Image: The HMS Titanic struck an iceberg on April 14, 1912, and sank. It was one of the worst maritime disasters in history. The Montgomery County government payroll department is one of the worst government spending disasters in history.
Conroe, August 19 – On Thursday, August 17, 2017, late night comedian Stephen Colbert made the comment that giving certain awards or recognition would be the equivalent of giving an award to the iceberg involved in the 1912 Titanic disaster.
Well, guess what? Montgomery County Judge Craig Doyal, with raw nepotism as his driving force, has authored a resolution to recognize “the efforts of the people who work in Montgomery County and of the payroll profession” and, with his massive ego as his driver, seeks to have the County government declare “the first full week of September 2017 as National Payroll Week in Montgomery County, Texas.”
Let’s be clear. It’s nice to recognize the private payroll profession. They work hard and provide important services to permit private business organizations to do what they hope to do: earn profits.
Nevertheless, Doyal’s crazy “proclamation” has two major problems with it. While it’s entirely appropriate to recognize the private payroll profession, recognizing the Montgomery County government’s payroll division is like recognizing the iceberg that sunk the Titanic.
Montgomery County’s payroll function is an epicenter of nepotism and self-dealing
First, Doyal’s daughter is the payroll coordinator for the County Treasurer’s Department. The County Treasurer is the embattled Stephanne Davenport. Davenport doesn’t just “house the County Judge’s daughter” in her Department.
Davenport hired Doyal’s daughter back into the Treasurer Department and gave her a substantial promotion in 2014. The payroll functions within the Treasurer’s Department have been a mess ever since.
Not only do Davenport and daughter-Doyal run the payroll poorly but they do so in a manner that causes great expense and delay to any County Department that must drive back and forth to Conroe to deliver payroll information and pick up paychecks and pay stubs. The privacy of employee information has not received appropriate protection under Davenport, because she shares that information with her husband, who then publishes it on social media for the world to see.
On September 16, 2016, Davenport submitted Position Description forms to the Montgomery County Human Resources Department in which Davenport sought – secretly – to promote Doyal’s daughter to the position of “Assistant County Treasurer.” County HR Director Dodi Shaw and Assistant Director Kathy Flowers caught the obvious nepotism, challenged Davenport’s and daughter-Doyal’s improper attempt, and suffered substantial political heat from Doyal and his “chief of staff” jim fredricks as a result.
The controversy culminated in the March 14, 2017, Commissioners Court meeting where Davenport revealed her hatefulness and lack of payroll professionalism when she openly attacked the integrity of Shaw and Flowers in open court for the world to see, with Doyal and Precinct 2 County Commissioner Charlie Riley not only condoning Davenport’s and daughter-Doyal’s terrible conduct but actually egging them forward.
Conflict of interest
Since Doyal’s daughter is the person whose back he is patting, it would seem rather inappropriate for Doyal to place this proposed proclamation on the agenda. It’s a conflict of interest and nepotism, if nothing else. Hopefully, Doyal will get one of his cronies on the Commissioners Court – Riley, or the Precinct 1 or Precinct 3 Commissioners – to make the motion for the proclamation.
The Montgomery County government’s payroll function is an expensive, poorly-run mess
Embattled Montgomery County Treasurer Stephanne Davenport attempted to fool the public into believing the financial economy of her payroll operation during her presentation to the Commissioners Court on Wednesday, July 26, 2017. The only person who appeared impressed was County Judge Craig Doyal, whose daughter is Davenport’s highly-paid Payroll Coordinator.
Davenport’s presentation on the cost of the County payroll accomplished little more than to reveal Davenport’s ignorance of finance. Davenport calculated the cost of payroll to the County as somehow involving only one employee, Doyal’s daughter, whom Davenport apparently thinks accomplishes the payroll tasks entirely by herself.
Even the Houston Chronicle wrote “When done completely in house, the average cost to issue a payroll check can be determined by identifying the man hours employees expend to prepare payroll. This process may include obtaining salary forms or time cards from employees, entering that data into the company’s computer system and issuing checks.” It’s not a particularly sophisticated aspect of financial management.
Davenport, who refused to provide a copy of her budget presentation to this newspaper, calculated the cost of payroll as follows:
Doyal’s daughter’s salary $60,983.52 + taxes and benefits of $12,354.92 = $73,338.44
2,562 County employees x 26 payroll periods = 66,612 County paychecks processed per year.
