The State Worker

Chronicling civil-service life for California state workers

March 6, 2013
Report: State payroll system upgrade may not be feasible

RB_State_Checks_Machine.JPGAfter nine years and $262 million spent on a twice-failed project to upgrade California's employee pay system, the Legislative Analyst's Office says an overhaul of the current system may not be possible.

A report released today lays out the ugly details of the 21st Century / MyCalPays project: The 2004 launch with an optimistic $130 million price tag, the escalating cost estimates that reached $373 million; the contractors hired and fired when the job wasn't done.

Last month State Controller John Chiang terminated a contract with global tech firm SAP after a test run of 1,300 paychecks was riddled with errors. For now, the state continues to process payroll with the 30-year-old system it had hoped to discard.

"Due to recent events, it is unclear to our office that integrating the state's payroll systems, in their current structure, is feasible," the analyst's office wrote.

And now the Legislature faces a difficult choice: Should the state just continue limping along with its reliable-but-limited payroll system? Or should it press ahead with an upgrade, believing the reward -- better money management -- outweighs the risk of throwing good money after bad?

The report makes a few suggestions to shape that decision:

  • No more money to restart the MyCalPays project until there's a thorough review.
  • Independent assessment of what went wrong and whether the state could simplify its payroll practices.
  • Consider alternatives to a new payroll system, such as keeping the old system, hiring a firm to pick up where SAP left off or restarting with different software.

Click here to read the LAO's report.

PHOTO CREDIT: State paychecks roll off a printer at the State Controller's Office on C Street in Sacramento on Thursday, May 22, 2003.
Randall Benton / Sacramento Bee file, 2003

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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