Despite warnings, CCSD’s faulty payroll, HR system debuted to hisses

Nearly 10 months before the launch of the Clark County School District’s new $17 million payroll and human resources system, employees warned that the district didn’t have the logistics to support it after launch and that it was incompatible with the strategic budgeting process.

It’s not clear what role, if any, those concerns played in the problematic launch of the district’s new Human Capital Management System software in January, when employees began to report paycheck errors of hundreds of dollars, as the district is still conducting its own assessment of what went wrong.

But at a recent School Board meeting, an outside consultant hired to solve the system’s problems said it went live with known gaps in critical functionality.

“In most cases, when a project is about to go live, there is a go, no-go meeting that includes 100 percent of the stakeholders,” said Mike Del Prado, CEO of Executive Option. “There were several key open items that one would say, ‘We shouldn’t be operational. We shouldn’t be ready with this.’”

“The expectation would be that there would be some bumps in the road, but nobody expected to hit big trenches, the big problems that we did,” the district’s Chief Technology Officer Greg Halopoff said in a phone interview Friday. The district did not make other officials involved in the implementation available for interviews.

CCSD received $17 million from the state Legislature in 2017 for an update to its existing human resources system, parts of which were developed in the 1970s. The update included a new software suite, with a payroll component called PeopleSoft, a hiring program known as Taleo and a strategic budget planning tool named Hyperion that tied each position to the school budget.

The district awarded the contract to implement the update to CherryRoad Technologies in October 2017.

But beginning with the first payroll run, support staffers and substitute teachers found they were being paid incorrectly, while teachers reported not being paid at all for teaching night school or covering classes on their prep periods — both issues that had appeared during testing.

Principals, too, said they worried that the hiring side of the software was impeding their ability to fill vacancies in a timely manner.

The software also apparently played a role in the district running afoul of Internal Revenue Service filing requirements.

Concerns aired in April 2019

In April 2019, two employees separately brought concerns about the in-development system to upper administrators, including Chief Financial Officer Jason Goudie and then-Chief Technology Officer Dan Wray, according to records obtained by the Review-Journal through state open-records laws.

Marsha Swenson of the district’s central information services office wrote that she was concerned about supporting the new system after its launch in a note to Wray and Human Capital Management Director Andre Yates.

“Cherry Road has expressed to us how many people it’s going to take to support the system after go-live. For a system and organization the size of ours requires from 30 to 80 people,” Swenson wrote, adding that if the district used a low estimate of 40 people, each would be responsible for about 8,000 district employees.

Swenson, who still worked for the district as of the end of 2019, did not return a request for comment. Her email describes being worried about the repercussions of raising the issue, adding that she hoped “that the powers that be are on top of all the moving parts to bring this project in successfully.”

Wray declined to comment, referring a reporter to his successor, Halopoff.

In an interview, Halopoff acknowledged the challenges of staffing the project, citing both inadequate funding and difficulties in filling positions. CCSD did not have anyone available to work on the HCMS project full-time, he said, as each employee still had to maintain the existing system in addition to working on the new one.

Approximately 50 CCSD employees from HR, finance and payroll departments were designated to support the system after launch, he said. A team of about 100, including part-timers, worked on its implementation.

Halopoff also said he sensed reservations from employees who had only ever worked on the old HR system and who may have been asked to take on new duties. To combat this, he said the district conducted extensive training for the impacted departments.

Budget questions raised

Meanwhile, Jeffrey Halsell, an assistant superintendent in the strategic budget, business and finance unit, also questioned in April whether the new budgeting system was correctly computing the number of paid days, including holidays, for support staff, and particularly for those with unconventional start and end dates.

Shortly after, Halsell sent an email to Goudie detailing his concerns about whether Hyperion would work at CCSD, where principals have autonomy over their school budgets. While Hyperion had successfully been used by the city of Las Vegas and the San Diego Unified School District, those entities relied on system analysts, not school principals, to manage the budget software, Halsell wrote.

“Principals have been given, and now expect, the ability to build a variety of staffing scenarios. They split-fund positions, share positions, assign job 2’s, purchase preps and generally customize their budgets to best meet the instructional needs of their schools,” Halsell wrote. “I’m not confident Hyperion has the flexibility to provide that level of customization.”

In a Dec. 2 email, Halsell reiterated his concerns, including how the system handled support staff and positions funded outside the general budget, in a lengthy email to Goudie. He added that he believed the strategic budget office was not properly consulted in the development of the budget system, which must balance a variety of different calculations rather than perform individual discrete functions.

He also wrote that he had submitted his retirement paperwork after learning that the new systems would not roll out parallel to the old as had been previously discussed, but that the old software would shut down on Jan. 1 and Hyperion would go live on Jan. 15. Halsell’s retirement became official on Dec. 12.

