State to adopt pay system despite errors

A computerized payroll system that has left thousands of local public school and community college employees improperly paid will be adopted by state government next year despite its many problems.

The payroll system, to be phased in starting next January, would help the controller’s office generate paychecks for more than 290,000 state employees. The office pays most state workers. It administers an $18-billion annual payroll that includes the state civil service, judges, elected officials and more than 59,000 California State University system employees.

California officials say they are working to avoid problems that have shortchanged faculty, cafeteria cooks and other workers in the Los Angeles Unified School District and Los Angeles Community College District.

State and community college district officials are scheduled to meet this week to discuss “lessons learned” about the system.

The nine-campus community college district has issued about 2,000 emergency checks since implementing the system in 2005, but could not determine how many employees were affected, officials said.

The problems were most severe over the first year, when about 120 checks were issued a month, officials said. That figure is now about 60 a month.

In L.A. Unified, which started running the program in January, about 7,000 of the more than 77,000 district employees did not receive checks or were paid the wrong amount. The district has issued more than 2,200 emergency checks.

Community college district and faculty union officials agree that most payroll problems have been solved, but some still linger.

It has been nearly four months, and English teacher Susana de la Pena still hasn’t been paid the roughly $3,000 owed to her by the Los Angeles Community College District. De la Pena, who taught at Pierce College in Woodland Hills, sued the district in December to secure overdue paychecks.

“There’s a lot of people who are very upset, that are hurting and borrowing money, but they don’t want to say anything because they don’t want to lose their jobs,” De la Pena said.

The American Federation of Teachers Faculty Guild filed a class-action suit against the community college district in the fall over payroll problems. One teacher involved in the suit is still owed about $9,000, from six months ago. The union will enter arbitration with the district this month, union officials said.

Representatives with the community college district and L.A. Unified acknowledged that some problems were caused by employees who were poorly trained in operating the new system. But the community college district and union also blame the software provider, the German company SAP AG.

“The problems that we’ve encountered here were really related more to some of the shortcomings in SAP that we discovered shortly after our ‘go live’ date,” said Michael Phillips, payroll manager for the community college district.

Several community college district officials said they have been doing all they can to remedy the situation, including working overtime and devoting extra staff to the problem. The new software was rolled out at the district in July 2005 with much fanfare, replacing a roughly 30-year-old payroll system.

Phillips, however, called the changeover “horrific.” A major stumbling block is so-called concurrent employment, in which workers hold different positions, sometimes at more than one campus, and are on different pay schedules for each job.

Concurrent employment accounts for nearly half of about 9,000 community college district employees, officials said.

The community college district spent $3.3 million on the software and about $23 million to launch the system and reconfigure it to district needs, officials said.

This is not the first time school systems have had trouble with the SAP software. Universities outside California encountered problems at least as far back as 1999.

SAP, founded in 1972 and considered a global leader in providing software for business integration, serves many large companies, including Walt Disney Co., Coca-Cola and IBM.

More than 20 million Americans are paid by employers using SAP software, according to the company. For the last 10 years it has tried to attract more public sector customers, targeting schools. In the United States it has 40 academic sites -- including Duke University, Massachusetts Institute of Technology and Purdue University -- and more than 300 worldwide.

In interviews last week, SAP officials said they were not aware of the community college district’s continuing problems or the lawsuits. College district officials said that a heated meeting last fall with SAP officials established ground rules for what the district needed from the company.

An SAP executive defended the company’s software and said some problems are caused by how the product is used.

“The implementation is really all about changing the way you do business, or improving the way you do business, and that can be painful,” said Malcolm Woodfield, director of global business development for SAP higher education and research.

Some school systems essentially want to duplicate their old payroll systems -- only in high-tech formats. What they really need to do, he said, is revamp their practices.

Users characterize SAP payroll software as specific, but rigid -- one change or customization can lead to a domino effect of problems down the line. Instead, SAP leaves it to clients to build on the software, Woodfield said.

“If we make a change to an area over here, it effects how our company works everywhere,” he said. SAP produces one software for all its clients.

“We can do a special package for higher education, but the danger is adding cost instead of taking it away,” Woodfield said. “The strategy for what our customers want is to be simpler and standard, that’s why they come to SAP.”

He acknowledged that the one-size-fits-all model can have limitations. “Maybe this is OK for Disney, but is it OK for LACCD?” Woodfield asked.

Most school systems describe his company as responsive to customer complaints, he said. “It’s not as if we sell the project and walk away,” he added.

However, some frustrated users suggested that SAP is not as responsive to education clients as it is to big companies.

“When you’ve got clients like General Mills and Coca-Cola, that’s where your money’s coming from,” said Phillips, the community college district payroll manager. “Higher education institutions, we’re almost beggars. We don’t have the large budgets that private industry has to fuel a lot of SAP development for us.”

To alleviate some problems, the community college district plans to change all employees over to one pay schedule in July, Phillips said.

SAP officials said the higher education market is a strategic industry and denied having neglected education clients. They meet with schools quarterly to discuss software development and school wish lists, they said.

Meanwhile, the California controller’s office finalized its contract with SAP in June at a cost of $9.8 million for the software and $69 million for implementation. A team of more than 150 people is preparing for the launch, said Garin Casaleggio, a spokesman for the controller.

State officials said their contract requires SAP to fix problems associated with concurrent employment before the state starts using the new system. “The state controller’s office has definitely been paying attention to what’s going on and is on top of this,” Casaleggio said.

Woodfield of SAP could not confirm whether a concurrent employment fix would be released in time but said it is a “focus” for developers. And what of De la Pena, the English teacher owed $3,000?

She resigned in October and worked as a tutor through her Christmas vacation to scrape by. She’s now teaching at other community colleges and universities.

“I’m not trying to make money off of this,” she said of her lawsuit, which does not seek punitive damages. “I said, ‘Just give me my paycheck that I earned.’ ”

tami.abdollah@latimes.com