Baltimore taxpayers will fork over $534,000 to cover retirement contributions that were not properly deducted from employee paychecks by the city’s glitch-plagued Workday system.
The error was discovered by Baltimore Inspector General Isabel Mercedes Cumming, who reported that retirement contributions by 4,341 employees were not deducted from a COLA (cost of living adjustment) payment last September.
The uncollected money, dating back to July 1, 2021, covered Class C and Hybrid Class D employees represented by the City Union of Baltimore (CUB) and AFSCME Local 44.
Workday’s pension code did not include a retroactive pension feature, so the deductions were never made, Cumming said in a report issued this week.
Since 2019, Baltimore has spent tens of millions of dollars to incorporate human capital management, payroll and financial transactions into the cloud-based Workday system.
The transition to so-called paperless processes has hardly been seamless.
Service gaps and general confusion have led to the issuance of “off-system” checks, written by hand, just to keep municipal operations running.
In this case, “configuration issues within the payroll system and low staff levels within the Bureau of Accounting & Payroll Services (BAPS) contributed to the missed contributions and other retroactive payment issues,” Cumming wrote.
Michael Moiseyev, who replaced Henry Raymond as city finance director last October, says new and needed Workday pension codes are being tested and should be operational by the end of April.
When the 4,000-plus COLA payments were issued, the city had one BAPS employee handling the task, Moiseyev told the inspector general.
The employee was “supported by a team of contractors who lacked specific detailed knowledge of the City of Baltimore payroll configuration,” he acknowledged (emphasis added).
To avoid similar problems in the future, Moiseyev promised to temporarily transfer more people to BAPS as well as “increase support from contractors.”
Contractors ignorant of Workday’s configurations were in the driver’s seat.
On March 1, the Board of Estimates extended a $362,000 contract with Oakland Consulting Group for “go-live” Workday support at the finance department.
At the same meeting, $450,300 was added to Accenture’s longstanding contract for Workday implementation.
That contract, initially approved for $7.3 million in June 2019, has since doubled to $15.8 million.
Below are the six price increases authorized by the board to implement Workday through 2023.
Another Mystery Overpayment
Other financial discrepancies were found by the IG, including $4.4 million in overpayments made to 269 city employees.
The IG report gives few specifics about these overpayments – who received them and why – except that they also involved retroactive pay that was improperly processed through Central Payroll.
Cumming said her office recently learned that the finance department “was able to reverse numerous overpayment transactions and, as of February 2023, was in the process of collecting the remaining overpayments of over $1 million.”
Her report calls on City Auditor Josh Pasch to look at how BAPS has calculated mandatory pension contributions from employees prior to July 2021.
“The OIG recommends the Department of Audits conduct a review to determine if retirement contributions have been missed on prior retroactive payments within the Payroll System.”
Regarding the $534,000 not deducted from employee paychecks, David A. Randall, director of the city retirement system, plans to bill taxpayers for the cost.
He told Cumming he has included the full amount as part of his department’s “employer’s share” of retirement benefits for fiscal year 2024.