Pension upgrade not easy or cheap (...described existing upgrade efforts as in "dissarray".)greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Pension computer upgrade not easy or cheap
Complexity of pension laws means software has to be customized
By Greg J. Borowski of the Journal Sentinel staff
Last Updated: Nov. 28, 1999
A major upgrade of the city pension office's computer systems will take longer and cost more than expected, largely because Milwaukee's pension laws are so complicated that it could take nearly $4 million and 14 months just to map them out.
Less than three weeks after the Common Council approved borrowing $3 million for preliminary work on the computer project as part of the 2000 budget, aldermen will be asked today to approve another $1.5 million.
That's already more than the estimates to complete the entire project included in a March report, which described existing upgrade efforts as in "disarray." The pension board voted to kill that upgrade effort in favor of a more structured approach to replacing the office's outdated system.
Nearly all the initial cash will go to hiring a firm to analyze and lay out each step needed to determine pension payments, a process that now involves checking documents on microfilm, doing some calculations by hand and relying on more than 700 computer spreadsheets to address hundreds of special retirement scenarios.
The analysis is needed before the city can hire another outside firm to actually write the new software, which would dramatically cut the staff time - now about eight hours a case - needed to calculate benefits for workers planning to retire. The customized software will cost millions more.
Earlier proposals from outside firms assumed the city could adapt some of its steps and processes to better match computer software already on the market, which would mean a lower price tag, said City Comptroller Wally Morics.
"In the real world, you could do that," said Morics, chairman of the pension board's special computerization committee. "But our rules and regulations are governed by charter ordinance. They are carved in concrete."
That ordinance, known as Chapter 36, is more than 70 pages long and has been amended many times over the past decades. It has been the subject of countless lawsuits, with rulings against the city dictating further changes. In addition, the city attorney's office over the years has issued 1,400 opinions, each one interpreting and refining aspects of the ordinance.
Even without all that, the city's pension system would be considered complicated.
In addition to city workers, it includes some employees from Milwaukee Public Schools, Milwaukee Area Technical College and a handful of other entities. The system has different tiers of benefits for police officers and firefighters, general city employees and elected officials.
There are clauses that award benefits to members for time served on some city boards and commissions. Some workers move from group to group, or full-time to part-time, accumulating different benefits at different rates as they go.
People may go from police officer to elected official and back again. They may leave office and later serve on a commission, or move from union to union.
That leaves a dizzying array of possible - and often unique - calculations needed to determine how much a retiree's monthly pension check should be.
A report to the pension board estimates that the first major step - sorting through the laws and documenting every nuance - will cost $3.9 million and take 14 months. Two bids to do the work have been received, but a final company has not been chosen.
In addition, $500,000 will go toward salaries of workers assisting the project. With other related costs, that brings the borrowing for next year to $4.5 million.
The measure before the council would add $1.5 million to the $3 million already in the budget. The council's Finance and Personnel Committee is to consider the measure at a special meeting this morning. If the measure passes, it would go straight to the full council, which meets at 9 a.m.
The costs and problems related to the computer upgrade are a side concern in the city's ongoing effort to settle a series of pension lawsuits. So far, officials have reached deals with the unions representing police officers and firefighters. Talks continue with other groups.
The talks revolve around tapping the pension fund's $1 billion surplus to provide higher benefits for workers and retirees. In exchange, the lawsuits would be dropped and the city allowed to make money-saving changes to the way the system operates.
Many expect an initial rush of retirements once a deal is in place. The goal for an effective date is Jan. 1. A better computer system would make the applications easier to handle, but the upgrade project won't be done for years.
In fact, the pension settlement - with different packages of increased benefits for different unions - would make the system even more complicated, potentially creating even higher costs and a longer wait before the first step of the computer upgrade can be completed.
Members of the pension board and others think the city should rewrite Chapter 36 to streamline it and eliminate some of the redundancies, contradictions and confusion.
That would lower the computer costs, since the software program needed would be simpler. But a rewrite could take a year or more and could prompt lawsuits of its own, especially if unions or others think existing benefits are being reduced in the process.
Before the pension board scrapped the old upgrade effort in March, the city had already spent more than $400,000 on it. A report at the time said the project had little direction and was so far behind officials couldn't guarantee that existing systems would function properly come 2000.
Those Y2K fixes have since been completed at a cost of roughly an additional $390,000, nearly double the $200,000 estimated in March. At the time, the estimate for dealing with all the office's computer problems was between $2.95 million and $3.8 million. The consultants, though, had assumed software already on the market could easily be adapted to Milwaukee's system.
Anne Bahr, executive director of the pension office, said it's too early to estimate how much the actual upgrade of the system will cost. During pension settlement talks last month, Common Council President John Kalwitz suggested the overall computerization costs could run between $11 million and $21 million.
Appeared in the Milwaukee Journal Sentinel on Nov. 29, 1999.
-- Homer Beanfang (Bats@inbellfry.com), November 29, 1999
What a nightmare!
Flat tax 'n flat pension 'n flat _____ ________ ____ _____ flatline?
-- Ashton & Leska in Cascadia (email@example.com), November 29, 1999.
But the fed's say it'll just be a three-day bump in the pothole of life - it will all get fixed in three days......
Looks like they haven't been ABLE to figure out HOW to fix ONE PROGRAM for ONE pension plan for ONE city in ONE state in 8 months - and the estimate itself keeps changing - oscillating now between 11 and 21 million (real good planning people, real good).......but the current program seems likely to fail in december.
Here, and for how many other cities?
-- Robert A. Cook, PE (Marietta, GA) (firstname.lastname@example.org), November 30, 1999.