Assembly Bill (AB) 730, which seeks to rectify situations like the payroll debacle at the Los Angeles Unified School District (LAUSD), has passed the Assembly and will now proceed to the State Senate.
The bill, sponsored by Assistant Majority Leader Kevin de LeÛn of Los Angeles, would prevent vendors from bidding on public contracts for a period of five years if they are found to have violated an information technology contract with another public entity.
Under the current law, contractors found to be in breach of contract by a court of law may continue to apply for and be awarded public contracts.
The legislation passed the Assembly Business and Professions Committee January 15th and its Appropriations Committee on January 23rd. It passed the full Assembly January 29th by a vote of 49-29.
“The Assembly has sent a clear message to unscrupulous information technology vendors: walk away from your commitments to taxpayers and you will be punished,” stated de LeÛn. “Too many vendors are intentionally underbidding contracts with the intent of substantially increasing the costs at the back end of the project, leaving taxpayers holding the bag.
“We shouldn’t be rewarding those vendors with additional government contracts.”
The audit, financial advisory and consulting firm of Deloitte & Touche was hired by the school district to install its payroll system for $95 million. Controversy erupted last year after it was discovered that teachers, nutritionists, nurses and other certificated personnel were not being paid accurately.
L.A. Unified officials subsequently hired additional consultants to repair the system, which currently remains in place.
The total cost to install and fix software is estimated at approximately $210 million.
Thousands of teachers went months without being paid or were drastically underpaid throughout 2007, which resulted in financial distress for many educators. One teacher, Patricia Thomas, who lost her husband last year, was forced to take out an emergency loan after going several months of being paid less than her actual salary. In May, she received a check for only $23.
Others saw excess money in their paychecks, which the district has ordered them to pay back. Larry Rubin, who runs the computer department at Orville Wright Magnet School, was one of those teachers. He, like other educators, is not completely certain that the figures that were provided to them by L.A. Unified for reimbursement were correct.
“I have to assume that what they are telling me is right, but you can’t be sure,” said Rubin, who has taught in the district for 15 years.
The computer teacher knows colleagues who have been in similar predicaments, like Thomas, with some of them coming to the brink of financial crisis.
“Many teachers’ lives have been messed up by this [payroll controversy],” he said.
Due to the payroll inaccuracies, the school district has been fined hundreds of thousands of dollars for delivering incorrect information to the state pension fund for teachers.
“As of October 31st, LAUSD has been fined over $328,000,” Ricardo Duran, a media officer with the California State Teachers Retirement System (CalSTRS), the nation’s third-largest pension fund, told The Argonaut in December.
The penalties are assessed in accordance with the California Education Code Section 23006, which states, “If a county superintendent of schools or employing agency, school district or community college district that reports directly to the system, submits monthly reports late or in unacceptable form, the board may assess penalties.”
Teachers are not in danger of losing important credits and retirement benefits, said Duran.
“CalSTRS members will collect all the benefits and service credits to which they are entitled,” said the pension fund’s media officer. “The correct information will ultimately be submitted by LAUSD.
“In the meantime, CalSTRS uses a process that ensures retiring members will begin to receive their initial benefit less than 30 days after retiring.”
De LeÛn, who sponsored the legislation because of the payroll system problems, said, “We simply can’t afford to throw good taxpayer money after bad by rewarding contractors with new public contracts.”
“We need to hold this contractor and others like them accountable if they choose to walk away from their commitments to taxpayers,” he added.
Deloitte & Touche had previously customized the same software system called SAP for the Irish Health Service, which spent eight years and 12 times more than it had budgeted for the project before it stopped trying to implement the software, according to a Los Angeles Times editorial.
Rubin is aware of AB 730’s passage and is encouraged with its progress.
“I hope that it passes the Senate as well,” he said. “This whole thing has been so outrageous.”
AB 730 will apply only to contracts over $1 million and where the final judgement is more than $250,000.
Calls to the school district for comment had not been returned as The Argonaut went to press.