Report: Unclear What Role State Played in Failure of New Payroll System

The State of California is currently embroiled in a legal battle with a contractor hired to create a new payroll system. That system failed about a year ago and the contractor was fired. The State of California is currently embroiled in a legal battle with a contractor hired to create a new payroll system. That system failed about a year ago and the contractor was fired.

But in a report out today the non-partisan Legislative Analyst Office says there’s no clear understanding of what role the state played in the failure.

LAO Analyst Lourdes Morales contributed to the report.

“There are some general preliminary understandings of what may have happened,” she says. “But there has not been a thorough and independent assessment of the challenges that lead to the suspension of the project and the termination of the contract.”

Additionally, Morales says the state should also reconsider whether all employees should be paid using one system.

“We think that integrating the state’s payroll system is extremely complex,” she says. “There’s particular departments that vary significantly in how they pay staff, most notably the Department of Forestry and Fire Protection as well as the Department of Corrections.”

While the LAO agrees the state should allocate money for legal fees, the report says equal priority should be given to finding out what went wrong with the nearly $300 million dollar system. California stands to lose $50 million if the state is ultimately defeated in court.     

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