Doyal’s daughter’s compensation ($73,338.44) divided by number of paychecks (66,612) = $1.10 per paycheck.
The real calculation of the cost of payroll
Davenport, who has no formal education beyond high school and came into the County government as an administrative assistant without a credible finance background, left some rather major items out of the proper calculation of the cost of paychecks for Montgomery County.
In order to understand how the County payroll works, here’s the process.
Individual departments keep time of hourly employees through time cards, even though that methodology is quite antiquated. County Departments must input their payroll information by Monday at 10 a.m. for an upcoming bi-weekly payroll on Friday. Each County Department must input two copies of their payroll information. At 10 a.m. on Monday, such as today, July 31, 2017, the County Departments are then locked out of the County’s payroll computer system. Before Tuesday afternoon, the County Auditor’s Office review the payroll inputs and must approve them. Late on Tuesday afternoon, the Treasurer’s Office prints the payroll checks or the documents showing direct debits. On Wednesday, the Treasurer’s Office sorts the payroll checks and related documents by Department. On Friday, sixty-six (66) County employees, one from each County Department, must come to the County Treasurer’s Office to pick up the payroll checks or documents evidencing direct deposits. Incredibly, for example, an employee must drive from New Caney or from Conroe to pick up the Department’s payroll checks for her or his Department, because Davenport has failed to put the payroll function onto an electronic system for processing payroll.
Therefore, according to eight (8) County employees who spoke to The Golden Hammer about the process, the real expense for the County Treasurer and the entire County for processing payroll is the following:
Payroll Coordinator Salary Plus Benefits = $73,338.44.
1/2 Payroll Assistant Salary = $72,586.80 ($51,718.42 salary + $20,868.38 benefits) x 0.5 = $36,293.40.
1/4 County Treasurer Salary + Benefits = $190,570 ($135,782 salary + 54,788 benefits) x 0.25 = $47,643.
Estimated expense for County Auditor Review, multiple employees = $110,000.00 per year.
Additionally, 66 employees (1 from each County Department), averaging $55,000 per year, spends 8 hours every two weeks inputting the payroll information, driving to Conroe to pick up the payroll checks and deposit verification, and driving back to the office. 66 x $55,000 x 0.1 (8 out of 80 hours) = $363,000 per year.
Total Actual Payroll Expense for Montgomery County government = $630,219.84.
There are 2,562 checks for 26 payroll periods per year = 2,562 x 26 = 66,612 checks per year.
Payroll expense per check = $630,219.84/66,612 = $9.46 per check.
Now, there are two cost inputs in the process not included. First, the employee inputs his or her time, by timecard or electronic entry. Second, hopefully, there is some administrator or department head to reviews the input of time both before the data submittal to the County Treasurer and after the checks come back to the department for distribution. For shorthand purposes, let’s refer to these costs as “Fixed Cost Inputs.”
The Citizens Budget Committee recommended that the County government utilize the services of an outside payroll service such as ADP for the entire payroll. The Fixed Cost Inputs will remain. Nevertheless, all of the other cost inputs will disappear.
Entrepreneur magazine did a survey of payroll services in 2016 and found that the average cost per check for companies, such as ADP, which do the payroll for companies and governmental institutions is $1.40 per check nationwide. The cost of those services in Texas is probably slightly lower than the nationwide average. The payroll services establish an electronic input system, take the payroll information, calculate all of the correct checks and accrued benefits, and prepare the associated payroll tax returns for federal and state reporting purposes. They also issue the checks or the direct deposits, which is the system that many government institutions and private companies mandate for payroll.
How does Montgomery County compare?
Clearly, the payroll system under Davenport is far more expensive than an outside payroll company.
Fundamentally, though, here’s the problem: with County Judge Craig Doyal’s daughter as the first employee who would lose her lucrative County job, it’s quite unlikely that Doyal or Davenport will seek a far more efficient outside payroll service to replace the antiquated County system in the near future.
The nepotism and Davenport’s poor financial management continues to cost Montgomery County taxpayers over $536,892.72 per year just in payroll processing expense alone over and above what the cost would be if the County went to an outside payroll service.
$536,892.72 is a real and direct cost per year of Doyal’s and Davenport’s nepotism and mismanagement.