Stockton city officials are ramping up efforts to stabilize payroll operations and improve internal controls after a series of delays, system errors, and missed tax deadlines.
In a detailed update presented at the recent Stockton City Council Audit Committee meeting, Deputy Human Resources Director Maya Reft said that while historical issues linger, corrective actions are underway.
“All reported payroll issues have been identified and corrected,” Reft told the committee. “No major errors have been reported.”
One of the most significant developments was the committee’s direction to launch a forensic payroll audit within 30 days. Though the contract has been executed and a kickoff meeting held, Deputy City Manager Chad Reed acknowledged delays. “We haven’t received the project schedule yet,” Reed said. “That audit is going to get started, we’re just waiting on the measurable dates.”
Vice Mayor Jason Lee pressed the urgency, “We should probably have that started within the next 30 days. We currently don’t have a city auditor, and we need to engage in the work.”
Among the issues highlighted was a late submission of 2024 quarter four unemployment taxes, which resulted in penalties. Reft explained the delay occurred before payroll transitioned to Human Resources. “We had to go back, calculate and submit the payment and reporting,” she said.
Committee members expressed concern over recurring issues. “It’s just concerning when we get fees and penalties for something that we should be doing on a regular basis,” said Councilmember Michelle Padilla. Reft assured the committee that new monthly and quarterly payroll calendars are being implemented to prevent further errors.
Efforts to modernize payroll systems are progressing. Since January 2023, payroll had not been posted directly to the general ledger using the Munis system. Instead, it was manually imported from spreadsheets. That changed as of July 24, with 12 biweekly payrolls now successfully posted through Munis. “That’s a big win for us,” Reft said. “The team will correct errors in real time and post to the ledger within the same week.”
The transition to biweekly pay periods also complicated implementation of cost-of-living adjustments (COLAs), Reft added. “This was the first COLA during a biweekly pay period, so the team had to test how to apply split rates,” she said, noting some manual entries were required.
Additionally, the city is working to reduce CalPERS reporting errors, down from 320 to 134. “We still have a lot of things to do on our checklist,” Reft said, outlining plans for updated training manuals, SOPs, and an annual task calendar.
Reed also provided a broader status report on the Administrative Services Department (ASD), which has faced staffing gaps and relocation challenges. Consultants from Ryland and Robert Half have stepped in, and the ASD team has now consolidated at the new City Hall facility.
Progress is being made on the overdue Annual Comprehensive Financial Report (ACFR) for fiscal year 2023–24, with external auditors scheduled for on-site meetings August 6–7. Reed said the goal is to present a completed report to the council by September 9.
Recruitment for a new Chief Financial Officer (CFO) is also underway. “That’s a critical position,” said Lee. Reed noted that 17 applicants had applied as of last week, with four appearing qualified. “We’ll have a hiring committee for first-round interviews and aim to fill the role by mid-October.”
Future recruitments for budget and procurement managers are also in development, with brochures expected soon. Reed said the incoming CFO may help select an Assistant CFO, suggesting internal candidates may be considered.
Councilmember Padilla inquired about the auditor’s role in the ACFR, asking whether delays could result in penalties. Reed replied, “We’re overdue, but I don’t believe there are financial penalties. It’s about internal checks and the integrity of our financial reporting.”
The committee agreed to request a full update before the City Council on both payroll and administrative services progress, aligning it with the ACFR presentation on September 9. Additionally, they voted to have Moss Adams, the city’s external audit firm, present to the Audit Committee within 60 days to answer lingering questions about past consultant oversight.
During public comment, local resident Mary Elizabeth urged the city to evaluate its heavy reliance on outside consultants. “We need employees who are empowered to become more educated and capable so we can do more in-house,” she said.
Lee agreed, requesting a comprehensive list of all consultants and their roles. “Once you get to a bad place, you don’t use the same actors,” he said. “We need to understand who was involved and how oversight worked, or didn’t.”
The city continues to review internal systems and aims to improve transparency, stabilize leadership, and prevent the procedural lapses that have plagued past operations.