How the City of University Park, Texas Eliminated OBBBA Payroll Risk — in Six Weeks

The enactment of the One Big Beautiful Bill Act (OBBBA, Public Law 119-21) created an above-the-line deduction for qualified overtime compensation. For Tax Year 2026 W-2s, employers must report the FLSA overtime premium portion in Box 12 under Code TT. Most municipal payroll systems were never designed to compute that figure from the FLSA regular rate.

For the City of University Park, Texas, a suburban municipality with an active police and fire workforce, that gap was immediate. Payroll was manually tracking FLSA §207(k) overtime classifications in spreadsheets, with no automated inquiry trail and material IRS information-return exposure at filing season if the Code TT figures were wrong.

In April 2026, the City engaged Phoenician, LLC, a public-sector software firm that builds compliance overlays on top of the systems agencies already run. Phoenician deployed Beacon, its universal FLSA overtime and W-2 compliance overlay, alongside the City's existing New World Systems payroll platform. No system replacement was required. From kickoff to handoff, the project took six weeks. University Park's first production cycle with automated Code TT figures followed.

Results & Impact

Initial Outcomes — First Production Cycle

• Full OBBBA compliance achieved from the first production payroll cycle in May 2026 — W-2 Box 12 Code TT reporting automated across all eligible public safety employees
• Manual spreadsheet calculations completely eliminated; payroll team workflow shifted entirely to exception review
• Immutable, audit-ready compliance record generated per employee per payroll cycle — an IRS or DOL exam now requires a database query, not a months-long reconstruction project
• Procurement completed in under 30 days from initial engagement to signed Statement of Work, via TXShare MSA No. 2025-048
• Six-week deployment, from contract execution in April 2026 to live production in May 2026
• Fixed fee of $46,800 — secured OBBBA compliance through 2028, with no per-seat licensing and no system replacement costs

The Challenge: OBBBA Compliance on a Payroll System Not Built for It

FLSA §207(k) allows public safety agencies to define custom 7-to-28-day work periods for overtime calculation — a flexibility designed for fire and police shift patterns, but one that requires precise, defensible calculation on every pay cycle. The OBBBA layered new complexity on top of this: agencies must now isolate FLSA-qualifying overtime premiums and report them separately in W-2 Box 12 under Code TT, a requirement that standard municipal payroll platforms are not natively designed to handle.

For University Park, the gap between what its payroll system could calculate and what federal law now required was being bridged by manual spreadsheet work. This created three compounding risks:

• Audit exposure: manual calculations cannot produce the immutable, per-employee inquiry trail required to defend a §207(k) position during an IRS or DOL examination
• Liquidated damages liability: FLSA overtime miscalculations can result in liquidated damages equal to the amount of unpaid wages, doubling the financial exposure of any error
• W-2 reporting penalties: incorrect or missing Code TT entries create IRS penalty exposure per W-2 form, compounding with workforce size

Replacing the City's New World Systems payroll platform was not a viable path — a full HRIS replacement would take years and cost multiples of the compliance problem it was solving. The City needed a solution that could sit alongside its existing system and add the compliance layer the legislation required.

The Solution

Beacon is a universal FLSA overtime and W-2 compliance overlay, not a payroll replacement. It runs on top of an agency's existing payroll and timekeeping stack through turnkey API connectors and custom integrations tailored as needed, reading hours and pay codes from the systems the agency already operates. Phoenician’s rules engine classifies overtime under the applicable FLSA regime, computes the regular rate, and produces OBBBA Box 12 Code TT/TP figures from that math.

For University Park, Beacon was deployed on-premises alongside New World Systems. Core capabilities include:

• FLSA overtime classification across regimes: including standard §207(a) and public-safety §207(k) work periods, with overtime hours classified into FLSA-qualifying, CBA-only, and state-mandated buckets, and a complete inquiry trail for every decision
• Regular-rate computation: weighted regular rates that account for shift differentials, longevity pay, hazard pay, out-of-position or acting pay, non-discretionary bonuses, multi-rate work, fluctuating workweek math, employer-generous premiums above the federal floor, and CBA-contracted overtime
• OBBBA W-2 Box 12 Code TT reporting: FLSA-qualifying overtime premiums are isolated and reported accurately on every W-2 without spreadsheet reconstruction
• Immutable audit trail: every classification decision recorded and retained, so an IRS or DOL inquiry becomes a database query rather than a reconstruction exercise

Phoenician's "Built to the Rule" design philosophy means Beacon's logic is engineered to the Code of Federal Regulations — not a loose interpretation of it. This eliminates the audit exposure that accumulates when payroll systems apply general-purpose overtime logic to FLSA edge cases, including §207(k) schedules, CBA premiums, and multi-rate work.

Implementation and Investment

The City of University Park procured Beacon through TXShare MSA No. 2025-048 — the cooperative purchasing agreement administered by the North Central Texas Council of Governments (NCTCOG) and available on Civic Marketplace. The procurement process, from initial engagement to a signed Statement of Work, took fewer than 30 days. No new RFP was required.

Engagement timeline and cost:

• Contract execution: April 2026
• Go-live (first production payroll cycle): May 2026
• Total deployment duration: six weeks
• Fixed fee: $46,800 — securing OBBBA compliance through Tax Year 2028
• Deployment model: on-premises, integrated with existing New World Systems payroll

Internal preparation included mapping existing pay codes and shift patterns to Beacon's classification rules, configuring the API connectors to New World Systems, and validating weighted regular-rate calculations against historical payroll data before the first live cycle. Phoenician's founders — Seth Poor (COO) and Jared Bodily (CTO) — managed the engagement directly, with no junior engineers or account managers involved.