Campus payroll errors can translate to big bucks … but automation can help

USD reportedly saved more than $700,000 in overtime payments.

Collecting and entering employee payroll information is a famously complex task in higher education. College payroll calculations are even more complicated—and fraught with error—when they’re done by hand.

And as colleges have faced lean budgets in recent years, officials have been focused on avoiding employee overpayment while campus departments are asked to cut back.

The University of San Diego (USD), a private campus with about 3,800 employees, reportedly saved about $1.5 million last year after campus administrators moved from a manual payroll system to an automated approach that removed human error from the process.

Automating payroll gave the university a more accurate reading of how much overtime employees were working, according to an independent analysis described in a report published by Kronos, a Massachusetts-based workforce management solutions company hired by USD.

USD saw its payroll error rates drop by 93 percent after automating the process, saving more than $700,000 in annual overtime payouts. USD employees, according to the Kronos report, “often overestimated the amount of overtime they worked.”

“I would say that the recession has done a lot to heighten sensitivity about this issue,” said Christine Carmichael, Kronos’s industry marketing director for the public sector.

Wasting money on payroll errors—especially when those mistakes are discovered by local newspapers—could cause PR damage for campuses during tough economic times. Colleges and universities “become hyper-press-sensitive” about overpayments to employees during down economies, Carmichael said.

Leaving payroll management to campus employees also could result in lawsuits if mistakes are made, Carmichael said. Campus workers who aren’t compensated for their overtime work could take the matter to court—another potential PR blow to colleges.

“[Payroll errors] of any kind are bad,” Carmichael said. “But that is definitely the worst scenario.”

Payroll issues plague even the most prominent campuses. Yale University in January told same-sex couples who work for the school that a 2010 payroll mistake meant thousands of dollars would be deducted from their early 2011 paychecks.

Connecticut recognizes gay marriages, but because those marriages aren’t recognized by the federal government, the Yale employees had to compensate for the mistaken tax benefits they were given. The error affected about 60 employees.

Colleges face the unique challenge of employing students who work part time for a variety of campus departments. A student, for example, might work at a sporting event, in the student union, and at the campus gym during the same week, reporting to three supervisors and being paid at different rates for each job.

“This has always made the student population particularly difficult to manage,” because students might make time sheet mistakes that aren’t caught by employees who enter payroll information, Carmichael said.

USD employees have improved productivity after the automation of payroll services, according to the report. Knowing that their paychecks were processed manually, employees regularly checked to make sure there were no errors from the previous two-week pay period.

Before the change was made, “correcting an underpayment in a paycheck typically took an employee away from their job for an average of 20 minutes,” the report said.

What’s more, automation of the biweekly payroll process using Kronos eliminated the need for administrators to manually collect and rekey data from 1,600 timesheets every pay period.

Getting all campus employees to participate in an automated payroll system is necessary, but not always easy, according to the Kronos report. Some faculty initially resisted the payroll change.

“These employees, most of whom were salaried workers in academic roles, were uninterested in adopting Kronos because it required them to change some of their daily tasks,” the report said.

USD officials eventually let these employees enter their timesheets into the automated system themselves, rather than use a time clock that tracked exactly how long a faculty member worked.

Kronos’ payroll automation solutions reportedly are used by more than 600 colleges, universities, and K-12 school districts, as well as thousands of businesses around the world. They consist of software tools that allow administrators to track, plan, and manage their employees’ time, and consistently apply various rules—as well as a variety of technologies for collecting accurate data on the number of hours employees work, such as badges, biometric terminals, and telephone and handheld devices.

The information from these technologies is fed into the Kronos software automatically, so administrators don’t have to key it in by hand.

The company recently released a new version of its workforce-management software that can manage remote employees as easily as those who work on campus.

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