HomeMy WebLinkAboutCC AG PKT 2004-08-09 #T •
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AGENDA REPORT
DATE: August 9, 2004
TO: Honorable Mayor and Council Members
THRU: John B. Bahorski, City Manager
FROM: Pamela Arends -King, Director of Administrative Services/Treasurer
SUBJECT: Purchase of Springbrook Human Resources and Payroll
Software
SUMMARY OF REQUEST:
Staff requests Council approve purchase of Springbrook human resources and payroll software and
approve the attached budget amendment 05 -01 authorizing the expending of funds to acquire the
software, maintain the software and process the City's payroll.
BACKGROUND:
The City has been outsourcing payroll since 1998. The two main reasons for outsourcing payroll were
to obtain a reliable payroll software and to save the City money. Outsourcing the payroll eliminated a
full -time account technician position. The company, Payroll Services Unlimited, the City used from
1998 through 2001 was bought by another company therefore the City of Los Alamitos who was also
using Payroll Services Unlimited acquired the software and hardware to do the payroll in 2001. The
City of Los Alamitos provided payroll services through 2002 and the City went with Automatic Data
Processing (ADP) January 2003.
The payroll service the City was provided by Payroll Services Unlimited was full- service. The
timesheets were sent to the company and it processed the payroll and reviewed it for errors. Staff time
for departments other than finance was as minimal as it was before payroll was outsourced and
consisted of collecting time sheets and manager's review for approval. The Finance Department
reviewed the payroll after it was completed and delivered which took about 2 hours per payroll period.
This service continued when the City of Los Alamitos acquired the computer hardware and software
from the company that bought out Payroll Services Unlimited. Staff recognized the outsourcing of
payroll with the City of Los Alamitos would be temporary because the software and hardware it
acquired was outdated and there was only one programmer who knew how to support the software,
therefore the City had no option but to look for alternatives.
Because outsourcing the payroll had worked very well for the City it was decided to continue to
outsource payroll. The only other company that had experience doing municipal government payroll
was ADP. The services ADP demonstrated to the City appeared as though it would work plus the City
was able to have access to a human resources program. Staff was aware that it would be entering
timesheets through ADP, however, with the product demonstrated it was pointed out the program is
Agenda Item f
August 9, 2004
Agenda Report: Purchase of Springbrook Payroll and Human Resources Software
easy and would not consume very much of staff's time.
The City has been using ADP for a year and a half and the service is not satisfactory. It is not
satisfactory because the amount of staff time required to process a payroll far exceeds the amount of
time we were assured it would take by the ADP representatives and the support the City receives is
inconsistent and not very helpful. ADP uses several different employees, therefore when a call is
placed to ADP because of a question or problem the staff ADP provides is not always familiar with the
City's payroll and do not provide adequate help or correct information. The product also does not have
the flexibility to process a municipal governments payroll requirements as it stated it could therefore
many extra hours of staff time is needed each payroll period to ensure payroll is correct. Currently
each payroll period takes a finance department account technician 20 hours a payroll period and the
accounting manager 6 hours a payroll period to process and correct the payroll. Also each department
spends extra time from one half hour up to four hours entering the payroll from time sheets depending
on the number of employees. The human resources employee spends an extra four hours each pay
period reviewing payroll to ensure the correct vacation/sick accruals and salary ranges are being used.
The object of outsourcing payroll is to minimize costs and staff time. Because processing the payroll
requires additional time that was not expected, time necessary for the employees especially the
accounting manager and the finance account technician to complete necessary and critical job duties is
lost and those duties are either not completed and or not completed in a timely manner.
The City is paying ADP about $26,500 annually for its service which is comparable to the other
payroll service it used, however, the other service did not require 26 hours of the finance department's
time each payroll period and or the time the other departments use to enter the payroll. The other
service also processed the payroll correctly and understood municipal government payrolls.
Due to the ADP's unsatisfactory performance staff looked at bringing payroll back "in- house" using
the Springbrook software. The City is currently using the software's finance and utility billing
modules and is very satisfied with it. During the software's users group conference in May 2004, staff
talked with several employees of cities that are using Springbrook's payroll and human resources
software. The overall response from the employees was they were very happy with the software and
would highly recommend it. The payroll and human resources software was written to meet the needs
of a municipal government and it can also provide the required PERS reports. The software also has
very flexible reporting capabilities and the payroll will be integrated with the finance software thereby
eliminating the need to post the payroll to the general ledger manually.
Purchase of the Springbrook payroll and human resources software is $20,000 ($10,000 per module).
Total estimated cost of training and implementation is not expected to exceed $16,800. To process the
payroll every pay period a part-time payroll clerk will be hired to work from 15 to 20 hours a pay
period at an estimated hourly rate of $20 to $23 per hour. The payroll clerk will perform all payroll
functions except for the final review of payroll that will be completed by either the accounting
manager or director of administrative services. Total cost to purchase and implement the software is
$36,800. Total annual maintenance cost for both software modules is $4,000. After the initial cost of
purchasing and implementing the software the estimated annual costs to process payroll is $23,000.
The basic annual cost to use ADP is $26,500 therefore using the Springbrook software that includes
hiring a part-time payroll clerk that would process the entire payroll and management review of payroll
August 9, 2004
Agenda Report: Purchase of Springbrook Payroll and Hunan Resources Software
will generate an annual savings to the City of at least $3,500. This annual savings helps offset the
initial cost of implementing and acquiring the software.
Using Springbrook software would address two critical issues. The first and most important critical
issue is the accurate processing of payroll. The second critical issue is staff time will be used
efficiently.
FISCAL IMPACT:
Total proposed budget amendment increases general fund fiscal year 04/05 to purchase; implement and
process payroll is $26,780. The estimated general fund ending undesignated fund balance for fiscal
year 04/05 is $5,471,852. The proposed budget amendment will decrease the general fund
undesignated fund balance by $26,780 to $5,445,072.
RECOMMENDATION:
Council approve purchase of Springbrook human resources and payroll software and approve the
attached budget amendment 05 -01 authorizing the expending of funds to acquire the software,
maintain the software and process the City's payroll. a
Pamela Arends -King
Director of Administrative Services/Treasurer
NO • � ' APP 'O ' 1:
John ' . Bahorski
Cit % anager