Direct Deposit Team Final Report

Salaried Employees: 1,564 (17%)
Wage Employees: 4,394 (52%)
UVA Temps: 700 (50%)
Stipend Recipients: 1,258 (74%)
Total Checks per Month 7,916
Total Checks per Year 94,992

• The bank charges 5.77 cents more to process a paper check than to process a direct deposit transaction. As a result, the University spends an additional $4,128 per year to cover the incremental banking costs associated with issuance of paper checks.
• Distribution of payroll is a very labor intensive task. A total of 7.75 FTEs (6 FTEs in academic departments, .25 FTE in the Bursar's Office, and 1.5 FTEs in the Payroll Department) are required University-wide to distribute paper checks and earnings statements to employees and stipend recipients. An estimate of the personnel costs associated with payroll distribution are:

Academic Departments (6 FTEs) $150,000
Bursar's Office (.25 FTE) 6,252
Payroll Department (1.5 FTEs) 37,500
Total Annual Cost $193,752

1. A reduction/elimination of the payroll distribution tasks that are currently the responsibility of departmental personnel.
2. A decrease in banking costs incurred by the University because direct deposit transactions are cheaper to process than paper checks.
3. An increase in central department costs. The Payroll Department will need to hire an additional FTE because of the increased workload resulting from mandatory direct deposit. The estimated annual cost for this FTE is $28,000.

• New salaried employees will sign up for direct deposit during new employee orientation. No exceptions to this direct deposit policy will be made for new salaried employees.
• New wage employees will sign up for direct deposit at the Employment Services Office when they are filling out other required employment paperwork (e.g., tax forms, I-9 form). As is the case with new salaried employees, no exceptions to the direct deposit policy will be made for new wage employees.
• Existing employees (salaried and wage) will be informed of the direct deposit requirement through a letter sent on July 1, 1997. This letter will inform employees of 1) the new policy, 2) the plans to close all departmental distribution points and 3) the consequences of not complying (i.e., that they will have to pick up paychecks at a central distribution point in Carruthers Hall if they do not enroll in direct deposit). Because there are currently more employees receiving paper checks than could be served at the central distribution point, it will be necessary to close the departmental distribution points in three stages. Employees will be separated into three groups based on the vice presidential areas of the University (Office of the Executive Vice President & Chief Financial Officer, Office of the Vice President & Provost for Health Sciences, and Office of the Vice President & Provost). Each group of employees will be given a deadline by which they must sign up for direct deposit. These deadlines correspond to the dates on which certain departmental distribution points will be closed. The suggested deadlines are as follows:

1. It is too labor intensive at both the University and departmental levels.
2. Employees do not always receive earnings statements in a consistent or timely manner.

1. Employees would have to keep a current address on file with the Payroll Department in order to receive their earnings statements.
2. All employees would receive earnings statements via the same delivery mechanism (i.e., it would standardize the system).
3. Personnel in the Payroll Department would no longer have to process the earnings statements. The outside vendor would coordinate the printing, sorting, bundling, and mailing of the earnings statements.
4. It would eliminate the need for departmental personnel to distribute earnings statements. This is essential because of the plans to eliminate departmental distribution points when mandatory direct deposit is implemented.

• New Employees -
• Since January 1995, all new salaried employees have been required to sign up for direct deposit during new employee orientation. The same policy should be instituted for new wage employees. Participation in direct deposit is currently much lower among wage employees than among salaried employees. This difference is due, in part, to the fact that participation is still optional for wage employees. Therefore, the team recommends that all new wage employees be required to sign up for direct deposit.
• Existing Employees -
• A major focus of this proposal is shifting existing salaried and wage employees to a direct deposit system. Currently, 17% of all payments to salaried employees and 52% of all payments to wage employees are made with paper checks. The team recommends that employees who are presently receiving paper checks be required to switch to the direct deposit system.

• 100% participation in direct deposit by salaried and wage employees would represent an annual bank cost savings of $4,128 to the University before implementation of delayed payroll and $4,416 after implementation.
• Electronic direct deposit requires more effort in the University Payroll Department than processing paper checks. Between handling sign up, file maintenance and post payday research and corrections, it is estimated that at least 1 additional FTE would be required (Attachment A). There would, however, be a corresponding decrease across the University of 6 FTEs because departmental employees would no longer be required to hand out paper checks and earnings statements. In essence, this means that those employees responsible for distribution in the departments would now be able to direct their attention to other duties.

