Travis County Commissioners Court
Tuesday, August 23, 2011 (Agenda)
Item 21
21 is receive reports and take appropriate action on the following items: a, results of the employee survey, and b, proposal from converting from semi monthly payroll to biweekly payroll effective January 1, 2012.
>> and I do have a power point presentation and I don't know if we're going to get to see it.
>> do we need help or will you be able to figure it out?
>> hopefully I'll be able to figure it out.
>> good afternoon.
diane blankenship with the hrmd department and I've got
>> [indiscernible] and mike wicker who is heading up s.a.p.
and works in the auditor's office.
we are presenting the results of the biweekly survey to the court that we asked if we could survey the employees and we are also going to talk about proposal to convert to biweekly payroll.
we were not going to ask for action today on that, but we would like to have action if possible one way or the other by the 30th, so the next week.
so we're going to go over the survey and then we're going to make the business case for biweekly payroll and discuss issues and opportunities and discussions from the group or the audience.
first the survey results.
the employees were given one week to complete the survey.
the complete results are in your backup including all questions and all comments.
primarily the survey was done online.
it was also available on hard copy so for the people that don't have computer access, we got almost 200 response via hard copy which we did enter into the results.
so the results you have in front of you in the backup is reflective of all of the surveys both online and the ones we got in hard copy format.
approximately 40% of employees responded either online or via hard copy and 60% of the employees did not respond.
I also want to talk about that at first we got feedback, I got initial calls the survey was skewed and I got that in both directions.
I got from some people that clearly this is meant to convince people about biweekly payroll and from other people that, you know, well, the people who like semi-monthly had twice as many opportunities to provide comments.
as you would expect with an emotional issue.
and in fact they did get twice the opportunity because if they said no, we asked them why.
they did get twice as many opportunities to comment.
we were not trying to convince people about by week I payroll but were trying to assess.
the first question on the survey is do you prefer biweekly payroll.
even if you think question 5 skews one way or the other.
I do want to acknowledge we did get feedback both ways that the survey was skewed.
I want to hit a few highlights.
the first question is number 1, do you prefer biweekly payroll and a little over 50% of respondents said yes, we prefer biweekly payroll.
36.6% of the respondents said no, they do not prefer biweekly payroll.
and 10.1% said maybe.
they didn't have enough information, they couldn't make the call at that time.
again the people that said no or maybe, they were given the opportunity right then and there to give us comments and they are quite impassioned in their comments.
but otherwise the comments are in there verbatim.
then there was question number 3 -- question 2 asked for comments if you didn't want biweekly payroll.
question number 3 said if the biweekly payroll were shown to benefit the majority of employees, would you then be in favor of biweekly payroll.
we saw a little shift.
65.5% of employees said yeah, if it benefited the majority of people, then I would prefer it.
23.2% said no, wouldn't prefer it even if it benefited the majority of employees.
11.3% said maybe on that.
another question I think bears highlighting here quickly is we asked employees that if we were to go to biweekly payroll wow feel like you needed some money management training, some financial planning training.
about 24.5% of our respondents said yes, they would want some training so we felt like we would need to have a plan for financial training.
62.4% no and unsure was about 13% of respond he knows.
respond -- respondents.
we asked employees about payroll, what's most important to you.
the majority, 43.6% said they like having their base pay the same every semi month, every two weeks, they want their base pay the same.
they like to plan that way.
some people, 22.8% said I would like my paycheck to be here on the same day of the week.
it's hard when it's different days of the week.
13.3% said I would like my overtime to be paid on the next check.
I don't want to have to wait for overtime.
payroll delay was about 20% of employees.
it takes 15 to 16 days to get your paycheck because you are paid a pay period behind.
