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HomeMy WebLinkAbout32-Finance ~ CITY OF SAN BERNARDINO :57J REQUEST FOR COUNCIL ACTION From: BARBARA PAcHON, DIRECTOR OF FINANCE Subject: PAYROLL DATES Dept: FINANCE ORIGINAL Date: SEPTEMBER 10, 1996 Synopsis of Previous Council action: Council made the policy decision during the FY 93 budget deliberations to issue paychecks on the 15th and 1st of the month. '"} :il C}4 dJ; ;:Jl~~JO .tn~av Recommended motion: Staff recommends that the Mayor and Common Council make the policy decision to issue paychecks for the first pay period of the month on the 15th and for the second pay period of the month on the last day of the month (currently issued on the 1st day of the following month) . ~L~!t~L / Signature Contact person: Barbara pachon, Director of Finance Phone: x - 5242 Supporting data attached: staff report. correspondence to and Ward: from bargaining units FUNDING REQUIREMENTS, Amount: N/A Source: (Acct. No.) (Acct. DescriDtion) Finance: Council Notes: Agenda Item No. 3~ /{)I1I~h .. STAFF REPORT BACKGROUND Currently, the City issues paychecks twice monthly. The first check covers the pay period from the 1st through the 15th and the check is issued on the 15th, the last day of that payroll period. For example, for the pay period of 4/1 through 4/15, payroll checks are issued on April 15th. The second pay period of the month covers the 16th through the end of the month. Checks for this payroll period are not issued until the first day of the following month. For example, for the pay period of 4/16 through 4/30, payroll checks are issued on 5/1. Instead of issuing payroll checks on the 15th and 1st of each month, staff recommends changing current procedures and issuing checks on the 15th and last day of the month. Using the example above, payroll checks for the period of 4/16 through 4/30 would now be issued on 4/30 rather than 5/1. The issues necessitating the change are discussed below. ISSUES Bank Reconciliation - The current payroll procedures cause timing inconsistencies between the City's books and the bank statement. For example, the City records as an April transaction a payroll issued on May 1st because the charges were for the pay period of 4/16 through 4/31. However, the bank records this payroll in May because it bases the transaction on the date of the check. Even though the majority of payroll transactions are handled via auto deposit prior to the 1st, the bank will not record the transaction until the 1st because of the check issue date. The City's auditors recommend and concur with this change as it will improve the bank reconciliation process. Accountina Practices - There is an inconsistency between the way the City records the first pay period of the month versus the second pay period of the month. Checks issued for the first pay period of the month, for example 4/1 through 4/15, are issued on the last day of that pay period, the 15th. However, checks issued for the second pay period of the month, 4/16 through 4/30, are not issued on 4/30, the last day of the pay period; they are issued on 5/1. Financial transactions should be handled consistently throughout the year and the current method of issuing payroll checks is not consistent between the two pay periods. I.R.S. Reoortina - Just as the bank handles payroll transactions on a cash basis, so does the I.R.S. For example, paychecks for the pay period of 12/16 through 12/31 are dated 1/1 and can be distributed as early as 12/22 due to Christmas closure of City Hall. However, due to I.R.S. regulations, the wages earned for page 1 of 2 page 2 of 2 this pay period are reported to the I.R.S. in the following year because the check date is January 1, not December 31. If the change in payroll dates is approved as recommended, there will be a one-time adjustment in the first year of implementation and City employees will have an extra pay period reported on their W-2's to the I.R.S. Financial Svstem - The final concern regarding payroll dates relates to the City's computerized financial system. When the decision was made in July of 1992 to record payroll dates on the 15th and 1st, arrangements were made on the old financial system to post the 2nd payroll of each month correctly even though the check date was for the following month. Now that Finance is on a new financial system, staff would like to correct this problem in order to accurately reflect the payroll transactions and make the bank reconciliation process more efficient. Changes could be made in the new system to accommodate the City's current payroll procedures. However, avoiding unique program changes to the financial system and dating payroll checks for the month in which they will be recorded to the City's books allows for less chance of error and more control over payroll posting. FISCAL IMPACT TO CITY Implementing this change in payroll procedures presents no fiscal or budget impact to the City. All employee bargaining units were notified of the proposed change in payroll dates, and were requested to respond by August 2, 1996. None of the City's five bargaining units indicated they wish to meet regarding this issue. RECOMMENDATION Staff recommends that the Mayor and Common Council make the policy decision to issue payroll checks on the 15th for the first payroll period of the month and on the last day of the month for the second payroll period of the month effective January 1, 1997. .' ERNARDINO 300 NORTH "0" STREET. SANBERNAROINO. CALIFORNIA 9241B July 23, 1996 Mr. Jeff Carr Labor Relations Representative San Bernardino Public Employees' Association P.O. Box 308 San Bernardino, CA 92402 --., 1,-.,' ;-;:;l~)-;:li;"~ ~..-,-- i;-,J,i2.c r;" ?':;i\\'/f )~JI-li ,.1. -.. ... -~'~_ J il:.': II" '):; '''"~,, :/:. ' .lii ~~- "'.. I::;:.) , I ; ...~. i.._' .J----' ::-:"\," :\''''''-:0.. , .J "4"~~ H,,~ 1) l?T '~I-'f /"01"'"... . '-, I L," ::::~." 