Spotlight on $avings

Payroll Outsourcing vs. In-house Processing: Which Method Makes the Most Sense?

- Charles H. McCann Technical School, North Adams, MA

Every local government and school administration asks this question at some point in time. Certainly outsourcing has its appeal: somebody else prints, folds and stuffs the checks. Of course, not having to generate and distribute W-2s is another big perk. 

But what do you give up in exchange?

Charles H. McCann Technical School considered this question, and the answer was surprising. In-house payroll was, by far, the way to go! 

Here is their story.

McCann Technical School is a regional school that provides vocational and technical education to high school and post-secondary students in Northern Berkshire County, Massachusetts. With a reputation for progressive thinking, McCann Tech constantly looks for efficiency and improvements to their programs and administration. In 2008, mounting budget and staffing challenges led McCann Tech to outsource their payroll to a third party vendor.

The results were not exactly what they had hoped for. According to Superintendent Jim Brosnan, "We took a hard look at our workflow after we outsourced our payroll. What we found was that any labor savings from outsourcing were far outweighed by additional and redundant data entry efforts that were required to keep our budget and human resource systems up-to-date."

Payroll suddenly became more burdensome.  Each pay cycle, the business staff, including Treasurer Maureen Senecal and Accountant Paula O'Neil, found that the process was not yet complete just because checks were distributed.  As Maureen Senecal puts it,  "After each payroll, we now had to manage our contract balances, encumbrances, and general ledger activity. To keep up with this, we actually had to keep duplicate, shadow systems to track the data. Redundant efforts amounted to an additional 3 to 5 hours of extra work each pay cycle." 

When the business case analysis was complete, the decision to implement BudgetSense Payroll was clear. 

Elimination of duplicated labor and benefits, as well as discontinued outsourcing fees equates to savings of $13,500 to $15,500 annually.

The benefits were immediately apparent. "When we finish the last step of payroll in BudgetSense, we are done. There is no more manual re-entry, or posting of general ledger transactions. This saves us a lot of headaches, and helps us manage our salary contracts easily," according to Senecal. What's more, automated e-mail distribution of direct deposit checks has been a home run. 100% of McCann Tech employees, (even substitutes and coaches) receive their payroll direct deposit notices via e-mail, saving the school time, money and a few trees in the process.

Congratulations, McCann Tech, for a job well done!

Have you noticed significant savings that you would like to share in the $avings Spotlight? To share your story with the rest of the UniFund client community, contact us at $avings@unifundonline.com, so we can add your experiences to a future edition of uniNews.