20.2% of employees said I sure would like that delay not to be so long and that's what's important to me.
comments, there were lots of comments against biweekly payroll and the majority were about budgeting and monthly bills, that their rent comes once a month, mortgage is once a month, car payment is once a month.
and I'm sure you read the comments.
that was the majority of the comments that we received against biweekly payroll.
they were highly charged, eloquent, emotional in nature and that is to be expected because pay is an emotional issue.
and certainly when somebody is talking about messing with your compensation or messing with your pay, employees don't always think it's in their favor.
that's kind of to be expected.
but we're going to talk to you about the business case for going to biweekly payroll.
I don't have a personal preference one way or the other but I think it makes good business sense for this organization and that's why I've elected to be a part of this team and to bring it to you.
payroll is not a service that we provide to the taxpayers.
what we provide to the taxpayers is health and human services and justice and public safety and transportation, justice, elected officials and so forth.
payroll is a lot like h.r.
in that it's just a necessary evil.
when you have a business and employees, you have to be able to pay them.
it's a back office operation and back office operations should be done as efficiently and effectively as possible.
for payroll that means effectiveness is accuracy, making sure the pay is right and correct and also means it gets out as quickly as possible.
semi monthly payroll, there's nothing wrong with semi monthly payroll.
if this is an organization of just salaried employees I would say stick with semi monthly payroll, there's no reason to change.
biweekly payroll is considered a best practice for a nonexempt hoarily.
>> because you want to alie the workweek with the pay cycle because you have overtime issues.
approximately 70% of employees are hourly, nonexempt employees.
they are eligible for overtime.
it might be paid in different ways but they are eligible for overtime.
aligning the workweek that ends on Saturday every week with the payroll cycle is the most efficient and effective way to run payroll and to process the payroll for these employees.
I'm sure beth will chime in here, but semi monthly, when you have a workforce that is a majority of nonexempt employees equals a lot of manual processing.
the nonexempt employees have their pay smoothed to 86.67 hours per pay period.
they are not paid for the actual hours they work, they have it smoothed so they get 86.67 hours.
that means manual calculations have to be made, we have to manually add that instead of accounting for the hours the person worked in the pay period.
in addition to calculate that overtime because the workweek and the pay cycle does not align, it means we have to pull those time sheets from the previous pay cycle to get that workweek that crossed over pay cycles to calculate that overtime.
so it's very cumbersome and that's not just in the payroll department, that's out there in the field when you are working somewhere that you are the payroll administrator in the transportation and natural resources department or the sheriff's department you are having to pull time sheets and actually calculate the overtime that breaches pay cycles.
that's because the workweek and the pay cycle does not align.
manual equals delay.
whenever we are doing something manually instead of automaticallyly, it's going to to more time, there's no room for error.
for your pay period that ends to 30th, you don't get paid until the 15th.
when the overtime crosses a cycle, the overtime can be further delayed.
you have to wait until the following pay cycle so you can calculate how much overtime actually got on that week that crossed pay cycles.
and paychecks are difficult to understand for employees.
if you've got overtime that's crossing pay weeks and you are getting paid 86.67 hours it's hard to understand if you got paid accurate for the overtime.
leave without pay is another issue that's difficult and kind of inconsistent with using semi monthly payroll.
leave without pay if you are an exempt employee it varies in value as calculated in semi monthly payroll.
what I mean by that is in semi monthly payroll we have -- we have pay periods that are ten business days, 11 business days and 12 business days.
so let's say you took four days of leave without pay in any given pay period.
how much of that salary is that for you?
it depends.
on a ten day pay period that's 40% of your salary you didn't get.
on 11 days, that's 36.3% of your salary that you didn't get.
and on a 12-day pay period that's 33.3% that you didn't get and sometimes it works out in the employee's favor and sometimes in the county's favor but it's inconsistent.
four days of leave without pay should be the same value no matter how you are processing payroll.
going to biweekly payroll would eliminate that bearing in leave without pay.
and I also want to hit on bee fit implementation.
sapd can handle either one.
however, it is -- it's a default to biweekly payroll, semi monthly is currently processed will likely require modifications to the sap system.
modifications incur fees.
