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LA's payroll system, already over budget, needs millions more for upgrades

The Los Angeles City Council is expected to approve millions of dollars in additional spending Friday for a new payroll system that has yet to direct deposit a single employee paycheck, is two years behind schedule, and was already over budget.

“This is an absolute cannot fail, must achieve, must get there,” said Councilman Tim McOsker at a committee meeting earlier this month, when the latest request for additional funding was given initial approval.

“The city is not ready to go live,” LA Information Technology Agency general manager Ted M. Ross said at the meeting Dec. 5, and said it would take another six months before the new system would be ready for a “cutover” to begin paying employees.

The delays and cost overruns have been blamed on staffing shortages across all city departments, high employee turnover within those departments and the logistical complications brought by the COVID-19 pandemic.

“With this delay, we’ll be two and a half years behind our original schedule and some $50 million over budget,” Deputy City Controller Rick Cole said at the meeting.

“Failure is not an option,” Cole said. “We need to complete the system and have it implemented successfully, going live in June.” 

The payroll upgrade project began in 2020 when the council agreed to spend $62,109,339.70 for several contractors to migrate the city’s outdated, custom-built payroll computers, called “PaySR,” to a modern environment from the company Workday that merged payroll and human resources data.

The project’s complexity was underestimated, one senior City official told the NBC4 I-Team.

The council approved a $14.6 million increase to the contracts in April 2022, and another $17.4 million increase in early 2023, according to council records.

The movement of the city’s old payroll data and the city’s unique requirements of issuing paychecks using more than 1,500 salary formulas for different classes of workers was described as “hellishly complicated,” by one official.

The three council members on the Personnel, Audits, and Hiring Committee were unavailable for comment Thursday. A spokesperson for Workday said the company was committed to successfully updating the city’s systems.

“A project of this magnitude is more than just about the technology – it’s also about resources and process,” the company said in an email.

“We can confirm that the issues related to the delays are not the result of the Workday system.”

The city’s legacy PaySR system is on, “life support,” according to the City’s IT department, with many components no longer manufactured or supported. An IT memo said it cost roughly $3 million to keep the system functioning in 2022.

Source: NBC Los Angeles

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