On Tuesday, in a rare instance of communal accord, the Humboldt County Board of Supervisors voted unanimously to support a proposal backed by both County Administrative Officer Elishia Hayes and Auditor-Controller Karen Paz Dominguez — namely, to keep payroll management duties under the A-C’s office through the end of the current fiscal year (June 30).

In the same motion, the board voted (unanimously) to hire outside accounting firm CliftonLarsonAllen (CLA), to the tune of $279,000, to conduct a payroll audit. According to Hayes, the firm will take a “holistic view” of the county’s payroll operations in an effort to find sources of recurring errors and identify measures to fix them.

If you’re just tuning in, the county’s payroll function has been a source of problems and controversy for years now. In late 2018, shortly before Paz Dominguez assumed office, the county moved payroll out of her office and over to the Human Resources Department. Problems ensued, and in 2020 the board briefly outsourced payroll responsibilities to private firm Automatic Data Processing (ADP), only to find — after paying the firm $146,000 — that the company couldn’t get its systems to work with the county’s systems.

Since then, payroll duties have been shifted back to Human Resources, and finally, last August, returned to the Auditor-Controller’s Office, despite objections from a number of county employees. 

Snafus have persisted, despite assistance from outside firm KOA Hills, and when the board last considered this matter, on March 2, the meeting proved acrimonious — another flashpoint in the ongoing conflagration between Paz Dominguez and other county personnel, including supervisors and department heads.

The board failed to reach a decision at that meeting over whether to leave payroll duties in the A-C’s office, move them over to the CAO’s Office or do something else altogether. Instead, the board continued the matter and directed Hayes and Paz Dominguez to work together, along with Human Resources Director Zachary O’Hanen, in hopes of finding a potential solution. 

On Tuesday, staff presented the board with three options:

1. keep payroll in the A-C’s Office for the foreseeable future and continue working to improve matters
2. move it over to the CAO’s Office, or
3. sit tight, leaving payroll in the A-C’s Office for the next couple of months, at least, before re-evaluating matters in July.

Chief Financial Officer and Assistant CAO Tabitha Miller ran the board through a list of pros and cons for each option, noting that Paz Dominguez didn’t necessarily agree with the lists. Staff’s recommendation, she said, was Option 3. 

Miller also urged the board to direct more resources toward addressing the $28 million in unreconciled transactions from the 2019-20 fiscal year, a looming problem, discussed earlier in the meeting, that’s holding up the county’s submittal of its long-overdue 2019-20 single audit report. 

“We keep talking about how far behind we are in the single audit report and our other reporting requirements and the handicaps and the impacts to the county,” she said. “And I think we’re minimizing the potential damage that’s there to our federal and state funding.” Continued delays could wind up costing the county millions more dollars, she said, and she asked the board to authorize the CAO’s Office and Treasurer-Tax Collector’s Office to work with the Auditor-Controller’s Office to wrap up work on those discrepancies.

“We’re not at a point where it’s rocket science,” Miller said, and she explained that the remaining work is mostly a matter of simple searches and data entry, tasks that staff could handle.

Returning to the matter of payroll, Fifth District Supervisor Steve Madrone thanked Paz Dominguez, Hayes and O’Hanen for working together as requested.

Paz Dominguez delivered a presentation, telling the board that she’d heard them “loud and clear” when they asked for improvements in communication. She recounted the recent efforts of a payroll “think tank” she’d organized, saying personnel from various county departments gathered to address and categorize problems and agree on an objective.

The think tank members plan to keep meeting after each payroll goes out. Paz Dominguez shared a screenshot showing a collection of Post-it-style notes from a recent think tank meeting that had been organized via a proprietary program called Stormboard, saying, “It’s a tangible result from these efforts at communication.”

She also updated the board on changes she has made with payroll duties, including a new organizational system facilitated through another proprietary software product called a Trello Board, which will allow county staff to track each step in the payroll process.

Paz Dominguez then boasted that out of more than 2,500 W-2 tax forms her office issued for the 2021 fiscal year, only 30 had errors requiring correction. This, she said, amounted to an accuracy rate of 99.99 percent.

This led to a brief dispute with First District Supervisor Rex Bohn about the underlying math.

See the video clips below. First, here’s Paz Dominguez’s statement:

A couple minutes later, Bohn challenged her calculations, saying the accuracy rate actually works out to more like 98.8 percent, not 99.99, prompting Paz Dominguez to offer to do the math right there in front of him:

Who’s correct? We’ll let readers do their own calculations.

Madrone later asked if all the W-2 issues have been resolved, and Paz Dominguez replied that all but three have been fixed, with those remaining three referred to the vendor that sells the county’s financial software.

“That’s great progress,” Madrone said. He then asked, skeptically, who exactly is included in the “staff” that was recommending Option 3. He sounded delighted when Hayes told him that she and Paz Dominguez had discussed the matter and were in agreement on the recommendation, as was O’Hanen.

“Sounds to me like Door No. 3 has all kinds of prizes behind it, so I’m looking forward to that one,” Madrone said.

Third District Supervisor Mike Wilson made a motion to accept the staff recommendation for Option 3, agree to a $279,000 contract with CLA for a payroll audit and authorize the County Administrative Office and the Treasurer-Tax Collector’s Office to work with the Auditor-Controller’s Office on resolving the $28 million-worth of unreconciled transactions. 

The vote was 5-0 in favor.