and they have to be updated sometimes when you apply patches depending on what patch -- you know how you have your applications that constantly need to be updated.
that's a patch they are doing on your application.
if that happens with your software, if that patch goes across a modification you you might have to update that in order to apply that patch.
it always will have to be updated to upgrade to newer versions of the software and that prevents a lot of organizations from up grading.
they do modifications any indications and don't upgrade to newer versions of the software.
in order to upgrade modifications, it's doable but it adds to additional go forward costs.
to set it up now it's not a problem.
we already incorporated that to set it up now.
it's every time you have to update a patch, an amazing, there are additional costs so it will increase the go forward costs.
did you want to add anything to that?
>> you brought up a good point.
and I guess I need to ask the auditors folks I guess at some point as far as the timeliness as far as this court if we decide to approve a biweekly payroll, how much lead time must the auditor's office have to make sure it fits into their financial system as we go forward?
>> and that's why we're bringing that forward now really.
we've -- to do this without impacting the cost of befit and being able to incomp rate into the new system we would want that change effective January 1st of 12, in other words this coming January, which obviously before we convert to befit.
and in order to make all the changes to h.t.e.
as well as policy things that might need to be addressed, we need you to decide by the end of the month.
>> August 30th.
>> and that would then allow us to be able to make that change effective January 1st, 2012.
>> right, and we would like to make that change a full year in advance to converging to s.a.p.
we want to solve the biweekly payroll issues and have a year to get everything right and have a good rollout in s.a.p.
>> thank you.
>> there's nothing to say that you couldn't -- if you decided to go to biweekly payroll some period of time other than then, it really needs to be probably a couple years after the conversion to s.a.p.
so, you know, no one is saying that you could never make the choice later to go to biweekly payroll, it's just it would be a fairly long time period before I think we would be stable enough with the new system and would want to take that project on.
>> okay.
>> so we're asking for a long-term decision basically right now.
>> thank you.
>> okay.
issues and opportunities.
I'm going to hit on this really quick.
employee preference and acceptance.
that's a big one.
a big would you know to me.
how do the employees feel bit.
again, the majority of the survey respondents prefer biweekly payroll and I will concede those that did not want biweekly payroll were passionate and eloquent in comments.
bills and budgeting was what we saw the most.
and 65% of employees said they prefer biweekly payroll if it had benefited the majority of employees.
impacts employees, this is a big one to me also.
in page 13, we thought three different example ins the backup.
one of them is if you make 28,000 a year, is that right, 51,000 a year and about 73,000 a year, what's the impact to your bottom line.
it's about 7.7% all the way across.
so you can see the net difference the 7.7% lower paycheck every time you get a paycheck, but you get two additional paychecks per year.
here's examples.
for a 28,000 person, $52.78 difference per paycheck.
and for the 73,000 person it's $125 difference per paycheck.
I would proposal if we did this we put on line a paycheck calculator for employees.
here's what my yearly pay is, deductions, everybody just went through open enrollment so they could start planning now.
also I want to kind of -- I had another handout.
can you hand me one of those?
the one on far, far.
it's a timing of pay issue.
I think that's really important to notice that -- can you give this.
this is one additional sheet of paper that I didn't get in the 87-page backup.
I'm sorry for that.
a lot of people talk about when am I going have money in my hands.
that was a very immaterial impad issue.
it's an issue of timing of pay, which pay cycle puts more money in my pocket at any given point of the year.
and the answer is it works out half and half.
because on 113 you get paid under -- that's going to be a pay period for both.
then on 1-27 you are going to get paid again if you are on biweekly payroll.
you got more money in your pocket right then.
on 1-31 you have more on semi monthly.
on 2-10 you have more under biweekly payroll.
then on 2-15 you have more money in your pocket.
it's going to go back and forth.
this is net pay using the $50,000 example.
so what happens is to say I get more pay or I can meet my bills better, really it's a timing issue.
because half the time you are going have more money in your pocket under biweekly payroll and half the time more money in your pocket semi monthly when you look at the whole year all together.
also for the people that are living paycheck to paycheck, and I know the people that are living paycheck to paycheck and trust knee they are not the people that have the automatic deductions set up for their mortgage because they are living paycheck to paycheck.
they are not sure that money is going to be there.
those people she it's a lot easier for them to budget on a 14-day pay period.