“As you should well remember, we both came into a strategic budget firestorm that first year,” Halsell wrote. “After that I took responsibility for the integrity of the system and made sure that never happened again. I am now being asked to take responsibility for a system that I know little about and believe is grossly unprepared for a Jan. 15 rollout.”

In an interview in May, Halsell confirmed that he had sent the emails to Goudie and that he put in for his retirement shortly after.

Further emails show Goudie asked Deputy Chief Financial Officer Diane Bartholomew if Halsell’s concerns had been considered and whether the system was indeed ready for launch.

Bartholomew replied that what the district called Phase I, or the minimum for go-live, had been developed and tested, with only some tweaking still to be done.

A separate records request also produced a response to Halsell’s concerns from Bartholomew, who denied that he had been left out of the design process. Staff members from his office had completed parallel tests of the new system “for multiple schools at all levels,” she said.

Emails detailing the implementation of the system in December did not list CCSD Superintendent Jesus Jara among the recipients. He was included in updates of the system after its rocky launch in January.

Halopoff said he felt confident that Hyperion could provide the needed level of flexibility for school budgets, describing the district’s prior budget system as fragmented and unable to provide position budget control.

Hyperion had a nearly flawless launch in January, he added.

IRS ‘misunderstanding’

Records obtained by the Review-Journal also show that an issue converting data from the old system to the new led to a filing error with the IRS that nearly cost the district $2 million in fines.

On Aug. 12, the district received a letter from the IRS stating that it had failed to file Affordable Care Act-related forms for 2016 and would be fined a total of $2 million in penalties.

Denise Farleigh, director of Employee Benefits and Payroll, said in an email to Goudie and other administrators that the issue arose from a misunderstanding by the IRS that the district had submitted those files, when it had in fact only sent test files that had “errored out.” Notices from the IRS about the ACA issues were sent to the wrong department, she added.

“Hopefully, the 2019 files will be accepted (without errors) in the new year due to having data in PeopleSoft and not having the conversion issues from CCSD Mainframe to PeopleSoft for ACA tracking,” Mead wrote. “I will contact the IRS via phone and written correspondence tomorrow with an update. This should put us in the clear of any failure-to-file penalties that CCSD faced.”

Additional records also show that the district did parallel testing of the old and new payroll systems in summer 2019, initially uncovering payroll issues impacting approximately 30 percent of certified teachers. The numbers improved to just 8 percent by the third parallel run.

Halopoff said the numbers of correct paychecks further increased in subsequent tests.

But the parallel tests covered only base pay, according to Halopoff, and not the extra duty pay for prep periods and night school that would eventually create a headache for teachers. Extra duty was often requested on paper forms, Halopoff said, and to parallel test it would have meant doing double data entry.

Still, he said the district went into its launch window with a very high level of confidence on the advice of CherryRoad. The subsequent payroll issues and other challenges with the hiring process led the district to hire consultant Del Prado and begin negotiating a $700,000 credit with CherryRoad.

Consultant findings

Del Prado found there was limited cross-functional testing of the system beyond the payroll department and fractured collaboration between CherryRoad and CCSD, both of which “reduced confidence” in the system.

In an interview with the Review-Journal, Del Prado said his primary concern since arriving in early March was to make sure district employees would receive their missing pay and be paid correctly going forward. In that regard, he said he expected to have a high percentage of the underlying issues addressed by the end of this month before the district moves into a second phase of implementing the system, which will require less support from himself and CherryRoad.

At the May board meeting, staff estimated that of 800 pending reports of erroneous pay, approximately 200 would result in additional paychecks being cut.

Asked if the system would be ready for the next school year, Del Prado said both CCSD and CherryRoad staff were working hard to make it happen.

“That’s the goal,” Del Prado said. “The key with remediation and optimization work is to stop the bleeding. You can bail a sinking ship, but unless you plug the hole, you’re still going to be in trouble.”

Del Prado said he also expects to present his findings on the causes of the system failures at a future board meeting. Broadly speaking, Del Prado said there were several things that could have gone better, from preventable issues like communicating, documenting and implementing requirements, to factors outside of the project team’s control, such as staffing and funding.

He added that in large projects such as this, the first critical step is gathering all the requirements before anything is built, something he feels may have been missing.

Ultimately, Del Prado said the HCMS will be a boon one day to the district, empowering principals and other users to work more efficiently than in the previous system.

“But that’s only a value if users have been properly trained and acclimated in the comfort of the use of the product,” he said. “That’s going to be part of the next phase.”

Contact Aleksandra Appleton at 702-383-0218 or aappleton @reviewjournal.com. Follow @aleksappleton on Twitter.