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Calif. official says new payroll system in chaos

Posted: December 22, 2012 4:00 p.m.
Updated: December 22, 2012 4:00 p.m.

LOS ANGELES (AP) — A $371 million overhaul of California's government payroll system is in chaos and in danger of collapsing, the state controller's office warned in a letter demanding fixes from the contractor.

The updated system can't process payroll for even a portion of the 240,000 state employees, Jim Lombard, the controller's chief administrative officer, wrote to SAP Public Services in October, the Los Angeles Times reported ( ).

In testing earlier this year with 1,300 workers, the system issued some checks to the wrong workers or for the wrong amounts. Since the testing began in June, "every pay cycle has experienced problems," Lombard wrote.

He added SAP failed to meet nine of 44 deadlines this year.

"The project . is foundering and is in danger of collapsing," Lombard said.

Lombard's 37-page letter demanded that SAP fix state-identified problems, including replacing inexperienced project managers and staff.

"Considering the project's complexity, and the many requirements involved in payroll processing, there have been some challenges," SAP spokesman Andy Kendzie said in a statement to the Times. "Despite these, SAP remains committed to the overall success of the project."

Officials are reviewing a plan that the contractor submitted last month to address state concerns, said Jacob Roper, a state controller spokesman.

The payroll system overhaul, called the 21st Century Project, is one of the state's biggest technology endeavors. The goal is to replace six different human resources systems, some installed in the 1970s.

The new system must handle a $15 billion payroll covering 160 state departments, agencies, boards and commissions, calculating data on 36 medical plans, 12 dental plans and dozens of paycheck deductions.

However, the upgrade is five years overdue and has nearly tripled in costs since lawmakers authorized it in 2005.

The first contractor, BearingPoint, was fired in January 2009 after it had been paid nearly $26 million.

It's not the first time a state government technology project has run into trouble in California.

The state spent $50 million on a failed Department of Motor Vehicles system before it was tossed in 1994.

A new computer system for the public pension fund cost twice the original budget before it was completed last year, and a plan to upgrade accounting databases and allow agencies to coordinate purchasing has seen hundreds of millions of dollars in costs increases and is years behind schedule.


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