I know I'm going total good paid every Friday, than having if you look at this, I've also put the days under semi monthly, 18, 15, 14 day pay cycle.
it varies.
that means I'm going one more weekend without some money in my pocket which makes a difference when you have kids to feed at home at the weekend.
those are the people that are actually really living paycheck to paycheck and they don't have automatic deductions on their bills.
that's another thing to think about when we're looking at the employees that are really living paycheck to paycheck.
I'm not advocate ing this but I want to throw this out there.
if this court is worried about I want to make sure that month to month people have different -- they have enough money in their pockets, there are other options to mitigate that.
one option would be to convert longevity pay into a pay period to pay period addition to your paycheck as opposed to one lump sum.
not advocating that.
I know people feel passionate about having their lump sum longevity pay, but regardless it is a way to get extra money in your paycheck every time you get a paycheck, and then you get the two extra paychecks per year under biweekly payroll.
kind of a tradeoff.
ironically the people who told me I like my semi monthly, those are the same people that don't touch my longevity, I like that lump sum.
they don't think having those two extra paychecks twice per year is beneficial to employees.
but that is, there are lots of ways to get more money in the pockets of our people month to month without necessarily raising salaries.
that would be one way of doing it.
so there are lots of options with that.
issues and opportunities, I told you 24.5% of employees that responded to the survey were interested in training and assistance with financial planning.
we have 100 hours in the eap budget for training.
I would dedicate 25 of those to financial training and assistance and they are also one on one, each employee is entitled to three one on one sessions perish that the eap could help them with financial planning.
in addition we can assist people, I know there are people like I like get my paycheck and I like my bill coming out right then.
loans can be reamortized.
they don't have to be paid month to month.
if you have a 60-month car loan that can be ream for tied.
accruals, vacation and sick and personal holiday accruals.
these could be consolidated and streamlined.
for example, you could see you know what, we're going to do vacation, we're going to change the amount and still do it per pay period and it still comes out the same amount per year.
or we're going to still keep it four hours per pay period, five hours per pay period.
that nets an extra day to day and a half of vacation for employees.
if you decided to do that.
however, that might not be a bad idea on a year where we have no raise that is someone gets an extra day to day and a half of vacation.
we have a lot of options with that also.
deductions.
deductions are currently based on semi monthly pay cycle.
we've attached in the backup almost all of these can be converted to biweekly payroll.
employees would have some choices such as their Travis County charity contribution and their 457.
they could make changes if they want to or they don't to.
>> > and the credit union.
>> we're working with the credit union.
they told us they can work with us to convert to biweekly payroll.
workload is an issue with this because there's two additional pay cycles.
that means it's more work for me.
yes, there are two additional per pay cycles but it will be less work because you allow the computer to do the calculation.
we can handle these biweekly calculations.
there is no smoothing necessary of those paychecks and no manual entries needed to do overtime and leave without pay and so forth.
there will be no need to pull the previous pay cycle's time sheets in order to calculate overtime.
time sheets would also be completed and approved on Mondays, every other Monday.
and I don't know about y'all but in my office seems like tend of the pay period seems to sneak up and I'm saying complete your time sheets.
I would love for them to know every other Monday that time sheet has to be turned in, but now the 15th or the 30th doesn't sneak up.
that doesn't happen with anyone else but me?
>> payroll delay is currently half a month and it's going to stay half a month, 14 days until after sap role jot.
if we go to biweekly we would look to trying to get it to one week.
>> that would be over a period of time after implementation.
>> I want to be very, very clear that we would not look at reducing that payroll delay until successful implementation of the sap program.
we would keep it at 14 days and look at taking it down.
that's all I have for these points that I wanted to make.
