The Department of Veterans Affairs has centralized its payroll system for all employees. 

As of June 1, the VA is processing payroll for all 430,000 of its employees across its facilities through its Financial Services Center (FSC), according to a Tuesday release. The consolidation — which the VA said is set to save or avoid the agency from spending over $24 million annually — had an expected completion date of 2027, but the department finished 15 months early. 

The VA said it didn’t lay off or remove any employees as part of this change. A now-scrapped plan for workforce reduction at the VA had proposed cutting as many as 3,000 HR and finance positions and about 83,000 staff agencywide. That plan also included goals of streamlining human resources offices, among other efforts to eliminate “duplicative programs.”

It now takes about 600 employees to manage the centralized FSC system, VA said, and employees who are no longer needed for payroll processing are now working in other mission areas. 

The FSC was already managing payroll for employees in the Veterans Benefits Administration and National Cemetery Administration. But the majority of VA facilities relied on disparate payroll systems. The VA said that while the FSC has been capable of handling payroll across all facilities, duplication remained, costing taxpayers “millions of dollars a year to maintain.”

The VA said before its recent switch, 114 of its facilities were using different payroll systems. 

VA Secretary Doug Collins said in the release that this change reduces bureaucracy and prioritizes putting veterans first. 

“Consolidating payroll support for all medical centers to one payroll office is a commonsense reform that will let us focus on our real mission, which is serving Veterans, families, caregivers and survivors,” he said. 

The switch comes amid other efforts to increase efficiency at the VA and for other federal employees. In April, the VA resumed the rollout of its new, multi-billion-dollar Electronic Health Record (EHR) after a three-year long pause due to persistent technical issues. The new EHR is up and running at 10 sites as of last month. 

The Office of Personnel Management also recently made a significant step toward centralizing HR services. Earlier in June, OPM awarded Oracle a nearly $400 million contract for HR IT modernization. Oracle is set to deliver a governmentwide IT platform that will manage HR capabilities including payroll, benefits and employee performance. 

Currently, agencies governmentwide are using 119 individual IT systems to manage HR functions.

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