As resources dry up, more schools turn to outsourced payroll
PreK-12 school districts currently face shaky federal funding and a climate of uncertainty. And leaders are increasingly looking for new ways to find efficiencies and operate more effectively with the limited resources available.
That’s why even schools used to doing everything in-house are taking a second look at outsourced payroll. Outsourcing services can offer schools an affordable solution for payroll, along with other human capital management tasks like timekeeping and benefits, that then frees up internal team members to focus on higher-level work.
Keep reading to learn more about why schools benefit from outsourcing payroll and how to get started.
Almost everyone already outsources payroll — except schools
Outsourced payroll is standard operating procedure in most industries. In manufacturing or healthcare, for example, it would be unusual for a business to handle payroll in-house.
PreK-12 schools and other government organizations are the lone major sector that continues to do payroll internally. Much of this is simply inertia, as public sector institutions are sometimes slower to change than their private sector counterparts, rather than due to any sector-specific benefits that stem from an in-house approach.
But for many schools, continuing with a business-as-usual approach can actually be quite costly.
How does in-house payroll cause problems for schools?
Here are some of the payroll problems schools regularly deal with:
- Cost and workload: Having a full-time payroll person on staff is expensive. As a result, schools are either paying out a significant amount of money for salary and benefits or assigning payroll duties to someone with a broader range of responsibilities who then ends up overburdened. Plus, whoever does payroll will rarely get to take time off, as you can’t just skip payroll for a week.
- Trouble navigating rules for multiple states: Just because your school district only serves students in one state doesn’t mean all your employees live in-state. Every state has its own pay and labor regulations (as do the federal government and unions) — and all of those regulations change over time. So, depending on where your employees live, your payroll person has to navigate a complex web of evolving rules that can be too much for any one person to keep up with.
- Penalties for mistakes: Payroll involves so many complicated nuances. Let’s say your school overpays an employee who lives one county over in another state. Are you allowed to take the overpayment back? To arrive at an answer, you have to know the rules for multiple states plus any other relevant laws or regulations — and you risk violating labor law if a mistake is made or a statute is misinterpreted.
- Outdated technology and software: Schools handling payroll in-house often do so using legacy systems that are outdated and less efficient than more modern alternatives. This can be a significant time sink that also leaves schools reliant on expensive, aging tools.
- Loss of team members and experience: In many cases, internal payroll employees are approaching retirement age. And there is little appetite among younger generations to step into this work, in part because it’s so demanding. This means that schools will struggle to replace both payroll knowledge and the actual workers who implement it.
Why should schools start outsourcing payroll?
Outsourcing payroll offers significant upside for schools. Typically, outsourced payroll offers ROI through savings and more efficient use of existing resources. Schools also benefit from broader human capital management support and gain access to the institutional knowledge of their outsourcing provider.
1. Outsourced payroll offers ROI
Contracting your payroll needs to an outsourcing service will typically allow you to get better results for less money. Not only will outsourcing usually cost less money, but you’ll also be less likely to face payroll mistakes that lead to financial consequences.
2. Doubles as an outsourced human capital management solution
Outsourcing payroll often means also means gaining access to a cloud-based human capital management solution that handles timekeeping and benefits. This is essentially outsourcing the most burdensome aspects of HR work so that your internal team can shift to a more human focus.
3. Deep institutional knowledge
Outsourced payroll providers come with deep institutional knowledge beyond what an in-house person can offer. This doesn’t just help you avoid problems while navigating thorny payroll issues, it also protects you against losing payroll know-how to retirement.
4. Full support team
Payroll is a rough business because it’s really hard to take time off. Outsourcing your payroll means no one on your team has to worry about that. You’re also better protected against turnover or change of any kind, as you have an entire outsourced team available to work on your account if needed.
How should schools start outsourcing payroll?
To start outsourcing payroll for your school or district, begin by researching outsourced payroll providers who specialize in working with schools and educational institutions. Meet with a handful that look like a good fit to discuss your needs and learn more about the solutions they provide.
Depending on your circumstances, implementing outsourced payroll can take as little as a month after you begin working with a provider. A districtwide implementation or one that involves a full human capital management solution may take longer, but this rollout often happens in phases, so you can get payroll up quickly and then add in timekeeping and benefits over a period of several months.
How Wipfli can help
We help preK-12 schools overcome organizational challenges and navigate change. Let’s talk about your needs and whether solutions like outsourcing can deliver better, more cost-effective results. Start a conversation.
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