I didn't want to take up too much time so I talked as quickly as I could.
>> one thing I wanted to point out to the court and it is in your backup, the 7.7% reduction in the pay period pay includes the social security reduction.
we calculated that as if that social security decrease that went into effect as part of the economic stimulus plan had already gone back into effect.
so the other thing that's going to happen in January unless there's legislation to renew that or to extend that reduction is that the social security rate is going to go from 4.2% back up to the original 6.2%.
and that -- these calculations were done as if that had already happened.
>> did we hear from employees who get paid twice a month now and I guess they would be the lowly paid employees, did they actually say it would help me to get paid every other week?
>> again, we didn't trace it down to who said what.
we just got the pensions as far as that went.
that's a -- percentages.
>> it would help me to know that.
what the worker's comp and the human resource manual says is one thing or say is one thing.
it's another thing though because the people who contacted me have indicated that at the end of the year they think they would suffer because the amount that -- of compensation they have received would -- would counter change, they would catch up ultimately, but they see themselves as falling money short throughout the 12-month period.
>> right.
that's not really the case.
>> actually the first year it ends up being slightly more because you've got the last semi monthly payroll would be paid in January, and then you've got two pay periods in the year and the last one is in November.
so it actually ends up being just a little more.
>> but the money they have available throughout the year would differ and that would be less, wouldn't it?
>> no, that's why I gave enthusiasm handout because it shows about half the time at any given time about half the time you are going to have more in your hand for the year and that's why I wanted to show this by date because it shows the payroll dates on it.
so about half the time you have more in your hands under big and half the time it's just a timing issue.
you are not going to earn any less but half the time you are going to have more in your hands.
and it only varies by a couple hundred dollars at any given time.
>> if we really wanted to describe employees who make less, what would be the cutoff point?
40,000, 50,000?
>> we did an example under 28,000.
so we did do that on page 13.
>> but did we try to talk with employees that actually make 28,000 or less?
>> I don't know -- no, we didn't go out there.
we sent the survey out and allow it to be done by hand so we can make sure we get those employees.
>> if those are the ones we profess to help I would like to know what those say.
immaterial one that says if the majority of employees want to do this, it's fine with me.
at the same time, though, 60% of the employees didn't respond.
but those who did it looks like slightly more than 50% said, hey, I'd rather go to the every other week paycheck.
but if our reason for doing I will is that we think employees that make 28,000 or less would be better off, I would feel a whole lot better that we went out of our way to talk with some live county employees who feel that way.
>> and actually I'm supposed to go to t.n.r.
tomorrow, the west service center tomorrow and east service center on Thursday to kind of discuss this with them and I can get some anectdotal information from them.
it's going to be hard by the 30th.
I was impressed that they did respond by hand to make sure their votes were counted and they did do the survey and a lot of those we did from the t.n.r.
people.
>> I'll take anecdotal.
t.n.r.
facilities, I mean if they are better off, I say let's identity.
>> I would say also, I just want to say that this is a business case.
I can't say anybody is better off one way or the other because at the end of the year you're going to get paid the same amount.
so I can't say that you are better off or not.
I can say this is more efficient way of processing it and that way the dollars that we're spending both out in the field and internally in the payroll office can be spent doing other things and not processing payroll.
that I can say.
>> I was just going to say so when we sent out the survey, when the survey was sent out, it didn't ask -- we didn't identify the employees or anything and we didn't ask them what their salary level was.
so --
>> I know, I responded myself.
not that I'm that highly paid, but I make more than 28,000.
>> comments fall into what salary range they were making.
we had a lot of comments who felt it would benefit them.
but I have no way to attribute what salary, you know, level were they at.
>> I'm not saying a scientific survey, I'm saying between now and next Tuesday let's talk to some of those we know.
>> I will be in t.n.r.
tomorrow morning and Thursday morning.
>> what other departments did you say.
