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Committee delays $5 million reserve release as HR/payroll project's cost estimate climbs
Summary
Supervisors debated releasing $5,000,523 in reserves to implement a new HR/payroll system after the project's projected cost rose sharply from earlier estimates; staff said updated RFPs and required dedicated project staff drove the increase. The committee continued the item for two weeks for additional vendor and cost detail.
The Budget and Finance Committee considered whether to release $5,000,523 in reserve funds to implement a new human-resources and payroll system and pressed department staff for a clearer accounting after the project's estimated total grew substantially.
Chair Supervisor Aaron Peskin said the city clearly needs a new system but voiced skepticism at the shift from earlier $20 million estimates to current figures supervisors described as $35 million to $50 million. "I have a lot of trouble getting from what it cost yesterday, which was $20,000,000 to what you say it will cost today, which is $41,000,000," Peskin said.
Mickey Callahan of the Department of Human Resources warned of severe consequences from system failure and described the project's need for dedicated staff and negotiated licensing terms. She noted that the city had secured a licensing discount that could benefit other departments and that implementation contracts (including a time-and-labor product) will return to the committee for review. Callahan said delaying key hires could lengthen the project and increase total cost.
Deputy Controller and other committee witnesses explained the earlier $20 million estimate omitted hardware, integration and dedicated implementation staff; updated RFP responses and contractor estimates produced a larger, more precise figure. Committee members questioned whether some hardware, licensing or third-party items could be scaled back or renegotiated.
Labor representatives supported moving forward with the project if implementation prioritized city staff over contractors. Michael Seville of Local 21 said, "We think this project was vetted appropriately" and that the higher estimate reflected necessary implementation staffing.
After discussion, supervisors directed staff to continue negotiations with vendors, evaluate possible hardware and licensing savings, and return in two weeks with updated cost details and staffing plans. The committee continued Item 5 for two weeks to allow staff to bring back those specifics.
