States weigh pay systems

Some states celebrate Lincoln's birthday. Massachusetts and Maine celebrate Patriots' Day. Utah has Pioneer Day. But there's one day every state celebrates, usually every two weeks: payday.Payroll and financial systems are the quiet workhorses of state government. Unglamorous, unsung, often unnoticed'until something goes wrong.Three states'Wisconsin, Montana and Arkansas'have made some difficult decisions about whether to invest in enterprisewide financial and payroll systems amid the current economic downturn and its effects on state revenues. Would such an investment in information technology result in net savings through more efficiency?Susan Puntillo, administrator of Wisconsin's Technology Management Division, said the state has decided, for now, to stick with its homegrown financial, accounting and payroll system, which runs on an IBM Corp. mainframe under OS/390. Wisconsin officials hired American Management Systems Inc. of Fairfax, Va., to develop the system about nine years ago.'It's sturdy but not fancy,' Puntillo said. It doesn't do elaborate reports, but Puntillo called the system efficient and effective.The timing is bad for a move to an expensive, integrated enterprise accounting and financial system, Puntillo said. 'I wouldn't call the present economic times gloomy, but we're definitely in a downturn,' she said. 'It's hard to show a return on investment on a big enterprise system.'Now is not the time to do this. We want to avoid a hunkering-down mentality, but we do need to be prudent.' Until July 1999, Montana used a 25-year-old Cobol mainframe system for finances and payroll. 'It had dumb terminals and green screens,' said Chuck Virag, manager of the Statewide Accounting, Budgeting and Human Resources System (SABHRS), which replaced the mainframe.The client-server SABHRS is an integrated human resources, payroll and financial system that Montana hired PeopleSoft Inc. of Pleasanton, Calif., to develop. The system uses PeopleSoft 7.5 software and stores data in an Oracle8 database.The process of moving from mainframe to client-server was quite a challenge, Virag said. 'There weren't a lot of good metrics out there to help us,' he said.Many had hoped that the $16.5 million SABHRS would save Montana money, in paper or labor or time. But Virag no longer thinks that it will. 'From a quantifiable cost standpoint, SABHRS is costing us more than our legacy systems,' he said. 'And data entry takes longer using PeopleSoft. That made the system a hard sell.'The PeopleSoft system did integrate the state's disparate business modules, including payroll, benefits, time and labor, accounting, inventory and purchasing. Employee data could be entered once for all state business applications instead of 13 times.And it had been increasingly difficult to find Cobol programmers to make changes in the legacy system.'State employees had home PCs that were much more powerful than the legacy system,' said former assistant program manager Brian McCollough [GCN/State & Local, January 1998, Page 21].Like Montana, Arkansas upgraded its financial, human resources and payroll systems in one fell swoop. The Arkansas Administrative Statewide Information System (AASIS) went live July 1. Arkansas worked with SAP America Inc. of Newtown Square, Pa., to develop AASIS.The financial system offers users access over a secure intranet. AASIS stores data in an IBM DB2 Universal Database. The application runs on Unix servers and the intranet site runs under Microsoft Windows NT on Dell Computer Corp. hardware.Both Arkansas and Montana had problems initially. In the first month of Montana's SABHRS operation, 419 workers were short-changed in their paychecks []. For AASIS' second payday, the system underpaid 293 employees and failed to produce a paycheck for 130.Dick Barclay, the director of Arkansas' Finance and Administration Department, said the problems were to be expected in setting up a system the size and scope of AASIS.'The legislature gave us 16 months to get AASIS up and running. That's all the money we had for it,' Barclay said. He and his team met the deadline. 'But not only was the implementation schedule compressed, the training schedule was compressed as well.'Most of the problems with AASIS were the result of operator error, Barclay said.The total cost of AASIS was around $40 million, Barclay said, and in the long run AASIS will save the state money compared with Arkansas' legacy financial system.'Unfortunately, for those seeking instant gratification, they will be disappointed,' he said. 'We're not just changing computer systems. We're changing the way the state of Arkansas does business by adding more internal controls and more accountability.'Arkansas' previous accounting app was about 27 years old. Both Arkansas and Montana began work on their enterprise payroll systems before the economic downturn began.Since the beginning of the year, 'it's like the economy fell off a cliff,' said Scott Pattison, executive director of the National Association of State Budget Officers. Pattison said state governments learned from the 1991 recession, and set up what he called rainy-day funds. A few years ago, states averaged about 10 percent of their budget in rainy-day funds. 'Now they have about 5 percent in these funds,' he said.