be created instantly. In the fall of 1998 Payroll was split out from Human Resources and again made part of Accounting Services during the time period between HR directors. It has remained with this reporting structure for the past 5 years even though the interaction between Human Resources and Payroll remains a close and necessary partnership today. II. PRESENT DESCRIPTORS: FULFILLING THE MISSION Staff: 3.6 classified FTE; 1 Accountant I, 1 Accounting Technician III, 2 Accounting Technician II and 1 part-time work-study student. The supervisor is an exempt staff that splits their time between Payroll and Accounts Payable. Space: 940 square foot area office located in Carter Hall, Room 2005 Budget: $361,715 in FY State appropriated funds total $359,538 with $8,235 selfgenerated from service charges for off-cycle checks and garnishment processing fees. The workstudy wages of $2,200 are paid from the self-generated fund with the $6,035 remainder reserved for capital outlay future purchases. Mission: Payroll Services supports UNC's goals and missions by providing accurate and timely compensation for work performed and insuring we are at all times in compliance with all UNC, State, and Federal rules and regulations. Demand for Services: Payroll is in the unique position of being a department that the less you hear about them, the better they are functioning. Traditionally people will only contact payroll when they are unhappy. My pay isn t right, I didn t get paid, and my deductions are incorrect. The better care payroll takes of employees, the more efficient it becomes in operating, or the more progressive the services offered become, the less payroll gets noticed. Most of the work is behind the scenes in part because of the high level of confidentiality required when dealing with a person s pay. Because of that, payroll functions and services can appear to be un-important. Yet because of payroll, 3400 people a month can pay their bills timely, be certain that their benefits and retirement are deducted and paid correctly, and their paycheck or direct deposit is ready for them on payday. Productivity: Payroll currently processes a monthly $6 million payroll for 3400 UNC employees, which includes 600 full and part-time faculty, 200 exempt staff, 600 full and parttime classified staff, 100 non-student employees, and 1800 students including teaching and

3 graduate assistants. Payroll also processes at least 95 personal service agreements (PSA) in the amount of $100,000 monthly. Payroll processes and mails 6,000 W-2 s in January of each year. Current specialized services and unique payroll issues include: Accommodate approximately 50 less than 12 month classified employees that work 9, 10, and 11 months per year but have pay pro-rated over 12 months Different pay periods and benefits for different types of employees Process calculations and payment of work-study splits and federal funding Frequent contract changes for dollar amount or funding account changes each month Payout of contract periods are different depending on the type of contracted employee Manage other types of retirement instead of Social Security Administer PERA matchmaker amounts and plans Handle PERA retirement gross and federal taxable gross amounts for calculating taxes and retirement Calculate different percentages for UNC retirement match amounts based on type of employee Record different fringe benefit amounts based on object codes Accommodate different deadlines, coverage periods, and methods of submittal to insurance companies for different types of employees Provide quick turn around time for special checks (usually1-4 hours) Collect overpayments on an individual basis depending on the employee s ability to pay back money within a time frame Process summer payrolls to assure expenses are incurred in the proper fiscal year Manually submit retiree s life insurance benefits Handle fiscal year faculty payments Manually enter affiliated agencies (Credit Union, Alumni, Foundation) employee insurance plans Manually enter double deductions for full-time faculty paid over nine months rather than 12 months to ensure benefits continue monthly Manage interfaces to all outside vendors (PERA, Valic, TIAA, Benefits, State of Colorado) and internal administrative systems such as Accounting and Financial Aid Facilitate the hiring feed for student employees from the Student system to Peoplesoft Facilitate the feed of the student ACH information from the Card Office on a daily basis. Provide a repository for UNC Directory information, addresses and campus mailing labels Normal payroll processes and services include: Update and maintain tax withholding information (W-4 s) Update and maintain direct deposit information Withhold and process appropriate payroll deductions including employee benefits

