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Humboldt County Auditor-Controller Karen Paz Dominguez has been sounding alarms and pointing fingers since before she was elected to the department’s top job nearly two years ago, and it looks like we can expect more conflict during Tuesday’s Board of Supervisors meeting.

At issue is the county’s ongoing efforts to outsource payroll services to an independent company called ADP. While this may sound mundane or even boring to most of us, it has proved to be yet another flashpoint in the ongoing power struggle between Paz Dominguez and various other county departments and employees — particularly Chief Administrative Officer Amy Nilsen.

The agenda for Tuesday’s meeting was released Friday afternoon, and it includes an item from the Human Resources Department regarding the “ADP Project.” The staff report, which you can read here, includes an uncommonly lengthy narrative that recounts the county’s efforts over the past year to choose a payroll vendor and implement the necessary software. 

The narrative portrays Paz Dominguez as a reluctant — if not unwilling — collaborator, saying she “began to withdraw from the process” after ADP was selected as the vendor in March. It also accuses her of repeatedly failing to complete a document the company needs in order to move forward.

The staff report recommends that the Board of Supervisors “direct” Paz Dominguez to complete that document and also “direct” her to “participate in [the] ADP implementation process in good faith.”

Reached by phone on Friday, Paz Dominguez vehemently disputed the narrative in the county staff report (more on that below) and said it would be “unethical” for the Board of Supervisors to direct her to do anything since she’s an independently elected official with fiscal oversight responsibilities. “They don’t have the authority,” she said.

Paz Dominguez believes that payroll duties should never have been taken out of her office’s control and transferred to the Human Resources Department, a decision that the Board of Supervisors made in November 2018. In fact, she believes that county staffers conspired to take that responsibility away while she was on maternity leave so that she couldn’t make a fuss.

Supervisors and staff have said they made the move at the suggestion of an outside consulting firm, CPS HR Consulting, which issued a report on the Auditor-Controller’s Office in the fall of 2018. 

But Paz Dominguez viewed it as a power grab. On Friday she said that rather than outsourcing payroll, the county should return that responsibility to her department and invest in more robust training for members of payroll staff.

She recalled paycheck mistakes that resulted in fines from the California Public Employees Retirement System (CalPERS) earlier this year along with older snafus from the payroll division, such as the accidental issuance of incomplete W2 tax forms in 2018, under former Auditor-Controller Joe Mellett. 

In short, she described the payroll division as a mess but said outsourcing that work isn’t the answer. She believes it would be a waste of taxpayer money.

ADP’s payroll and time management services are expected to cost the county roughly $359,000 per year, plus a one-time implementation cost of $146,000. The staff report for Tuesday’s meeting says hiring ADP will also result in savings from both payroll personnel and IT hosting services.

At any rate, on Sunday Paz Dominguez issued an incendiary press release in which she accuses County Administrative Officer Amy Nilsen of starving her department of resources via “myopia and control over the budget process.” Paz Dominguez describes her own office as overworked and understaffed. She says other county administrators are asking her to abandon her official duties in order to “clean up their mess” in the payroll division. And she alleges that county government has a “culture” defined by taking shortcuts at the expense of the public’s interest.

We’ve written to the CAO’s office, the HR Department and all five county supervisors asking for a response to the accusations in this press release but have yet to hear back. We’ll update you when and if we get responses, though the matter may just play out during Tuesday’s meeting. 

Here’s the press release from Paz Dominguez:

Dear Taxpayers of Humboldt County,

On Tuesday, September 29th, the Board of Supervisors will hear a staff recommendation that they should direct the Auditor-Controller to assist with a project to outsource the payroll function from its in-house financial software to ADP, a policy which the Auditor-Controller has previously warned against.

Apparently, the County Administrative Officer, the Acting County Counsel, the Human Resources director, and the Treasurer Tax Collector will request that the Board instruct the Auditor-Controller to abandon the property duties of the A-C department and instead work for them to finish an implementation that they began, but are unable to complete themselves.

They have already spent hundreds of thousands on the project with hundreds of thousands more needed every year going forward and are hoping that the Auditor-Controller can clean up their mess. And it does not appear that these administrators intend to request the allocation of resources to make this task possible while performing the State Constitutional duties of the Auditor-Controller.

It is going to put the Auditor-Controller in the awkward task of having to refuse the direction of the Board or refuse the direction of the Federal and State mandates that dictate the work of the Auditor-Controller as staffing levels do not allow for the performance of both.

This agenda item is not scheduled for a time certain, thus making it a challenge for members of the public to plan and coordinate their day to ensure they can participate in this discussion when the Board gets around to discussing it. It is possible that this item will be passed without public participation and this office is not satisfied that the financial information or timeline of events which the Administrative Office is presenting is accurate.

