City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council approve a budget amendment to add an
additional Payroll Technician position for Fiscal Year 2007-08 in the amount of
$38,430 including salary and related benefits for the remainder of the fiscal year.
The funding for this position was approved in second year (Fiscal Year 2008-09) of
the two-year budget that was adopted in June 2007.
A Budget Amendment requires a 4/5ths vote.
BACKGROUND/DISCUSSION:
The Accounting Operations Division of the City Treasurer’s Office (“CTO”) has two
Payroll Technicians who report to the Accounting Manager. The CTO’s approved
two-year budget provided for the reclassification of one existing Payroll Technician
to a Payroll Technician II and for an additional Payroll Technician position to be
funded in the second year of the budget (08/09).
The span of control and responsibilities in the Division include all Payroll matters (as
well as related tax reporting and benefit payments), Accounts Payable (A/P) and
Accounts Receivable (A/R) for both the City and the Redevelopment Agency. The
Division is of paramount importance for the internal control/compliance monitoring of
all payment activity in the City (projected at $133 million), whether to employees or
vendors. Additionally, there has been a heightened emphasis on enforcement of
collection for receivables.
Meeting Date: 09/24/07 Item Number: A-5
AGENDA ITEM: Approval of a Budget Amendment to Fund a Payroll Technician
Position.
Contact Person/Dept.:
Crystal C. Alexander, City Treasurer's Office
Phone Number: 310-253-5866
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: Master Notification List (09/19/07)
Department Approval:
Crystal C. Alexander (09/13/07)
City Attorney Approval:
Carol Schwab (by H. Iker) (09/18/07)
City Controller Approval:
Marlee Chang (09/18/07)
City Manager Approval:
Jerry B. Fulwood (09/19/07) City of Culver City, California
City Council Agenda Item Report
The complexity of a city’s accounting operation is a direct reflection of the complexity
of the city itself. This is the case in Culver City, especially as Payroll operations
includes processing payments to staff that work in departments that function 24
hours a day, 7 days a week. The input to the payroll system is so complicated that
our former timecard vendor, Kronos, recommended that Los Angeles County contact
us to discuss how we administered our contracts.
The PDBA (Pays, Deductions, Benefits and Accruals) list that is behind the
production of individual paychecks is huge. There are 494 items on the list. Staff in
Payroll must not only understand the formulas behind each of these items, but must
also administer the 6 negotiated Memorandums of Understanding and the individual
employment contracts that drive how these items apply, and also work to ensure that
the 56 timekeepers in all the departments understand how the items apply as well.
When an error is made by the timekeepers in the departments, payroll staff must be
prepared to catch and correct it on the front end or to be able to rectify the error
instantly when it is discovered. This often requires an immediate payment to the
employee as well as corrections to all reports that must be filed bi-weekly with
PERS, PARS, Federal and State tax bodies, various courts and numerous vendors.
Payroll staff provides the quality control, throughout the paycheck production cycle,
to ensure that accurate and timely payment is made. The current payroll schedule
only allows accounting staff a two day turn around to process paychecks for
approximately 750 employees. This number can increase significantly in summer
months due to seasonal staff
Payroll staff also knows that their work can increase exponentially if payroll errors
are not identified and corrected quickly, since late adjustments often require
changing historical records, to ensure that tax reporting and W-2's are accurately
reflected.
There is no question that payroll production is the most intense and time driven of
the accounting operations conducted in the City. It is a mission critical operation.
Upon employment, the City makes a good faith promise to its employees that they
will be compensated timely and accurately for their services rendered.
It is a morale drain on an organization if payroll isn’t completed to the highest
standards. See the attached article about the severe payroll production problems
now ongoing at the Los Angeles Unified School District for some perspective.
Producing a payroll for the City of Culver City is a highly difficult undertaking. It has
grown, with the increasing complexity of the MOU’s, Executive Employment
Contracts, State and Federal tax regulations, retirement system (PERS & PARS) City of Culver City, California
City Council Agenda Item Report
requirements, garnishments, maintenance of records, reconciliations, payment
requests for deductions, and assistance to Departments. The City has been very
fortunate to have the current professional staff in payroll. These dedicated long term
employees ensure that the payroll is processed timely, even scheduling vacations
around the payroll cycle.
Although there has been discussion in the past regarding outsourcing payroll
functions, research indicated it was not feasible due to the complexity of the pays
and deductions the City has.
Payroll is a complex operation. It requires expertise and concentration. It takes
approximately two years before a Payroll Technician would be fully trained and able
to work independently. The City is vulnerable by staffing this operation with only two
positions. The operation of the division will be negatively impacted if one of the
Payroll Technicians were sick, on emergency leave, or take another position; it could
impact the division’s ability to generate the payroll on a timely basis. Staff believes
that it is better to recruit an additional position in the current fiscal year and not to
wait till next budget year. .
FISCAL ANALYSIS:
The cost to implement this full-time position for the remainder of the fiscal year
(estimated at six months following the requisite recruitment period) is approximately
$38,430 including salary and related benefits. The approximate annualized cost is
$76,860. It is recommended to transfer funding from the Appropriated Reserve
account.
ATTACHMENTS:
1. Los Angeles Times article: L.A. Unified payroll a lesson in agony
2. Payroll Technician Job Classification
City of Culver City, California
City Council Agenda Item Report
MOTION:
That the City Council:
Approve a Budget Amendment to transfer $38,430 from the Appropriated Reserve to
increase the personnel costs for the Accounting Operations Division, authorize the
fund transfer from the General Fund Reserve to fund the increase of $38,430 to
Accounting Operations Division (10112500) Account 411100 (Regular Salaries) and
Various Benefit Accounts (431000, 432000, 433000, 433500, 434000, 435000,
436000) for Fiscal Year 2007-08.
This item requires a 4/5ths vote.