Results of a Portland Public Schools audit from the latter half of 2022 recommended hiring an experienced payroll manager and retaining additional payroll staff to solve persisting problems and transition to a new payroll system.
The report from Spinglass Management Group, LLC confirmed that lack of staffing — what PPS had pointed to as the root cause of its payroll discrepancies dating back to October — was the major factor behind the issue. In the second half of 2022, PPS had one payroll manager, with a pending end date in March, and a part-time payroll specialist, which the report explained is “inadequate for an entity with 1,900 employees.”
Spinglass recommended that PPS hire “a payroll manager with extensive payroll and accounting experience,” who should be trained immediately, in addition to retaining three more payroll staff, with the total number of four being adequate to manage the deficiencies and payroll transitions.
The report found that PPS did not cross-train employees on payroll to accommodate for absence of key personnel, which led to the issues that the district had cited. There were not enough employees that knew the workarounds of the payroll system (Munis, a municipal payroll software designed by Tyler Technologies) to operate it after a staff member had to go on leave.
The audit covered the period between July to the end of December 2022. It was conducted as part of a Memorandum of Understanding (MOU) signed by the district and its collective bargaining units to rectify the payroll collapse that resulted in some employees being paid in incorrect amounts or not at all at the end of last year.
Issues that remain include tracking employees’ accrued vacation time, which has still not been addressed despite being flagged as a significant deficiency in an audit from June 2020.
Controls over logging employee time were also inadequate. Spinglass was unable to determine whether employees have been paid for the correct hours worked, according to the report. They expect that the transition to ADP to outsource payroll will help solve those time capture problems.
After looking into the services offered by ADP, Spinglass recommended that the district continue with the process to outsource payroll through the company. The district’s goal is to complete that transition by Aug. 1, according to a recent press release. An official launch meeting with ADP has been scheduled for this week.
PPS has been granted an extended timeline by the IRS — until March 31 — to file its Employer Annual Tax Returns, which were not filed in a timely manner, according to Spinglass. Employers’ Quarterly Tax Returns were also not filed in a timely manner for the third and fourth quarters of 2022.
PPS has made strides to address logged payroll concerns, which totaled over 700 earlier in January.
“There has been a dramatic reduction in the number of concerns logged since Dec. 16th. We believe this is indicative of PPS’ efforts to improve their execution as procedures have evolved and payroll staff members have acquired additional experience with the systems,” the Spinglass report reads.