Acting County Counsel has expressed the position that this office has no right or place to even comment on the policy decisions or whether they are financially appropriate. This office is also greatly concerned about the systems of payment which involve cash, outside bank accounts, unsubstantiated indirect charges, ACH withdrawals, and credit cards which make tracking and regulation of the payments being made on behalf of the county impossible.The checks and balances are not in place and the County is in serious jeopardy of financial difficulty.

To the degree that this office is intended to serve as a gatekeeper of the County’s funds, the task is further made difficult by its removal by the County Administrator from the agenda item routing process for items for which this office is obligated to address.

This County’s rank and file staff are under severe difficulty. Invoices from local vendors are disappearing on the desks of stressed and overworked fiscal staff across all departments. The Auditor-Controller often receives invoices months past their due dates yet is expected to accept full responsibility for their delay.

Auditor-Controller staff are working overtime every day, weekends included, to help departments catch up on paying their invoices or to help taxpayers get their refunds after their property values were determined to be mis-assessed at the expense of the performance of their regulatory duties. Every last-minute emergency takes away from the regular work that needs to be completed and there are multiple last-minute emergencies every single day.

This office does not have an executive secretary or public information officers or teams of administrative staff like other departments have. The Auditor-Controller must spend extensive time with the A-C team reviewing invoices with them, troubleshooting system issues with them, reading up on government codes with them, and processing transactions with them. Time is especially precious under the pandemic.

The Auditor-Controller serves 17 different functions across the entire County with a staff of 11 people. The department has been inadequately funded and inadequately staffed for decades due to the County Administrative Officer’s myopia and control over the budget process. Departments are divided into silos where they must compete for scraps of made-up money in the budget. If they can “get along” with the Administrative Office, then they can get their charges waived or additional funding for more staff. If they don’t “get along”, then they can expect to be overcharged and disregarded.

This office has ongoing difficulties with what it believes to be an entrenched “culture” within the County Government which is not acting in the best interests of the public, but instead looking for shortcuts to make its own tasks easier, and now they are looking to have the Board thrust a project onto this office that this office discouraged, a project which is clearly outside of the duties of this office, without providing the needed resources.

They have already hired 4 outside consultants and 1 project manager to work the project, but apparently, they need this office to complete for a second time a mapping document to translate the general ledger information to a language that ADP understands and then further assist with whatever tasks arise in order to complete the project and then maintain it for years to come.

I am sorry if the County Administrator and other appointed heads do not see me as a “team player” in this matter. I was elected to serve a particular function and I intend to see that through until voters decide that I am not acting in their best interest.

As it is difficult to include all of the complexities in a press statement, I will make myself available for an interview should any member of the media take interest in this matter.

Sincerely and respectfully,

Your Auditor-Controller,

Karen Paz Domínguez
kpazdominguez@co.humboldt.ca.us

1st District Supervisor, Rex Bohn: rbohn@co.humboldt.ca.us
2nd District Supervisor, Estelle Fennell: efennell@co.humboldt.ca.us
3rd District Supervisor, Mike Wilson: mike.wilson@co.humboldt.ca.us
4th District Supervisor, Virginia Bass: vbass@co.humboldt.ca.us
5th District Supervisor, Steve Madrone: smadrone@co.humboldt.ca.us

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UPDATE: After this post was published, Chief Administrative Officer Amy Nilsen provided this response:

As the Auditor stated, county departments all over are understaffed and underfunded. The state and federal governments continue to heap mandates on counties without sufficient funding to support service delivery. We are constantly in a state of needing to find new ways to do more with less.

Automating parts of our payroll services will allow us to streamline critical activities, while ensuring everything has an audit trail and appropriate internal controls.

Our payroll staff is small and serves more than 2,300 employees. Using a mostly manual process, they need to interpret a half-dozen unique and complex MOUs and apply each of their various conditions, deductions and allowances every two weeks in order to make sure our hard-working employees receive their paychecks. It is a difficult, stressful job, and we are appreciative of the work they do each pay period.

However, we are human and mistakes get made. The more we can move away from paper timecards and more towards a shared platform where everyone can see what’s happening when it comes to issuing paychecks, the better for our employees and for taxpayers.

The county’s interest here is simply to ensure that can efficiently pay our employees on time and pay the correct amount.

This item first came before the Board in March, so the timing of the Auditor’s concerns around paying for this service are more than 6 months late. The Auditor was very engaged in the process of evaluating payroll vendors. The process is nearly complete – we just need to make sure that when we hit “submit” on employees’ timecards in the new system that all the charges go to the appropriate places. Only the Auditor holds the information to make that work.