Payroll project may be impossible, analyst says

The Legislative Analyst’s Office issued a report Wednesday questioning whether the state’s plan to unify and upgrade its payroll system is possible in the wake of severe setbacks.

The report also said the state agency charged with overseeing expensive and complicated computer projects may not have the tools necessary to prevent taxpayer money from being wasted.

The analyst’s office issued the report one month after the state fired the contractor leading the $373-million overhaul of the payroll system for 240,000 public employees. The upgrade, known as the 21st Century Project, has fallen years behind schedule while tripling in cost.

The contractor, SAP Public Services, defended its work on the project. But the controller’s office, which oversees state payroll, said tests conducted last summer revealed deep problems and that the company didn’t have a good plan to address them.

The Legislative Analyst’s Office said the state should hire another contractor to evaluate the project, a review that could take at least a year.

“Due to recent events, it is unclear to our office that integrating the state’s payroll systems, in their current structure, is feasible,” the report said.

The analyst’s office offered several alternatives, which include sticking with the state’s decades-old systems, splitting up payroll responsibilities among various departments or restarting the project with new software.

Concerns about the computer overhaul extend to the California Technology Agency, which will be renamed the Department of Technology in July. There are “relatively few opportunities” for the agency to “exercise enforceable authority regarding project direction,” the report said.

In practice, the report said, the agency only becomes involved when it’s time to approve projects or halt work because of a crisis.

Neither the controller’s office nor the California Technology Agency immediately responded to a request for comment on Wednesday.

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