>> facilities.
because we see custodians walking around this building every day.
and I haven't thought about it a whole lot and to be honest once I concluded, hey, it doesn't matter to me one way or the other, I just kind of took comfort in the fact that if whatever majority wants to do is fine with me.
and I feel that way today, but I guess I would feel better, though, if we talked with some of those that we are trying to assist.
more.
>> okay.
well, I'll certainly get their comments.
>> just chat with them.
and if I were doing it for facilities, I guess I would ask some of the facilities managers.
t.n.r., I asked some of them, just ask them this during the lunch break or they used to sign up and they would have a safety meeting every notice and then.
>> safety meeting is tomorrow.
>> would it help to contact the -- those folks who are members of the union?
>> actually greg is also going to be out there talking, greg powell is going to be out there.
he has
>> [inaudible] that I did have a conversation with him about this and he indicated to me that the more frequently people get paid they are in support of the fewer amount of days between paychecks, the union is generally supportive.
he said can we go weekly and I said no, no.
but he is going to be out there tomorrow also because he's indicated the union supports it.
I also spoke anecdotally with a couple of sheriff union association folks and, you know, I think their main concern was anything that gets us our overtime faster because they are used to some of it is 48 days on the overtime and that is another consideration also is that in the sheriff's office right now is only looking at overtime every 28 days, which is once every other pay period or so forth.
it will be every pay period after October 16th and that's going to add more manual processing to the sheriff's office, the people who process payroll so that's another consideration also.
>> miss wilson.
>> one legal consideration that needs to be taken into account when you do this is that employees have to pay for coverage on some of their health benefits like dental and supplemental life and long-term disability.
those are deducted from their paychecks.
those are then paid to the insurance company.
the Texas constitution does not allow to us pay something to the insurance company until it's been deducted from the paycheck.
so however this is devised, it must take into account that employees have to have the full amount that is owing for a month premium for them deducted before it's paid to the insurance company.
so -- so, you know, one way that some employers do it is that they take it out of the first 24 paychecks in the fiscal year and in the last two they don't take it out, don't take a deduction out for that, which would mean that the amount of your deduction for those premiums would stay exactly the same under either payroll.
but that doesn't have to be the way you do it.
you just have to make sure that you have taken from the employee the amount of deduction necessary to pay for the premium that needs to be paid to the insurance company before you pay the insurance company anything.
>> that's not an issue for us right now because we're an advance, we're a month in advance as opposed to paying for the current month.
>> but if you --
>> we're still a month in advance so really your October insurance is being deducted in September.
so that's still going to happen so that's not an issue for us.
it would be an issue if we started looking at going to current payroll deductions but we're not proposing that right now.
>> but if you are only taking out a prorata 1/26 amount of premium there will be months when you have not paid your full premium before the beginning of the next month when the premium is due.
>> I understand what you are saying and I can tell you the other counties are not does advanced, they are doing current which means they are taking it out -- they are doing it October for October.
other counties are doing it a different way.
they are doing current.
we should still be ahead.
>> just pay attention to it.
>> okay.
>> there's been a declaration what other counties are doing is legal?
>> I just got a survey.
usually people want to know what other counties are doing.
I don't say if anything is legal or not legal.
>> any other questions, comments?
you expect action next week?
for the employees who make 28,000 or less, let us hear from you.
my name is diane blankenship, I'm in hrmd.
let me know how you think one way or the other.
>> [laughter]
>> thank you for your consideration.
>> thank y'all.
we'll have it back on next week.
so for those who really want to know what this is about, this one sheet tells it all.
>> I think it shows a good example of really it goes back and forth as to when you have more money in your pocketbook.
it goes back and forth because you can look at the dates there.
and I think that people don't really understand that, that it goes back and forth.
I think they would be surprised if they saw that.
>> okay.
I'm going to deliver as many surprises as I can between now and next Tuesday.
>> thank you, sir.
>> thank you.
>> thank you all.
>> why don't we hear from the parking committee, then go to broaddus.
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