The State Worker

An error-free state payroll? It’ll be at least four more years, controller says

Before she leaves office in four years, State Controller Betty Yee wants to make progress on an elusive task in California state government: overhauling the state’s outdated and dysfunctional payroll system.

“It’s a priority of my second term,” Yee said in an interview. “I want the damn thing started.”

Five of the state’s 21 bargaining units have contracts expiring in July. Any pay or benefit changes that come with new contracts will once again test the error-prone system, instituted in the Vietnam War era when the state had 40 percent fewer employees and wasn’t engaged in collective bargaining.

Two years ago, the International Union of Operating Engineers filed a grievance with the state when its members hadn’t seen a pay increase won in contract negotiations three months earlier. State employees commonly experience trouble getting paid on time.

“It’s not nimble enough,” Yee said of the system.

She and her predecessors have envisioned a complete overhaul of the system since at least 1999, when the Legislature dedicated $1 million to the project. Yee said four years isn’t enough time to institute a new system, but she is focused on laying the groundwork for her successor.

“The work we’re doing right now is really the tedious step of looking at how we get pay to every single employee at the correct amount … and how do we do better,” she said.

She is working on tweaks and changes to make the financial lives of the state’s 250,000 workers, plus University of California employees who are paid through the system, a little easier.

By the middle of next year, she plans to roll out a digital system for employees to view pay stubs and W-2s online. The system is being tested at the state military and water resources departments and at Cal HR.

It’s an effort to better serve employees who have requested the documents when they attempt to get mortgages, loans or file back taxes, Yee said. Eventually, employees could be able to complete more advanced tasks online, such as adding a dependent, she said.

Eventually, the state will select a contractor for the overhaul.

“We’re getting clear on what is the service we want to provide to state employees, so we can say to vendors, ‘Here’s what needs to be delivered,’” she said. “But it’s too early to even talk about that.”

Yee’s predecessor, John Chiang, canceled an $90 million contract with SAP Public Services after a failed rollout to a small number of employees in 2013. Yee settled a lawsuit with the company in 2016.

The company refunded California $59 million in the settlement and neither side admitted responsibility.

Yee said she hopes Gov. Gavin Newsom’s stated dedication to accelerating innovation and technological processes in state government will help speed up the new payroll overhaul.

“I think there’s a convergence of things that at least give me some hope we can make good progress,” she said.

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