4 Process and issue non-scheduled (on-demand) checks Process and mail W-2's Process employment verification information from archived records Answer payroll questions Run monthly payroll processes in accordance with Federal and State guidelines Establish the Peoplesoft monthly deadline calendar Process garnishments and wage assignments Process and collect overpayments Reconcile all insurance benefit payments for faculty, exempt, and classified staff Pay and reconcile PERA/Optional retirements Compute monthly payout of contracts Process one time payroll deductions outside of the computer processes Run monthly payroll reports and distribute to various departments Create and manage Peoplesoft and Contract originators listserv Distribute pay advices and checks Write queries for departments for statistical and decision making management Train all Peoplesoft users Process PSA s Deposit payroll taxes and file reports Coordinate with departments on entering Payroll data Transmit files and reports to outside vendors and the State of Colorado Maintain list-serves for communicating with campus Peoplesoft users Maintain a common deadline calendar with other departments like HR, Graduate School and Student Financial Services Adaptability: Payroll is currently moving towards 24/7 user-friendly services with the implementation of self-service accesses. Employees can now see their paychecks and make changes to their W-4 withholding document on-line. Departments can download all payroll forms. Prompt posting of monies is accomplished through electronic funds transfer (EFT) to vendors and direct deposit of paychecks. Quality of Services: Student employment at UNC may be a student s first job. Payroll endeavors to help the student through the myriad legal forms, processes, and policy guidelines that any new employee would encounter such as W-2 forms, pay advices, direct deposit forms, and time sheets. Telephones are answered promptly, questions answered accurately, help offered freely. The payroll staff continually strives to reassure employees, build trust in the staff, and offer the greatest degree of efficiency while maintaining the utmost confidentiality in employee s personal matters. Payroll must keep apprised of current federal and state law, university policy, and industry standards and trends. This is done through Internet search engines and through printed and online access of membership in the American Payroll Association.

5 Through the Peoplesoft HRMS database system Payroll has been able to provide campus departments with pertinent, individualized statistics and reports. Information technology has written 150 specialized reports and interfaces to further customize the operation of the system. Each month payroll runs 25 queries to check for errors, inconsistencies, and omissions before payroll confirms. Some of those queries look for: Overtime and shift differential problems Missing and incorrect information Medicare eligibility and enrollment Savings plan limits Employee new hire and termination lists Payroll also utilizes an additional 125 queries that contribute to the high level of efficient, error free operations we are proud to be a part of today. Prior to this audit process many problems resulted in no pay or incorrect pay requiring numerous special paychecks being written on payday. Office telephones rang continuously from 7:30 a.m. until the last person walked out the door in the evening. Today payday is a busy, active day but without the exhausting stress and problems of before. Quality of equipment, facilities, and other resources: Payroll is a support unit of university operations. The ability to function and offer progressive services is heavily dependent on the resources allotted to keep current with the latest computer technology. Efficient, up-to-date payroll functions are enhanced through the state of the art Peoplesoft software we currently use. Due to increasing costs and decreasing budgets we dropped the Peoplesoft license in We are currently maintaining all tax updates and tables within the Payroll/HR office with assistance from the Tax Accountant at UNC. UNC s Payroll office moved in December 2001 from a small corner in HR to professional office space. This has allowed employees a greater sense of security and privacy when discussing pay, benefit deductions, or other personal issues such as court ordered garnishments. Payroll is strongly supported with up-to-date computers, office space, office equipment and software. This helps our department to operate effectively and efficiently. III. THE FUTURE: EXPRESSING OUR DREAMS Mission and Structure The function of Payroll Services is essential to UNC s mission by compensating all employees including faculty, staff and student employees. We also provide specialized services for the unique situations associated with a higher education institution in Colorado. Payroll staff will be going through a shift of duties and reduction of FTE before the end of fiscal year This will reduce our staff by.60 FTE creating a savings of $26,000 per year. This structure change will require our staff to become very lean and mean and challenge the department to continue to provide excellent customer service.

