Pittsburgh set to produce paychecks in-house

Bob Bauder
| Tuesday, Jan. 5, 2016, 11:35 p.m.

Pittsburgh on Friday will distribute employee paychecks produced in-house for the first time since 2002, completing a $2 million project that's been long in the making, fraught with controversy and expected to save at least $500,000 yearly.

If the city government payroll management system lives up to expectations, it will trigger the release of $5.8 million in state gambling tax revenue to Pittsburgh that the Intergovernmental Cooperation Authority, a state-appointed financial oversight board, has withheld pending completion of the project. Authority Chairman Nick Varischetti said in a statement that the authority would release $2.9 million after it verifies the system is running and another $2.9 million if it works properly and meets ICA expectations.

“Since 2006, the ICA has been working to get Pittsburgh to implement a comprehensive financial management system, including a modern payroll module that will decrease the error rate and save taxpayers money,” Varischetti said. “After many false starts and delays, we are pleased that this project appears to be nearing the finish line.”

Mayor Bill Peduto's office, which has engaged in a long-running feud with the ICA and is suing for the release of the city's local share of gambling tax revenues, declined to comment. The two sides dispute the total amount owed. The city contends it will reach $20 million this year if the ICA doesn't release the money.

Pittsburgh has paid Minneapolis-based Ceridian Corp. nearly $8.5 million since 2002 to produce the biweekly payroll.

The city's last payroll disbursement for 2015, on Dec. 24, totaled more than $8 million for 3,134 employees, according to city Controller Michael Lamb's office.

Pittsburgh will continue to pay Ceridian about $150,000 annually to use software in combination with a JD Edwards management system the city and Allegheny County share.

Lamb estimated the city will save at least $500,000 a year by producing its payroll in-house.

“For the first time, we'll be able to do regular pre-audits of the payroll,” he said. “We're not going to audit every employee every two weeks, but we'll do random testing that we think can clean up a lot of mistakes that happen.”

Lamb said the audits will check to ensure employees are being paid for hours worked and that payroll deductions are correct.

City officials said the payroll management system will permit better control of salaries, which make up nearly 40 percent of the city's $518.9 million budget in 2016.

Employees have complained for years about city paycheck errors. Union officials earlier this year said they fielded complaints from hundreds of firefighters and police officers who were shorted. Others were overpaid.

Personnel director Todd Siegel, who headed the payroll project, said testing of the system uncovered some payroll errors. He said the system would reduce the error rate once fully operational.

“We found some things that were incorrect, but it was only a couple of dollars here and there,” Siegel said. “We didn't find any gross overpayments.”

The payroll system has been in the works since 2011 when then-Mayor Luke Ravenstahl agreed to a joint agreement with Allegheny County to share financial management services.

Lamb and Allegheny County Controller Chelsa Wager blamed delays in implementing the system on resistance from Ravenstahl's office and later Peduto's office.

Peduto halted the project after taking office in January 2014, saying it was more than $1 million over budget. He blamed the problems on lack of oversight by the controllers.

The Peduto administration hired Downtown-based computer consulting firm Independent Catalyst for $550,000 to jump-start the project.

“We're very satisfied with the results,” Siegel said. “It's set up for success now.”

Bob Bauder is a Tribune-Review staff writer. Reach him at 412-765-2312 or bbauder@tribweb.com.

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