• New Employees -
• The team does not anticipate that sign-up of new employees will be problematic. It will be explained to new employees that sign-up for direct deposit is a condition of employment and that paychecks will not be distributed by any other mechanism. It is this team’s recommendation that no exceptions be made for new employees.
• Existing Employees -
• It is inevitable that some employees will object to signing up for direct deposit. There are a couple of reasons for this resistance: 1) some employees do not have and/or do not want a bank account; and 2) some employees are hesitant to give the University access to their bank accounts. To address the second concern, the team has decided to rewrite a portion of the direct deposit sign-up form (see Attachment B). This rewrite will further clarify the situations in which the University would be permitted to make adjustments to an employee's bank account. It is anticipated that even after the rewrite, however, there will still be some employees who refuse to sign up for direct deposit. It should be noted that while all salaried and wage employees (except UVA Temps) will be expected to participate in direct deposit as a condition of employment, this team does not advocate firing individuals who refuse to participate. Based on the analysis of this team, however, it is clear that the University cannot continue to provide the same level of service to these employees who will not sign up for direct deposit. As noted throughout this document, distribution of paper checks has become a very burdensome task throughout the University, especially at the departmental level. Therefore, the team recommends the elimination of all departmental distribution points and the establishment of a central distribution point (the Bursar’s Office in Carruthers Hall) where employees will have to pick up their paychecks if they do not sign up for direct deposit. At the present time, however, there are more employees receiving paper checks than could possibly be served at a central distribution point. As a result, it will be necessary to close the departmental distribution points in stages. The process by which these departmental distribution points will be closed is explained in the Implementation section of this proposal.

• Payroll Payments to UVA Temps. UVA Temps should be excluded from the direct deposit mandate. There is a very high turnover in this work pool. In fact, it is not uncommon for some temporary employees to work for only one day. Based on this information, team members have concluded that it is not worthwhile to insist on direct deposit for temporary employees. Of course, all UVA Temps will continue to have the option of selecting direct deposit. Temps who choose to receive paper checks will continue to pick them up at the Employment Services Office in the Michie Building between the hours of 8 a.m. and 5 p.m., Monday through Friday.
• Stipend Payments. The team believes that stipend recipients may have significantly different banking needs and habits from those of employees and that further examination is necessary before a recommendation of mandatory direct deposit can be made for them.
• Special Payments. There will be times when issuance of a paper check is unavoidable. For example, a new employee’s first payroll payment is often a paper check. Another instance in which a manual check may have to be issued is if an employee changes the account to which direct deposits are made. There may not be sufficient time to update the direct deposit system before payday. In this case, payroll would have to manually produce a check to pay the employee on time. Manual checks issued under such special circumstances would have to be picked up by the employee at the Bursar’s Office in Carruthers Hall between the hours of 8 a.m. and 5 p.m., Monday through Friday.

• New Employees -
• As noted previously, it is currently a condition of employment that all new salaried employees (faculty and classified staff) sign up for direct deposit. This condition of employment will need to be extended to include all wage employees, with the exception of UVA Temps. Sign up for new salaried employees should continue to be coordinated during new employee orientation. Direct deposit sign up for new wage employees will be conducted in the Employment Services Office when the employee fills out other required employment paperwork (i.e. tax forms, I-9 form). Sign up for student wage employees will be handled at the departmental level.
• Existing Employees -
• On approximately July 1, 1997, a packet will be sent to all salaried (faculty and classified staff) and wage employees who are not signed up for direct deposit of their paychecks. This packet will contain 1) a letter announcing the new direct deposit requirement, 2) a fact sheet outlining the benefits of direct deposit (Attachment C), and 3) a direct deposit sign-up sheet. The letter will fully explain the new policy and the manner in which it will be implemented. Existing employees will be separated into three groups which are based on the three vice presidential areas of the University (Office of the Executive Vice President & Chief Financial Officer, Office of the Vice President & Provost for Health Sciences, and Office of the Vice President & Provost). Each group of employees will be given a deadline by which they must sign up for direct deposit. These deadlines correspond to the dates on which certain departmental distribution points will be closed. Employees who do not sign up for direct deposit by their respective deadlines will have to go to the central distribution point to pick up future paychecks. The recommended deadlines for the employee groups are as follows: