ITEM 3.4 Payroll Service ContractOt�ezoF
MINNESOTA
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT:
Administration
REQUESTOR:
Adam Flaherty, Finance Director
MEETING DATE:
November 9, 2015
PRESENTER(s):
Consent Agenda
REVIEWED BY:
City Administrator Johnson
ITEM #:
3.4 Payroll Service Contract
AGENDA ITEM DETAILS
RECOMMENDATION:
It is recommended by staff that the City Council adopt a motion authorizing the Finance Director to sign
a contract with Paychex for professional payroll services.
ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED?
Yes I No
BACKGROUND/JUSTIFICATION:
The City currently outsources its professional payroll services to Automated Data Processing (ADP). Early
in 2015, ADP forced the City to use a new program called Resource as they no longer supported the
system the City had been using. This forced conversion drastically increased the costs to the City from an
average of $4,300 per year (2013 & 2014) to a September YTD amount of $13,600 in 2015.
On top of the increased costs from ADP, City staff does not feel that the services provided by ADP are
adequate. Some of the issues include, but are not limited to: inaccurate direct deposits; pay stubs that
do not report PTO accruals; W2 and pay stubs that do not provide accurate descriptions of withholding
items; customer service that is not reachable by staff.
City staff has met with, and viewed demonstrations from two other professional payroll service
providers, which are Paychex and Ceridian. After the demonstrations, the staff involved agreed that
Paychex was the consensus choice for the City. The service that Paychex offers is much more user
friendly both to staff entering their time as well as staff processing the payrolls through the system.
Another benefit to switching providers is that the cost is much less. There is an expected
implementation cost of $1,100. The all-inclusive processing costs for the first year are expected to be
$5,100 with annual costs after the first year expected to be $6,200.
The Finance Director feels that outsourcing these services is still the best option for the City. A quote
obtained from our Financial Software company shows that there would be an upfront investment of
$27,600 with annual support costs being an additional $3,500 over our current software package.
SUPPORTING DOCUMENTS: ATTACHED NONE
POSSIBLE MOTION
Please word motion as you would like it to appear in the minutes.
-Motion authorizing the Finance Director to sign a contract with Paychex for professional payroll
services and to notify ADP in writing that the City will be terminating services in conjunction with the
Paychex implementation.
BUDGET INFORMATION
FUNDING:
These professional payroll service fees are paid
from the Finance Department budget.
ACTION TAKEN
BUDGETED:
Yes —These fees are budgeted for both 2015 and
2016 within account 101-41600-390.
❑ APPROVED AS REQUESTED ❑ DENIED o TABLED o OTHER (List changes)
COMMENTS: