Ok, this is the School District that spent over $100-million on a new school without testing for Radon, and had to tear it all down (see earlier posts).
Now LAUSD (Los Angeles Unified School District - which covers most of Los Angeles County) screwed up a new payroll system design that cost $95-million, and now it will cost another projected $37-million to fix it. During the last payday, there were over 4,000 paycheck errors. The system is based upon German developed SAP software, implemented by big 4 consulting firm Deloitte & Touche. Apparently the District has over 1100 payroll classifications and it was "too difficult" to modify the SAP system to handle them.
This reminds me of a similar situation at ARCO Oil when they tried using a canned payroll system to pay union workers on the company owned tankers, and they had a massive quagmire of payroll classifications that wouldn't work with the standard ARCO corporate payroll system, so they hired a project manager, purchased an HP computer and developed a payroll system from scratch just for the unions.
The lesson learned here is that you can't force a complex, union payroll system into a canned software package without lots of planning or modification. Or, as mentioned below, try to negotiate with the union to simplify their payroll classification system.
Here is a telling quote:
"But Garcia said the payroll problems illustrate a bigger issue for LAUSD.
"The ... experience at LAUSD speaks to the challenges our organization has in its entirety about moving toward the world-class system we want to be," she said."
LAUSD, union at odds over payroll mess
Flunk check system and scrap it, teachers urge
BY NAUSH BOGHOSSIAN Staff Writer
LA Daily News
Article Last Updated:08/27/2007 12:01:36 AM PDT
Seven months after Los Angeles Unified rolled out a $95 million computerized payroll system, school officials are prepared to pour at least another $37 million into the project to fix thousands of problems as they brace for the start of the school year.
But even as workers frantically try to resolve software glitches that have left thousands of employees underpaid or overpaid, district officials say solutions are still months away.
And rather than pour more money into the system to make it compatible with the district's payroll process, they say the best solution now may be to negotiate with the union to restructure how teachers are paid.
The problems, however, have become a rallying cry for union leadership, which contends the only option is to scrap the system and bring in a third party to handle payroll.
"It's an 8.9 on the Richter scale," United Teachers Los Angeles President A.J. Duffy said. "It's very bad and it promises to get worse when traditional school starts."
David Holmquist, LAUSD's interim chief operating officer, says the main problems now in the payroll system are for about 49,000 certificated teachers and principals. On Aug. 3, the last certificated pay date, nearly 4,000 had errors.
Most of the errors were corrected before checks were issued, but about 570 employees still either were not paid or were significantly underpaid, Holmquist said.
"It's good because it's improving. But it's not good," Holmquist said. "Certificated pay remains highly unstable. It's not to the level of stability we want and our employees need."
Superintendent David Brewer said Friday that the system would be stabilized - although not completely fixed - by January. But he said getting rid of the system, as the union is pushing, is not an option.
"The old system was way more flawed. We've hired some of the best consultants in the country to come in and work with us," he said.
"We want to build this system into a 21st-century system that will have a whole lot less errors. You just can't get rid of that."
Changing the system?
Holmquist said the most viable solution now is negotiating with the union to change the annualized pay process because rewriting system software to calculate 1,100 job classifications and pay types has proven "too difficult for consultants."
With the annualized pay process, the district pays teachers for 10 months of work over 12 months so they still receive a check in the months they are not working.
"The reason why we have new errors every month is that it seems every month we have something new forced into a relatively inflexible system," Holmquist said. "We hope they will help us work on an alternative to annualized pay."
Duffy said he's open to discussions but doesn't believe changing annualized pay is the solution.
"It can't be fixed. They need to change the system, dump Deloitte and Touche and SAP and come up with a system that deals with payroll only," Duffy said.
Duffy cites the rollout of an SAP payroll program with Deloitte and Touche in Ireland as an example of why the district should cut its losses and move to another system.
In that case, the Irish Health Service Executive government bought the SAP program in 1997 and contracted with Deloitte and Touche to oversee it for 140,000 employees at a projected price of about $12 million. By 2005, the system was still not fully implemented and costs had ballooned to more than $160 million.
IHSE decided in late 2005 to suspend the rollout of the new payroll and human resources systems and a separate system for financial management, according to the Web site e-health-insider.com.
But school board President Monica Garcia said that while it's unfortunate LAUSD employees have borne the brunt of the implementation problems, the district has invested too much money and time to dump the new system.
"We've invested a great amount of dollars and human resources and time, so much so that at this point, the benefits of the fixing outweigh the benefits of the scrapping," Garcia said.
Still, the teachers union has been working over the past few months to organize its members, holding demonstrations at Deloitte and Touche's Los Angeles offices and filing a class-action lawsuit along with other district unions, demanding change.
"We're going to continue to put pressure on the district and shine the light on their inability to get their upper management people to work with the consultants to get the payroll correct," Duffy said.
Westchester High School painting and drawing teacher Leila Jean Levi said a personal payroll history report showed she owed LAUSD $51.525.21 - even though she said she hasn't received a correct and complete paycheck since January.
"Just get rid of it. The employees have to get paid. This is ridiculous," said Levi, of Venice, who has been with the district since 1977. "I have to go get another job. I can't stick around."
District officials acknowledge that they simply were not adequately trained when they rolled out the payroll portion of the $95 million Better Tools for Schools system. An audit also is under way to determine whether the companies that designed and installed the system are at fault.
Touted as a key to cutting inefficiencies, fraud and bureaucracy, the district signed an 18-month, $55 million contract with Deloitte Consulting to help implement the system's three phases.
Holmquist would only say that the district "has some concerns on the failures on (Deloitte's) part to live up to obligations in the contract."
A spokeswoman for Deloitte Services would not comment on the problems or how much money may be needed to fix the glitches.
"We empathize with those district employees who have been affected by the transition to a new payroll system," spokeswoman Deborah Harrington said. "We have been working very closely with district officials to help them resolve remaining issues they face operating the system."
Deloitte has added resources at the district's information technology department to address problems, including redesigning pay stubs employees have said are unintelligible.
LAUSD also has opened five regional centers to handle employee complaints, bringing in temporary payroll employees and opening 30 centers at school sites to help people understand their personal payroll histories.
And behind-the-scenes, LAUSD workers and even volunteers are working long hours and weekends, even sleeping on cots at district headquarters, as they try to fix the problems.
In June, the LAUSD board approved spending an additional $37.5 million to cover the costs anticipated to stabilize the system. So far, $19 million of that has already been spent, with about $1.2 million earmarked for Deloitte and the rest for district employees, Holmquist said.
The remainder is expected to be used to cover rollout of the third phase involving computerized purchase orders. That has been repeatedly delayed and is now scheduled for July.
District officials including Brewer and board member Tamar Galatzan also recently met with City Controller Laura Chick to determine how the city successfully rolled out a payroll system.
Discussions since then have included bringing in the person who helped with the city's system.
For new school board member Richard Vladovic, the payroll problems are personal. Vladovic's two children are teachers at LAUSD and have been affected, as well as his new chief of staff, who was a teacher.
Vladovic said his daughter was overpaid $2,000 and the district claimed his chief of staff was overpaid $15,000. The final conclusion, however, is that LAUSD owes his staffer $105, he said.
"At some point, we need to say what's our contingency and bring in somebody else," said Vladovic. "I will not, and cannot, agree to throwing more money onto bad money. If we have to suck it up and change systems, we've got to. Our people need to be paid."
But Garcia said the payroll problems illustrate a bigger issue for LAUSD.
"The ... experience at LAUSD speaks to the challenges our organization has in its entirety about moving toward the world-class system we want to be," she said.