8'=";7?':..3.RD~NO Dear Mr. Carr: CBAHGS IN PAY DATS The city's Finance staff will propose to the Mayor and Common council that the city change the payday from the first of the following month to the last day of the previous month (e,g., instead of paycheck on August 1, it will be July 31). Inother words, employees will be paid one day sooner than they are now. Staff is proposing this change for several reasons, including: . it will make the second pay period of the month be paid out in the same way as the first pay period of the month; . greatly simplify our bank reconciliation process as recommended by the city's auditors; . make it easier and less chance of error in getting the second pay period to post to the correct month in the finance system. Please contact Dena Murillo, Senior secretary, at 384-5161 by close of business Fridav. Aucrost 2. 1996, if you wish to discuss the proposed change. Thank you for your cooperation. Sincerely, ~~J~~~~~~ ~)~ Barbara Dillon Director of Personnel BDjdm F,\CILlTIES iVi ;~'\ 1\; AGE j-'Ji E 1'1 T cc: Shauna Clark, city Administrator /Barbara Pachon, Director of Finance ERN ARD IN 0 300 NORTH "0" STREET, SAN BERNAROINO, CALIFORNIA 92418 July 23, 1996 Mr. Mike Lynd Labor Relations Representative San Bernardino Public Employees' Association P.O. Box 308 San Bernardino, CA 92402 Dear Mr. Lynd: CHUGB IN PAY OATB The City's Finance staff will propose to the Mayor and Common Council that the City change the payday from the first of the following month to the last day of the previous month (e,g., instead of paycheck on August 1, it will be July 31). In other words, employees will be paid one day sooner than they are now. Staff is proposing this change for several reasons, including: . it will make the second pay period of the month be paid out in the same way as the first pay period of the month; . greatly simplify our bank reconciliation process as recommended by the city's aUditors; . make it easier and less chance of error in getting the second pay period to post to the correct month in the finance system. Please contact Dena Murillo, Senior Secretary, at 384-5161 by close of business Fridav. Auaust 2. 1996, if you wish to discuss the proposed change. Thank you for your cooperation. Sincerely, ~~ Barbara Dillon Director of Personnel .' BD/dm cc: Shauna Clark, City Administrator vBarbara Pachon, Director of Finance ERN ARD IN 0 300 NORTH "0" STREET, SAN BERNARDINO. CALIFORNIA 8241B July 23, 1996 Mr. Skip KUlikoff, President San Bernardino City Professional Firefighters' Local 891 P.O. Box 2703 San Bernardino, CA 92406 Dear Mr. Kulikoff: CHANGB IN PAY DATB The City's Finance staff will propose to the Mayor and Common Council that the City change the payday from the first of the following month to the last day of the previous month (e,g., instead of paycheck on August I, it will be July 31). In other words, employees will be paid one day sooner than they are now. Staff is proposing this change for several reasons, including: . it will make the second pay period of the month paid out in the same way as the first pay period the month; be of / . greatly simplify our bank reconciliation process as recommended by the city's auditors; . make it easier and less chance of error in getting the second pay period to post to the correct month in the finance system. Please contact Dena Murillo, Senior Secretary, at 384-5161 by close of business Fridav. Auaust 2. 1996, if you wish to discuss the proposed change. Thank you for your cooperation. Sincerely, ~~ Barbara Dillon Director of Personnel . ' BDjdm cc: ~hauna Clark, City Administrator vBarbara Pachon, Director of Finance ERNARDINO 3OONORTH"O"STREET. SAN8ERNAROINO. CALIFORNIA 92418 July 23, 1996 Mr. steve Filson, President San Bernardino Police Officers' Association P.O. Box 2967 San Bernardino, CA 92406 Dear Mr. Filson: CDHGB III PAY DATB The City's Finance staff will propose to the Mayor and Common Council that the city change the payday from the first of the following month to the last day of the previous month (e,g., instead of paycheck on August 1, it will be July 31). In other words, employees will be paid one day sooner than they are now. Staff is proposing this change for several reasons, including: . it will make the second pay period of the month be paid out in the same way as the first pay period of the month: . greatly simplify our bank reconciliation process as recommended by the city's auditors: . make it easier and less chance of error in getting the second pay period to post to the correct month in the finance system. Please contact Dena Murillo, Senior secretary, at 384-5161 by close of business Fridav. Auaust 2. 1996, if you wish to discuss the proposed change. Thank you for your cooperation. Sincerely, ~~ Barbara Dillon Director of Personnel , BD/dm cc: Shauna Clark, city Administrator vBarbara Pachon, Director of Finance CI ERN ARD IN 0 300 NORTH "0" STREET, SAN BERNARDINO. CALIFORNIA 9241B July 23, 1996 Mr. Robert simmons President, SBCMA c/o city of San Bernardino city Attorney Office 300 N. D st. San Bernardino, CA 92418 Dear Mr. simmons: CRANGB IN PAY DATB The city's Finance staff will propose to the Mayor and Common council that the city change the payday from the first of the following month to the last day of the previous month (e,g., instead of paycheck on August 1, it will be July 31). In other words, employees will be paid one day sooner than they are now. Staff is proposing this change for several reasons, including: . it will make the second pay period of the month be paid out in the same way as the first pay period of the month; . greatly simplify our bank reconciliation process as recommended by the city's auditors; . make it easier and less chance of error in getting the second pay period to post to the correct month in the finance system. Please contact Dena Murillo, Senior Secretary, at 384-5161 by close of business Fridav. Auaust 2. 1996, if you wish to discuss the proposed change. Thank you for your cooperation. sincerely, ~.A~ Barbara Dillon Director of Personnel . BDjdm cc: Shauna Clark, city Administrator VBarbara Pachon, Director of Finance