6 The existing structure of the Payroll department exhibits good teamwork, cross training, and a cohesive work environment. The location is a great benefit with professional, private office space located near HR to facilitate the daily interactions needed between our departments. Futuristic Ideas/Changes/Efficiencies for Payroll Services The current trend to outsource may be possible for the Payroll/HR function at UNC. This is being evaluated due to the loss of the Peoplesoft maintenance contract which was costing UNC approximately $60,000-$70,000 per year. We are presently maintaining the software at UNC with help from our Tax Accountant and IT support. This is working well but we do not feel this is a long-term solution. A long-term solution may be outsourcing or purchasing different, more economical software. Efficiencies could be gained by providing more self-service Payroll and HR activities. If we continued our Peoplesoft maintenance, we would have been forced to pay additional for the webbased version of the software. It would have provided a lot more self-service alternatives. Web service is the future of all software programs and self-service eliminates a lot of data entry by the Payroll staff. Questions can be investigated by the employee through self-service thus cutting down on phone calls to payroll. The current self-service activities we offer were custom built by our IT staff and are very limited. With the purchase of another software or additional IT staff time, self-service could be greatly expanded to create more efficiencies and access. The purchase of integrated state of the art software that interfaces with general accounting, financial aid, HR and payroll would greatly reduce duplicate entries and the need for UNC created interfaces maintained by IT. Purchase expense could be spread out over several years if the software could be bought in pieces from a vendor that provides an integrated solution. This would also allow for a well-tested thorough conversion and implementation, free of short deadlines and overloaded staff. Re-combining the Payroll and HR departments would create additional efficiencies by accomplishing the following: Provide better office coverage during staff meetings and staff sick days. This will become crucial if FTE s reduce. Work together more collaboratively to reduce duplicate data entry and gain efficiencies as well as reduce errors (the two offices are centrally located near each other and share the same software). Create a one-stop shop for phone calls and walk-in customers. Reduce errors to increase cooperation and coordination between departments. Reducing or eliminating some of the following special situations can gain other efficiencies and cost savings as well as the manual processes that Payroll is required to accommodate: Make UNC retirement contributions consistent across all employee types. Pay all employees over 12 months with no exceptions (e.g. faculty paid over 9 months).

7 Eliminate paper checks (payroll card for people who can t get bank accounts or grand-fathered into the paper check procedure). Limit participation in UNC benefit plans to current UNC employees (e.g. retired faculty, Foundation, and Credit Union employees are not in the database) Have the collection department experts administer and collect overpayments rather than payroll. Automation of contract writing through direct upload of pay data would reduce duplicate data entry and errors in the contracting process at UNC. This is a current goal for the near future with the help of the IT department and will create additional efficiencies in the payroll office. Purchasing time entry software for hourly employees that will interface with payroll and student employment would reduce duplicate data entry, non-compliance issues such as overtime, and errors in manual calculations. Currently all departments on campus maintain manual timesheets that require a lot of time to fill out, calculate, and enter into PeopleSoft. With this efficiency UNC could also consider paying student employees on a bi-monthly basis with very little additional cost. Payroll advices could be ed if all employees were required to have an address and access to a computer. This would create a large savings in both time and materials to print, fold, insert and mail 3400 pay advices each month. It would also play an important role in the use of self-service activities and encouraging employees to be more independent. Summary Doing more with less can be a double-edged sword in terms of technology. To meet ever increasing demands for self-service and instant access requires the purchase of state-of-the-art software programs. Additionally, fewer employees in one area may just increase employees in another area to be able to maintain the technology. Streamlining payroll functions to maximize resources while increasing efficiency focuses on four issues: More IT support for building web based (24/7) access and self-service processes. Facilitating computer access by all employees on campus. Administrative and Board decisions to make policies and procedures more standard with fewer exceptions to manually manipulate. Purchases of integrated state of the art software programs and on-going financial support to maintain and upgrade those systems.